SALANT CORP
10-Q, 1999-08-16
MEN'S & BOYS' FURNISHGS, WORK CLOTHG, & ALLIED GARMENTS
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                                  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 July 3, 1999.

                                       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 August 6, 1999,  there were  outstanding  10,000,000  shares of the Common
Stock of the registrant.


<PAGE>



                                TABLE OF CONTENTS


                                                                      Page

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements (unaudited)

Condensed Consolidated Statements of Operations

Condensed Consolidated Statements of Comprehensive Income

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 1.  Legal Proceedings

Item 2.  Changes in Securities and Use of Proceeds

Item 6.  Exhibits and Reports on Form 8-K

SIGNATURE


<PAGE>




<TABLE>
<CAPTION>

                                        Salant Corporation and Subsidiaries
                                  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                    (Unaudited)
                                   (Amounts in thousands, except per share data)

                                                                 Three Months Ended                  Six Months Ended
                                                             July 3,          July 4,           July 3,
July 4,
                                                                   1999             1998              1999             1998
                                                               --------         --------          --------         ---------

<S>                                                            <C>              <C>               <C>              <C>
Net sales                                                      $ 61,820         $ 69,362          $140,402         $146,307
Cost of goods sold                                               52,052           52,696           113,801          113,674
                                                                -------         --------          --------         --------

Gross profit                                                      9,768           16,666            26,601           32,633

Selling, general and
 administrative expenses                                        (13,022)         (15,508)          (29,765)         (30,681)
Royalty income                                                      418            1,555             1,494            2,676
Goodwill amortization                                              (130)            (470)             (259)            (940)
(Provision for)/Reversal of division
 restructuring costs (Note 5)                                        --               --            (4,039)             160
Other income                                                        407              105               422              168
                                                               --------        ---------          --------         --------

Income/(loss) from continuing operations
 before interest, income taxes and
 extraordinary gain                                              (2,559)           2,348            (5,546)           4,016

Interest (income)/expense, net                                      (34)           3,493               772            6,926
                                                                 -------        --------            ------         --------

Loss from continuing operations before
 income taxes and extraordinary gain                             (2,525)          (1,145)           (6,318)          (2,910)

Income taxes/(benefit)                                               37              (29)               60              (26)
                                                                -------        ----------          -------         ---------

Loss from continuing operations before
 extraordinary gain                                              (2,562)          (1,116)           (6,378)          (2,884)

Discontinued operations (Note 6):
     Loss from discontinued operations                               --           (2,452)           (1,955)          (3,981)

Extraordinary gain (Note 7)                                      24,703               --            24,703               --
                                                                -------          -------           -------          -------

Net income/(loss)                                              $ 22,141          $(3,568)          $16,370         $ (6,865)
                                                               ========          =======           =======         ========

Pro forma basic and diluted income/(loss) per share (Note 8):
   From continuing operations                                   $(0.26)         $  (0.11)           $(0.64)        $   (0.29)
   From discontinued operations                                      --            (0.25)            (0.20)            (0.40)
   From extraordinary gain                                         2.47               --              2.47               --
                                                               --------           ------           -------          -------

Pro forma basic and diluted income/(loss)
 per share                                                      $   2.21        $  (0.36)         $   1.63        $  (0.69)
                                                                ========        ========          ========        ========

Pro forma weighted average common
 stock outstanding                                               10,000           10,000            10,000           10,000
                                                                =======         ========          ========        =========

</TABLE>


            See Notes to Condensed Consolidated Financial Statements.


<PAGE>
<TABLE>
<CAPTION>


                                        Salant Corporation and Subsidiaries
                             CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                                    (Unaudited)
                                              (Amounts in thousands)


                                                                 Three Months Ended                  Six Months Ended
                                                                 July 3,          July 4,           July 3,           July 4,
                                                                   1999             1998              1999             1998
                                                               --------        ---------           -------         --------


<S>                                                            <C>               <C>              <C>               <C>
Net income/(loss)                                              $ 22,141          $(3,568)         $ 16,370          $(6,865)

Other comprehensive income, net of tax:

 Foreign currency translation adjustments                            22               27                58               30
                                                               --------         --------          --------         --------

Comprehensive income/(loss)                                    $ 22,163         $ (3,541)         $ 16,428         $ (6,835)
                                                               ========         ========          ========         ========

</TABLE>





































            See Notes to Condensed Consolidated Financial Statements.


<PAGE>


<TABLE>
<CAPTION>



                                        Salant Corporation and Subsidiaries
                                       CONDENSED CONSOLIDATED BALANCE SHEETS
                                              (Amounts in thousands)

                                                                      July 3,              January 2,              July 4,
                                                                        1999                  1999                  1998
                                                                    (Unaudited)            (*)                  (Unaudited)
ASSETS
Current assets:
<S>                                                                  <C>                   <C>                   <C>
 Cash and cash equivalents                                           $    19,551           $    1,222            $    1,138
 Accounts receivable, net                                                 21,941               38,359                36,696
 Inventories (Note 3)                                                     41,617               69,590                87,028
 Prepaid expenses and other current assets                                 5,113                5,266                 8,529
 Assets held for sale (Note 2)                                             1,173               28,400                    --
 Net assets of discontinued operations                                        --                6,860                23,355
                                                                      ----------           ----------            ----------

Total current assets                                                      89,395              149,697               156,746

Property, plant and equipment, net                                        13,127               12,371                26,081
Other assets                                                              13,734               14,061                55,911
                                                                      ----------           ----------            ----------

Total assets                                                          $  116,256           $  176,129            $  238,738
                                                                      ==========           ==========            ==========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
 Loans payable                                                            $   --           $   38,496            $   52,176
 Accounts payable                                                          9,795                2,831                21,231
 Chapter 11 liabilities (Note 2)                                           6,310              143,807                    --
 Accrued liabilities                                                      11,129               14,344                18,775
 Current portion of long term debt                                            --                   --               104,879
 Reserve for business restructuring (Note 5)                               4,608                3,551                   869
                                                                        --------           ----------            ----------

Total current liabilities                                                 31,842              203,029               197,930

Deferred liabilities                                                       3,895                4,010                 5,340

Shareholders' equity/(deficiency):
Common stock - old (Note 2)                                                   --               15,405                15,405
Common stock - new (Note 2)                                               10,000                   --                    --
Additional paid-in capital                                               206,041              107,249               107,249
Deficit                                                                 (131,527)            (147,897)              (82,100)
Accumulated other comprehensive income (Note 4)                           (3,995)              (4,053)               (3,472)
Less - treasury stock, at cost                                                --               (1,614)               (1,614)
                                                                       ---------           ----------            ----------

Total shareholders' equity/(deficiency)                                   80,519              (30,910)               35,468
                                                                      ----------           ----------            ----------

Total liabilities and shareholders'
 equity/(deficiency)                                                  $  116,256           $  176,129            $  238,738
                                                                      ==========           ==========            ==========

(*) Derived from the audited financial statements.

</TABLE>


            See Notes to Condensed Consolidated Financial Statements.


<PAGE>

<TABLE>
<CAPTION>



                                        Salant Corporation and Subsidiaries
                                  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                    (Unaudited)
                                              (Amounts in thousands)

                                                                                         Six Months Ended
                                                                                       July 3,               July 4,
                                                                                       1999    1998
Cash Flows from Operating Activities:
<S>                                                                                 <C>                    <C>
Loss from continuing operations                                                     $  (6,378)             $ (2,884)
Adjustments to reconcile loss from continuing
 operations to net cash provided by/(used in)
 operating activities:
   Depreciation                                                                         2,521                 3,783
   Amortization of intangibles                                                            259                   940
Change in operating assets and liabilities
   Accounts receivable                                                                 16,418                 2,940
   Inventories                                                                         27,973                (2,250)
   Prepaid expenses and other current assets                                              198                (4,995)
   Accounts payable                                                                     6,964                (2,659)
   Accrued liabilities and reserve for
    business restructuring                                                             (2,242)                1,316
   Liabilities subject to compromise                                                  (17,915)                   --
   Deferred liabilities                                                                  (115)                  (42)
                                                                                    ----------                -----

Net cash provided by/(used in) continuing
   operating activities                                                                27,683                (3,851)
Cash provided by/(used in) discontinued operations                                      5,110                (9,846)
                                                                                    ---------              --------
Net cash provided by/(used in) operations                                              32,793               (13,697)
                                                                                    ---------              --------

Cash Flows from Investing Activities:
Capital expenditures                                                                   (2,112)               (5,389)
Proceeds from the sale of assets                                                       27,227                    --
Store fixture expenditures                                                             (1,141)                 (375)
                                                                                    ----------               ------

Net cash provided by/(used in) investing activities                                    23,974                (5,764)
                                                                                    ---------              --------

Cash Flows from Financing Activities:
Net short-term loans (payments)/borrowings                                            (38,496)               18,376
Other, net                                                                                 58                    30
                                                                                     --------              --------

Net cash (used in)/provided by financing activities                                   (38,438)               18,406
                                                                                    ----------             --------

Net increase/(decrease) in cash and cash equivalents                                   18,329                (1,055)

Cash and cash equivalents - beginning of year                                           1,222                 2,193
                                                                                     --------              --------

Cash and cash equivalents - end of quarter                                           $ 19,551              $  1,138
                                                                                     ========              ========
</TABLE>



            See Notes to Condensed Consolidated Financial Statements.


<PAGE>


<TABLE>
<CAPTION>


                                        Salant Corporation and Subsidiaries
                                  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                    (Unaudited)
                                              (Amounts in thousands)

                                                                                         Six Months Ended
                                                                                       July 3,               July 4,
                                                                                       1999    1998

Supplemental  disclosures of cash flow information:  Cash paid during the period
for:
<S>                                                                                  <C>                   <C>
    Interest                                                                         $    991              $  2,522
    Income taxes                                                                           60                   144

Supplemental investing and financing non-cash transactions:
    Common Stock issued for Senior Notes                                              104,879                    --
    Common Stock issued for pre-petition interest                                      14,703                    --
    Common Stock issued for post-petition interest                                        121                    --

</TABLE>






































            See Notes to Condensed Consolidated Financial Statements.



                       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 men's  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 and Canada.

The results of  operations  for the three and six months  ended July 3, 1999 and
July 4, 1998 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
have  been  eliminated  in  consolidation.   Certain  information  and  footnote
disclosures normally included in the financial statements prepared in accordance
with generally  accepted  accounting  principles have been condensed or omitted.
These condensed  consolidated financial statements should be read in conjunction
with  the  audited  financial  statements  and  notes  thereto  included  in the
Company's annual report to shareholders for the year ended January 2, 1999.

Note 2.  Financial Restructuring

On December 29, 1998 (the "Filing  Date") Salant filed a petition  under chapter
11 of title 11 of the United  States Code (the  "Chapter 11 Case") in the United
States  Bankruptcy Court for the Southern  District of New York (the "Bankruptcy
Court") in order to implement a  restructuring  of its 10-1/2 % Senior Notes due
December  31,  1998  (the  "Senior  Notes").  Salant  also  filed  its  Plan  of
Reorganization  (as amended the "Plan")  with the  Bankruptcy  Court in order to
implement its  restructuring.  Salant's major note and equity holders  supported
the Plan.  On April  16,  1999,  the  Bankruptcy  Court  entered  an order  (the
"Confirmation  Order")  confirming  the  Plan.  The  effective  date of the Plan
occurred on May 11, 1999 (the "Effective Date").

As of the Filing Date Salant had $143,807 of Chapter 11 liabilities,  consisting
of $104,879 of Senior  Notes,  $14,703 in Senior  Note  interest  and $24,225 of
unsecured  pre-bankruptcy  claims,  in  addition  to  loans  payable  to The CIT
Group/Commercial  Credit  Services,  Inc. (CIT). In addition,  during the fourth
quarter  of  1998,  Salant  accrued  estimated  fees  of  $3.2  million  for the
administration of the chapter 11 proceedings. During the first half of 1999, the
Company paid certain  liabilities  that were  supported by letters of credit and
other  liabilities  that  were  approved  by the  Bankruptcy  Court  in order to
effectuate the sale of non-Perry  Ellis assets.  As of July 3, 1999, the Company
had $6.3 million of  liabilities  subject to  compromise.  The balance  consists
primarily of items in which the scheduled amount and the claim amount are not in
agreement. The Company is currently in the process of reconciling these amounts.
<PAGE>

Salant  obtained  an  $85  million   debtor-in-possession   facility  (the  "DIP
Facility") from its existing working capital lender,  CIT, during the chapter 11
case. On May 11, 1999, the Company  entered into a syndicated  revolving  credit
facility (the "Credit  Agreement")  with CIT pursuant to and in accordance  with
the terms of a commitment  letter dated December 7, 1998, which replaced the CIT
DIP Facility.

The Credit  Agreement  provides for a general working capital  facility,  in the
form of direct borrowings and letters of credit, up to $85 million subject to an
asset-based  borrowing  formula.  The Credit Agreement consists of a $85 million
revolving  credit  facility,  with  at  least a $35  million  letter  of  credit
subfacility.  As collateral for borrowings  under the Credit  Agreement,  Salant
granted to CIT and a syndicate of lenders to be arranged by CIT (the  "Lenders")
a first  priority  lien on and  security  interest in  substantially  all of the
assets of Salant. The Credit Agreement has an initial term of three years.

The Credit Agreement also provided,  among other things, that (i) Salant will be
charged an  interest  rate on direct  borrowings  of .25% in excess of the Prime
Rate or at the  Company's  request,  2.25% in excess of LIBOR (as defined in the
Credit  Agreement),  and (ii) the Lenders  may, in their sole  discretion,  make
loans to Salant in excess of the  borrowing  formula  but within the $85 million
limit of the  revolving  credit  facility.  The  Company is  required  under the
agreement  to maintain  certain  financial  covenants  relating to  consolidated
tangible  net worth,  capital  expenditures,  maximum  pre-tax  losses / minimum
pre-tax  income  and  minimum  interest  coverage  ratios.  The  Company  was in
compliance with all applicable covenants at July 3, 1999.

Pursuant to the Credit  Agreement,  Salant will pay the  following  fees:  (i) a
documentary  letter of credit fee of 1/8 of 1.0% on issuance  and 1/8 of 1.0% on
negotiation;  (ii) a standby  letter of credit  fee of 1.0% per annum  plus bank
charges;  (iii) a commitment  fee of $325  thousand;  (iv) an unused line fee of
 .25%; (v) an agency fee of $100 thousand (only for the second and third years of
the term of the Credit  Agreement);  (vi) a collateral  management fee of $8,333
per  month;  and  (vii) a field  exam  fee of $750  per day  plus  out-of-pocket
expenses.

Pursuant to the Plan,  on the  Effective  Date,  all of Salant's  then  existing
common stock ("Old Common Stock"),  $1.00 par value per share was cancelled.  In
accordance with the Plan, 10,000,000 shares of new common stock, $1.00 par value
per share  (the "New  Common  Stock"),  were  issued by Salant as  follows:  (i)
9,500,000  shares of the New Common Stock were  distributed  to the holders (the
"Noteholders")  of Salant's  Senior Notes,  in full  satisfaction  of all of the
outstanding principal amount, plus all accrued and unpaid interest on the Senior
Notes and (ii) 500,000  shares of the New Common Stock were  distributed  to the
holders  of  Salant's  Old Common  Stock,  in full  satisfaction  of any and all
interests of such holder in Salant.

Accordingly,  under the Plan, as of the Effective  Date,  Salant's  stockholders
immediately  prior to the  Effective  Date,  who at that time  owned 100% of the
outstanding Old Common Stock of Salant,  received,  in the aggregate,  5% of the
issued and outstanding shares of New Common Stock, subject to dilution,  and the
Noteholders received, in the aggregate, 95% of the issued and outstanding shares
of New Common Stock, subject to dilution.  The Company reserved 1,111,111 shares
(10% of the  outstanding  shares)  of New Common  Stock for the Stock  Award and
Incentive Plan. The authorized  capital stock of Salant as of the Effective Date
consists of (i) 45,000,000 shares of New Common Stock, $1.00 par value per share
and (ii)  5,000,000  shares of Preferred  Stock,  $2.00 par value per share (the
"Preferred Stock"). No Preferred Stock was issued in connection with the Plan.

The newly  restructured  Salant  intends to focus  primarily  on its Perry Ellis
men's  apparel  business  and,  as a result,  is exiting  its other  businesses,
including its Children's  Group and non-Perry Ellis menswear  divisions.  In the
first quarter of 1999, the Company sold its John Henry and Manhattan businesses.
These  businesses  include the John Henry,  Manhattan and Lady  Manhattan  trade
names,  the John  Henry and  Manhattan  dress  shirt  inventory,  the  leasehold
interest in the dress shirt facility located in Valle Hermosa,  Mexico,  and the
equipment located at the Valle Hermosa facility and at Salant's facility located
in  Andalusia,  Alabama.  The  Company  received  $27  million  for the  sale of
trademarks,  licenses and  equipment in the first quarter of 1999. In the second
quarter of 1999,  Salant sold the  inventory  related to the  Manhattan and John
Henry dress shirt businesses and closed its private label denim  facilities.  In
the first quarter of 1999,  Salant also sold its Children's  Group, the proceeds
of which  related  primarily to the sale of  inventory.  Assets held for sale at
July 3, 1999 at a net realizable  value of $1.2 million,  consists  primarily of
property, plant and equipment, related to the businesses that were exited by the
Company.  The Company  anticipates that these assets will be sold or disposed of
prior to the end of 1999.  As a result of the above,  Salant will now report its
business operations as a single segment.

<TABLE>
<CAPTION>

Note 3.  Inventories
                                                       July 3,                January 2,                   July 4,
                                                          1999                      1999                      1998

<S>                                                   <C>                       <C>                       <C>
Finished goods                                        $ 22,790                  $ 42,022                  $ 52,392
Work-in-Process                                          9,418                    17,225                    17,826
Raw materials and supplies                               9,409                    10,343                    16,810
                                                      --------                 ---------                 ---------
                                                       $41,617                  $ 69,590                  $ 87,028
                                                       =======                  ========                  ========
</TABLE>

Note 4. Accumulated Other Comprehensive Income
<TABLE>
<CAPTION>

                                                             Foreign Currency   Minimum Pension    Accumulated Other
                                                               Translation        Liability         Comprehensive
                                                               Adjustments        Adjustment            Income
1999
<S>                                                               <C>             <C>                   <C>
Beginning of year balance                                         $(197)          $(3,856)              $(4,053)
Six months ended July 3, 1999 change                                 58                --                    58
                                                                  ------          --------              --------
End of quarter balance                                            $(139)          $(3,856)              $(3,995)
                                                                  ======          ========              ========

1998
Beginning of year balance                                            $6          $(3,508)               $(3,502)
Six months ended July 4, 1998 change                                 30               --                     30
                                                                  ------         --------               --------

End of quarter balance                                               $36          $(3,508)              $(3,472)
                                                                  ======          ========              ========
</TABLE>

Note 5.  Division Restructuring Costs

In the first quarter of 1999, the Company recorded  restructuring  provisions of
$4,039,  primarily for severance costs related to the sale of the John Henry and
Manhattan businesses and the closing of the Company's denim facilities.

As of July 3, 1999,  $4,608  remained in the  restructuring  reserve,  primarily
related  to  future  minimum  lease   payments  and  severance   costs  for  the
discontinued  businesses.  It is  anticipated  that these  expenditures  will be
completed by the first quarter of 2000.

Note 6.  Discontinued Operations

In the first quarter of 1999, an additional  provision of $1,955 was recorded to
account for additional  costs  incurred in the closing of the  Children's  Group
manufacturing  and  distribution  facilities.  The net  assets  of  discontinued
operations   decreased  to  a  net  liability  of  $205   (included  in  accrued
liabilities)  due  primarily  to the  sale and  disposal  of  inventory  and the
collection of accounts receivable.  Net sales of discontinued  operations in the
first half of 1999 and 1998 were $5,708 and $13,036, respectively.

Note 7.  Extraordinary Gain

In the second quarter of 1999,  the Company  recorded an  extraordinary  gain of
$24,703  related to the  conversion  of the Senior Notes and the related  unpaid
interest  into  equity,  as  described  in Note 2.  Pursuant  to the  Plan,  the
Noteholders received, in the aggregate, 95% of the issued and outstanding shares
of New Common Stock,  subject to dilution,  in full  satisfaction  of all of the
outstanding  principal amount  ($104,879),  plus all accrued and unpaid interest
($14,824) on the Senior Notes,  9,500,000  shares of the New Common  Stock,  was
distributed to the holders of Salant's Senior Notes.

Note 8.  Income/(Loss) Per Share

Pro forma basic  income/(loss) per share is based on the weighted average number
of common  shares as if the New Common Stock had been issued at the beginning of
the earliest period presented.  Common stock equivalents are not considered,  as
options have not been issued on the New Common Stock.

The following is a comparison of basic and diluted income/(loss) per share using
the historical shares  outstanding.  Common stock equivalents are not considered
for the Old Common Stock, as the options were cancelled or  anti-dilutive.  Such
computation does not give  retroactive  effect to the issuance of the New Common
Stock.
<TABLE>
<CAPTION>
                                                     Three Months Ended                 Six Months Ended
                                                       July 3,          July 4,          July 3,        July 4,
                                                        1999            1998              1999           1998
                                                       -----            ----              ----           ----

Basic and diluted income/(loss) per share:
<S>                                                     <C>           <C>                 <C>           <C>
   From continuing operations                           ($0.21)       ($0.08)             ($0.47)       ($0.19)
   From discontinued operations                             --         (0.16)              (0.14)        (0.26)
   From extraordinary gain                                2.03            --                1.81            --
                                                      --------    ----------            --------    ----------

Basic and diluted income/(loss) per share                $1.82        ($0.24)              $1.20        ($0.45)
                                                       =======       ========            =======       ========

Weighted average common stock outstanding               12,150        15,170              13,677        15,170
                                                        ======        ======              ======        ======
</TABLE>

ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
              CONDITION AND RESULTS OF OPERATIONS.

Results of Operations

Second Quarter of 1999 Compared with Second Quarter of 1998

Net Sales

Net sales decreased by $7.6 million,  or 10.9%, from $69.4 million in the second
quarter of 1998 to $61.8  million in the second  quarter of 1999.  This decrease
primarily  resulted  from a reduction of $9.2 million in sales for the non-Perry
Ellis  businesses  that  were  being  sold  or  closed.   Perry  Ellis  products
experienced  a net  increase of $1.7  million for the second  quarter of 1999 as
compared  to the second  quarter of 1998.  The  decrease in sales of Perry Ellis
dress  shirts,  due to  softness in the dress  shirt  market,  was offset by the
continuing success at retail of the other Perry Ellis products.

Gross Profit

The gross profit percentage  decreased from 24.0% to 15.8% in the second quarter
of 1999, as compared to the second quarter of 1998. The gross profit decrease of
8.2%  was  primarily  attributable  to the sale and  disposal  of the  Company's
non-Perry  Ellis  inventories for businesses the Company has liquidated or sold,
resulting  in 27.9%  lower  margins on those  sales.  The Perry  Ellis  business
generated a gross profit of 27.1% in the second  quarter of 1999, as compared to
28.4% in the second quarter of 1998.

Selling, General and Administrative Expenses

Selling,  general and administrative ("SG&A") expenses for the second quarter of
1999  decreased to $13.0 million  (21.1% of net sales) from $15.5 million (22.4%
of net sales) for the second  quarter of 1998. The decrease in SG&A expenses was
primarily a result of the elimination of personnel and overhead costs related to
the sale and closure of businesses that have been discontinued.

Income/(Loss) from Continuing Operations Before Interest,  Income Taxes and
Extraordinary Gain

Income from continuing operations before interest,  taxes and extraordinary gain
decreased  from $2.3  million  in the  second  quarter of 1998 to a loss of $2.6
million for the second  quarter of 1999.  The  decrease  of $4.9  million is due
primarily to the decrease in sales and the loss of margin on the  close-out  and
disposal of non-Perry Ellis inventories.

Interest Income / Expense, Net

Net interest  income was $34 thousand  for the second  quarter of 1999  compared
with  interest  expense  of $3.5  million  for the second  quarter of 1998.  The
decrease  in  interest  expense  resulted  from the  discontinuance  of interest
accrued on the Senior Notes and interest income from the cash generated  through
the sale of the John Henry and Manhattan businesses.

Discontinued Operations

In the first  quarter of 1999,  the Company  reserved for losses  related to the
phase out period and the closing of the Children's  Group. The $2.5 million loss
in the prior year was due to the loss from operations of the Children's Group.

Extraordinary Gain

An  extraordinary  gain of $24.7 million was recorded due to the exchange of the
Senior Notes of $104.9 million and the interest payable of $14.8 million for 9.5
million shares of the Company's New Common Stock.

Net Income / Loss

In the second quarter of 1999, the Company reported net income of $22.1 million,
or $2.21 per  share,  as  compared  to a net loss of $3.6  million,  or $.36 per
share, in the second quarter of 1998.

Earnings/(Loss)  Before  Interest,   Taxes,   Depreciation,   Amortization,
Restructuring Charges, Discontinued Operations and Extraordinary Gain

Loss before interest, taxes, depreciation,  amortization, restructuring charges,
discontinued  operations  and  extraordinary  gain was $1.1 million (1.8% of net
sales) in the second  quarter of 1999,  compared to income of $4.7 million (6.8%
of net sales) in the second  quarter of 1998,  a decrease of $5.8  million.  The
Company  believes this  information is helpful in  understanding  cash flow from
operations  that is available  for debt service 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.

Year to Date 1999 Compared with Year to Date 1998

Net Sales

Net sales  decreased by $5.9 million,  or 4.0%, from $146.3 million in the first
half of 1998 to  $140.4  million  in the  first  half  of  1999.  This  decrease
primarily  resulted  from a decrease  of $13.3  million  related to the sale and
disposal  of the  non-Perry  Ellis  businesses.  Sales of Perry  Ellis  products
experienced an increase of $7.4 million over the first half of last year.  Perry
Ellis dress shirts  experienced  a decrease in sales for the first half of 1999,
due to softness in the dress shirt  market,  which was offset by the  continuing
success at retail of the other Perry Ellis products. Gross Profit

The gross profit  percentage  decreased  from 22.3% in the first half of 1998 to
18.9% for the first half of 1999.  The decrease of 3.4% was due primarily to the
gross profit of non-Perry Ellis products  dropping by 16.7% due to lower margins
on the inventory  sales of businesses  the Company has  liquidated or sold.  The
Perry Ellis  business had an increase in gross profit  percentage  from 26.6% in
first half of 1998 to 27.4% in the first half of 1999.

Selling, General and Administrative Expenses

Selling, general and administrative ("SG&A") expenses for the first half of 1999
decreased to $29.8 million (21.2% of net sales) from $30.7 million (21.0% of net
sales) for the first half of 1998. The reduction of SG&A expenses was due to the
cost  savings  related  to the  elimination  of  overhead  and  personnel  costs
associated with the sale and disposal of the non-Perry Ellis businesses.

Provision for / Reversal of Division Restructuring Costs

In the first half of 1999,  the Company  recorded a  restructuring  provision of
$4.0 million.  The  provision  was primarily for severance  costs related to the
sale of the John Henry and  Manhattan  businesses  and its exit from the private
label denim jeans  business,  in order for the Company to focus primarily on the
Perry Ellis men's apparel business.

Income/(Loss) from Continuing Operations Before Interest, Income Taxes and
Extraordinary Gain

Loss from continuing operations before interest and taxes and extraordinary gain
was  $2.9  million  for the  first  half of 1998 as  compared  to a loss of $6.4
million  for the  first  half of  1999.  The  decrease  of $3.5  million  is due
primarily to the loss of margin on the close out of inventory  from the business
that will no longer continue as part of the ongoing operations of the Company.

Interest Income / Expense, Net

Net interest  expense was $0.8 million for the first half of 1999  compared with
interest  expense of $6.9  million for the first half of 1998.  The  decrease in
interest  expense  resulted from the  discontinuance  of interest accrued on the
Senior Notes and interest income from the cash generated through the sale of the
John Henry and Manhattan businesses.

Discontinued Operations

In the first half of 1999, the Company recorded an additional  provision of $2.0
million for expected losses during the phase out period of the Children's Group.
The  additional  amount was required due to additional  costs of phasing out the
Children's Group's production and distribution facilities. The $4.0 million loss
in the prior year was due to the loss from operations of the Children's Group.

Extraordinary Gain

An  extraordinary  gain of $24.7 million was recorded due to the exchange of the
Senior Notes of $104.9 million and the interest payable of $14.8 million for 9.5
million shares of the Company's New Common Stock.

Net Loss

In the first half of 1999, the Company reported net income of $16.4 million,  or
$1.63 per share, as compared with a net loss of $6.9 million, or $.69 per share,
in the first half of 1998.

Earnings Before Interest, Taxes,  Depreciation,  Amortization,  Restructuring
Charges,  Discontinued Operations and Extraordinary Gain

Earnings  before  interest,  taxes,  depreciation,  amortization,  restructuring
charges,  discontinued  operations and extraordinary gain was $1.3 million (0.9%
of net sales) in the first half of 1999,  compared to $8.6 million  (5.9% of net
sales) in the first half of 1998,  a decrease  of $7.3  million,  or 85.2%.  The
Company  believes this  information is helpful in  understanding  cash flow from
operations  that is available  for debt service 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

Upon  commencement  of the Chapter 11 Case,  Salant  filed a motion  seeking the
authority of the Bankruptcy Court to enter into a revolving credit facility with
CIT  pursuant  to and in  accordance  with  the  terms of the  Ratification  and
Amendment  Agreement,  dated as of December  29, 1998 (the  "Amendment")  which,
together  with  related  documents  are  referred  to as the CIT  DIP  Facility,
effective  as of the Filing Date,  which would  replace the  Company's  existing
working capital facility under the Credit  Agreement.  On December 29, 1998, the
Bankruptcy  Court  approved  the CIT DIP  Facility  on an  interim  basis and on
January 19, 1999 approved the CIT DIP Facility on a final basis.

The CIT DIP Facility  provided for a general  working capital  facility,  in the
form of direct borrowings and letters of credit, up to $85 million subject to an
asset-based  borrowing formula. The CIT DIP Facility consisted of an $85 million
revolving credit facility,  with a $30 million letter of credit subfacility.  As
collateral for borrowings under the CIT DIP Facility, the Company granted to CIT
a first  priority  lien on and  security  interest in  substantially  all of the
Company's   assets   and   those  of  its   subsidiaries,   with   superpriority
administrative  claim  status  over any and all  administrative  expenses in the
Company's  Chapter 11 Case,  subject to a $2 million  carve-out for professional
fees and the fees of the United States Trustee.

On May 11, 1999, the Company entered into a syndicated revolving credit facility
(the "Credit  Agreement")  with CIT pursuant to and in accordance with the terms
of a  commitment  letter  dated  December 7, 1998,  which  replaced  the CIT DIP
Facility described above.

The Credit  Agreement  provides for a general working capital  facility,  in the
form of direct borrowings and letters of credit, up to $85 million subject to an
asset-based  borrowing  formula.  The Credit Agreement consists of a $85 million
revolving  credit  facility,  with  at  least a $35  million  letter  of  credit
subfacility.  As collateral for borrowings  under the Credit  Agreement,  Salant
granted to CIT and a syndicate of lenders to be arranged by CIT (the  "Lenders")
a first  priority  lien on and  security  interest in  substantially  all of the
assets of Salant. The Credit Agreement has an initial term of three years.

The Credit Agreement also provided,  among other things, that (i) Salant will be
charged an  interest  rate on direct  borrowings  of .25% in excess of the Prime
Rate or at the  Company's  request,  2.25% in excess of LIBOR (as defined in the
Credit  Agreement),  and (ii) the Lenders  may, in their sole  discretion,  make
loans to Salant in excess of the  borrowing  formula  but within the $85 million
limit of the  revolving  credit  facility.  The  Company is  required  under the
agreement  to maintain  certain  financial  covenants  relating to  consolidated
tangible  net worth,  capital  expenditures,  maximum  pre-tax  losses / minimum
pre-tax  income  and  minimum  interest  coverage  ratios.  The  Company  was in
compliance with all applicable covenants at July 3, 1999.

Pursuant to the Credit  Agreement,  Salant will pay the  following  fees:  (i) a
documentary  letter of credit fee of 1/8 of 1.0% on issuance  and 1/8 of 1.0% on
negotiation;  (ii) a standby  letter of credit  fee of 1.0% per annum  plus bank
charges;  (iii) a commitment  fee of $325  thousand;  (iv) an unused line fee of
 .25%; (v) an agency fee of $100 thousand (only for the second and third years of
the term of the Credit  Agreement);  (vi) a collateral  management fee of $8,333
per  month;  and  (vii) a field  exam  fee of $750  per day  plus  out-of-pocket
expenses.

On July 3, 1999, direct  borrowings and letters of credit  outstanding under the
Credit Agreement were $30.0 million,  all of which related to letters of credit,
and the  Company  had unused  availability  of $19.2  million.  On July 4, 1998,
direct borrowings and letters of credit outstanding were $52.2 million and $22.1
million, respectively, and the Company had unused availability of $10.1 million.
During the first  half of 1999,  the  maximum  amount of direct  borrowings  and
letters of credit  outstanding  under the Credit Agreement was $66.9 million and
the maximum amount for the first half of 1998 was $84.6 million.

The Company's  cash  provided by operating  activities in the first half of 1999
was $32.8 million,  which primarily  reflects the decrease in inventory of $28.0
million,  a decrease in accounts  receivable  of $16.4  million,  an increase in
accounts   payable  of  $7.0  million  and  an  increase  in  cash  provided  by
discontinued  operations of $5.1 million offset by (i) a decrease in liabilities
subject  to  compromise  of  $17.9  million,  and  (ii) a  decrease  in  accrued
liabilities and reserve for business restructuring of $2.2.

Cash  provided  by  investing  activities  in the  first  half of 1999 was $24.0
million,  of which $27 million was from the payment for the assets sold relating
to the John Henry and Manhattan trademarks and licenses.  Also in the first half
of 1999, the Company used $2.1 million for capital expenditures and $1.1 million
for the installation of store fixtures in department stores. During fiscal 1999,
the Company plans to spend  approximately $7.5 million for capital  expenditures
and for the installation of store fixtures in department stores.

Cash used in financing  activities in the first half of 1999 was $38.4 million,
attributable  to payments of $38.5 million on the short-term borrowings.

Factors that May Affect Future Results and Financial Condition.

This report  contains or incorporates  by reference  forward-looking  statements
within the  meaning of the  Private  Securities  Litigation  Reform Act of 1995.
Where any such forward-looking statement includes a statement of the assumptions
or bases underlying such  forward-looking  statement,  the Company cautions that
assumed  facts or bases  almost  always  vary from the actual  results,  and the
differences  between  assumed facts or bases and actual results can be material,
depending on the circumstances.  Where, in any  forward-looking  statement,  the
Company  or its  management  expresses  an  expectation  or  belief as to future
results,  there can be no assurance  that the  statement of the  expectation  or
belief  will  result  or be  achieved  or  accomplished.  The  words  "believe",
"expect",  "estimate",  "project",  "seek", "anticipate" and similar expressions
may identify forward-looking  statements. The Company's future operating results
and financial condition are dependent upon the Company's ability to successfully
design,  manufacture,  import  and  market  apparel.  Taking  into  account  the
foregoing,  the following are  identified as important  factors that could cause
results  to  differ  materially  from  those  expressed  in any  forward-looking
statement made by, or on behalf of, the Company:

Disruption of Operations  Relating to the Chapter 11 Case. The  commencement  of
the Chapter 11 Case could adversely  affect the Company's and its  subsidiaries'
relationships with their customers, suppliers or employees. If the Company's and
its  subsidiaries'  relationships  with  customers,  suppliers or employees  are
adversely affected,  the Company's operations could be materially affected.  The
Company anticipates,  however,  that it will have sufficient cash to service the
obligations  that it intends to pay during the period  prior to and  through the
consummation of the Plan.

Even though the Plan was consummated on May 11, 1999,  there can be no assurance
that the  Company  would not  thereafter  suffer a  disruption  in its  business
operations as a result of filing the Chapter 11 Case,  particularly  in light of
the  fact  that  the  Company  has  been a debtor  in  bankruptcy  on two  prior
occasions.

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.  The Company also competes for private label programs with the internal
sourcing organizations of many of its own customers.

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 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 bankruptcy protection.  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 Holiday 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.

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.  The Company's  operations in Asia are subject to certain
political  and  economic  risks   including,   but  not  limited  to,  political
instability,  changing tax and trade  regulations and currency  devaluations and
controls. The Company's risks associated with the Company's Asian operations may
be  higher  in 1999 than has  historically  been the case,  due to the fact that
financial  markets in East and  Southeast  Asia have  recently  experienced  and
continue to experience difficult  conditions,  including a currency crisis. As a
result of recent economic  volatility,  the currencies of many countries in this
region have lost value  relative to the U.S.  dollar.  Although  the Company has
experienced no material foreign currency  transaction losses since the beginning
of this crisis,  its operations in the region are subject to an increased  level
of economic  instability.  The impact of these events on the Company's business,
and in particular  its sources of supply and royalty income cannot be determined
at this time.

Dependence on Contract  Manufacturing.  For the year ended January 2, 1999,  the
Company produced 65% of all of its products (in units) through arrangements with
independent contract manufacturers. Upon consummation of the Plan, substantially
all of the Company's inventory will be manufactured by independent  contractors.
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  fabric  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 in the
Company's common stock price.

Year 2000 Compliance. The Company has completed an assessment of its information
systems  ("IS"),  including its computer  software and hardware,  and the impact
that the year 2000 will have on such  systems and Salant's  overall  operations.
The  Company  has  completed  its  assessment  of date  critical  non-IS and has
determined  that they are year 2000  compliant.  As of November  17,  1998,  the
Company has completed the  implementation of new financial systems that are year
2000 compliant  ("Y2K").  In addition,  the Company has completed all testing of
software  modifications to correct the Y2K problems on certain existing software
programs, including its primary enterprise systems (the "AMS System") at a total
cost of $3.5 million.  All business  units that were using software that was not
Y2K compliant were  converted to the modified  software by the end of the second
quarter of 1999,  at a cost of $500  thousand.  The Company has also  identified
certain third party hardware and software that is not Y2K compliant. The Company
expects that these  systems  will be  converted by the end of the third  quarter
1999 to systems that will be Y2K compliant at an estimated cost of $1.0 million.
The funding for these activities has or will come from internally generated cash
flow  and/or  borrowings  under the  Company's  working  capital  facility.  If,
however,  the Company fails to complete such conversion in a timely manner, such
failure will have a material adverse effect on the business, financial condition
and results of operations of the Company.  To ensure  business  continuity,  the
Company began  surveying its suppliers of key goods and services in 1998 for Y2K
compliance. The Company continues to follow-up with its key business partners on
a global basis to obtain responses to its inquiries. Based on responses received
to date,  management  performed a risk  assessment in the second quarter of 1999
and is in the process of  developing  necessary  contingency  plans in the third
quarter of 1999.  The Company has engaged an outside  consultant  to compare its
plans and actions in  preparation  for Y2K and identify  areas where the Company
may  want to take  additional  steps  to  minimize  Y2K  related  impact  on its
business.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

As previously reported,  the Company has been a defendant in a lawsuit captioned
Maria  Delores  Rodriguez-Olvera,  et al.  vs.  Salant  Corp.  et  al.,  Case No
97-07-14605-CV,  in the 365th Judicial District Court of Maverick County,  Texas
(the "Rodriguez-Olvera  Action"). The plaintiffs in the Rodriguez-Olvera  Action
asserted  personal injury,  wrongful death, and survival claims arising out of a
bus accident that occurred on June 23, 1997. A bus  registered in Mexico,  owned
by the Company's  subsidiary  Maquiladora Sur, S.A. de C.V.  ("Maquiladora"),  a
Mexican  corporation  (and driven by a Mexican citizen and resident  employed by
Maquiladora),  carrying Mexican workers from their homes in Mexico to their jobs
at  Maquiladora,  overturned  and caught fire in Mexico.  Fourteen  persons were
killed in the  accident,  and twelve  others  claim  injuries as a result of the
accident; the Rodriguez-Olvera plaintiffs seek compensation from the Company for
those deaths and injuries.

As   previously   reported,   the   Rodriguez-Olvera   trial   court   set   the
Rodriguez-Olvera  Action  for  trial,  to begin on July 26,  1999.  Trial of the
action began on that day, and  continued  through  August 4, 1999.  On August 4,
1999, the Rodriguez-Olvera  Action was settled by the Company's insurers,  for a
cash payment of $30.0 million, plus court costs,  including ad litem fees (to be
divided among the individual Rodriguez-Olvera  plaintiffs),  which the Company's
insurers agreed to pay.

The Company  was also a  defendant  in a related  declaratory  judgment  action,
captioned  Hartford Fire Insurance Co. v. Salant Corp.,  Index No. 60233/98,  in
the Supreme  Court of the State of New York,  County of New York (the  "Hartford
Action"),  relating to the Company's  insurance coverage for the claims that are
the  subject  of the  Rodriguez-Olvera  Action.  In  the  Hartford  Action,  the
Company's insurers sought a declaratory judgment that the claims asserted in the
Rodriguez-Olvera Action are not covered under the policies that the insurers had
issued. As previously reported,  the Company's insurers  nevertheless provided a
defense to the Company in the  Rodriguez-Olvera  Action,  without  prejudice  to
their  positions  in the  Hartford  Action.  They  similarly  agreed  to pay the
Rodriguez-Olvera  settlement under a reservation of rights, without prejudice to
their  rights to claim  that this was not a covered  loss and  stating  that any
offer should not be taken as a waiver or estoppel of any policy defenses.  While
the Company  continues  to believe  that it was covered by its  insurers for the
amounts  they agreed to pay on account of the  settlement  and further  believes
that there is no basis for the insurers to have recourse back to the Company for
the settlement amounts they agreed to pay, the insurers have not withdrawn their
reservation  of  rights,  and the  possibility  remains  that one or more of the
company's  insurers  will seek such  recourse  from the Company of amounts  paid
under the  settlement.  Any  efforts by any  insurer  nevertheless  to seek such
recourse will be vigorously resisted.

ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS

As previously  reported,  Salant,  among other  things,  filed with the Delaware
Secretary  of State a Restated and Amended  Certificate  of  Incorporation  (the
"Certificate  of  Incorporation"),  under which the authorized  capital stock of
Salant as of the  Effective  Date  consists of (i)  45,000,000  shares of Common
Stock,  $1.00 par value per share (the "Common Stock") and (ii) 5,000,000 shares
of Preferred  Stock,$2.00 par value per share (the "Preferred Stock").  Pursuant
to the Plan,  Salant  distributed to the holders of (i) Salant's  10-1/2% Senior
Secured  Notes due December 31, 1998 an aggregate of 9,500,000  shares of Common
Stock and (ii) Salant's  existing common stock an aggregate of 500,000 shares of
Common Stock. No Preferred  Stock was issued on the Effective Date.  Pursuant to
the Certificate of  Incorporation,  Preferred Stock may be issued in one or more
series as  determined  from time to time by  Salant's  Board of  Directors  (the
"Board")  without  further  approval  of  the  stockholders.  Upon  issuance  of
Preferred   Stock,   the  Board  will  fix  the  voting  powers,   designations,
preferences,  and relative,  participating,  optional,  redemption,  conversion,
exchange or other special rights, qualifications, limitations or restrictions of
such  Preferred  Stock,  to the full extent  permitted  by law.  Pursuant to the
Certificate of  Incorporation,  Salant may not create,  designate,  authorize or
cause to be issued any class or series of nonvoting stock.

The Amended and Restated By-laws of Salant,  which were adopted by Salant on the
Effective  Date (the  "By-laws"),  provide  that the holders of shares of Common
Stock are  entitled  to one vote,  in person or by proxy,  for each share on all
matters  submitted  to a vote of  Salant's  stockholders.  Except as the General
Corporation Law of the State of Delaware (the "General  Corporation Law") or the
Certificate of Incorporation may otherwise provide, the holders of a majority in
voting  power of the issued and  outstanding  shares of capital  stock of Salant
entitled to vote shall  constitute a quorum at a meeting of stockholders for the
transaction of any business.  Under the By-laws,  the stockholders  present at a
meeting may adjourn the meeting  despite the absence of a quorum.  When a quorum
is  once  present,  it is  not  broken  by  the  subsequent  withdrawal  of  any
stockholder.  Under the By-laws, any action required or permitted to be taken by
the  stockholders  of Salant may be effected at a duly called  annual or special
meeting of such  stockholders,  setting  forth the action so taken.  The By-laws
provide that special  meetings of stockholders  may be called by the Board or by
stockholders  holding together at least 25% in voting power of all the shares of
Salant  entitled  to vote at the  meeting.  Any  action  which may be taken at a
meeting of the  stockholders  may be taken by the written consent of the holders
of not less than the  minimum  number of votes that would be  necessary  to take
such action.  The initial Board  consists of the five persons  identified in the
Plan. The Board will be divided into three classes;  the first class, the second
class and the third  class.  Each  director  will serve for a term ending on the
date of the third  annual  meeting  following  the annual  meeting at which such
director was  elected;(provided,  however,)  that the  directors  designated  as
members of the first class pursuant to a notice filed with the Bankruptcy  Court
(the  "Notice")shall  serve for a term ending upon the  election of directors at
the first annual  meeting next  following the end of the calendar year 1999, the
directors designated as members of the second class pursuant to the Notice shall
serve for a term ending  upon the  election of  directors  at the second  annual
meeting  next  following  the end of the  calendar  year 1999 and the  directors
designated as members of the third class  pursuant to the Notice shall serve for
a term ending upon the election of  directors  at the third annual  meeting next
following the end of the calendar year 1999. The  Certificate  of  Incorporation
provides that the  affirmative  vote of the holders of at least  two-thirds  (or
such greater  proportion as may other wise be required by any specific provision
of the Certificate of  Incorporation) of Common Stock entitled to vote generally
as to the  election  of  directors  is  required  to amend,  repeal or adopt any
provision  inconsistent  with paragraph (b) of Article SIXTH (i.e.,  shareholder
action by written  consent),  paragraphs  (c) and (m) of Article  SEVENTH (i.e.,
election,  term and filling of  vacancies  of members of the Board) and the last
sentence of Article NINTH of the Certificate of  Incorporation  (i.e.,  amending
certain provisions of the Certificate of  Incorporation).  There is no provision
in the Certificate of  Incorporation  for cumulative  voting with respect to the
election of directors of Salant. Under the By-laws, subject to the provisions of
the General  Corporation Law and the Certificate of Incorporation,  dividends on
the  shares of  capital  stock of  Salant  may be  declared  by the Board at any
regular or special meeting, and may be paid in cash, in property or in shares of
stock of Salant.  The shares of Common Stock have no  preemptive  or  conversion
rights,  redemption rights or sinking fund provisions.  The By-laws provide that
Salant  shall be  entitled  to hold  liable for calls and  assessments  a person
registered on its records as the owner of shares of Common Stock.

The Plan  requires  that  Salant use its  reasonable  best  efforts to cause the
Common  Stock to be listed  on a  national  securities  exchange  or the  NASDAQ
National  Market  System.  On June 1,  1999,  Salant  filed an  application  for
inclusion  of the Common  Stock on the NASDAQ  National  Market  System.  Salant
provided  additional  information on August 6, 1999 and the application is under
consideration by NASDAQ.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

Reports on Form 8-K

During the second  quarter of 1999, the Company filed a form 8-K dated April 29,
1999  reporting  (i) the First  Amended  Chapter 11 Plan of  Reorganization  for
Salant  Corporation,  dated February 3, 1999, (ii) the confirmation of the First
Amended Chapter 11 Plan of Reorganization of Salant Corporation, dated April 16,
1999, and (iii) the agreement  between Salant  Corporation  and Pension  Benefit
Guaranty Corporation, dated March 24, 1999.

During the second  quarter of 1999,  the Company  filed a form 8-K dated May 26,
1999 reporting a change in control. Pursuant to the Plan (as amended), as of the
Effective Date, all of Salant's then existing Old Common Stock,  $1.00 par value
per share, was cancelled.  Pursuant to the Plan, 10,000,000 shares of New Common
Stock, $1.00 par value per share, was issued by Salant as follows: (i) 9,500,000
shares  of  the  New  Common  Stock  were   distributed   to  the  holders  (the
"Noteholders")  of Salant's  Senior Notes,  in full  satisfaction  of all of the
outstanding principal amount, plus all accrued and unpaid interest on the Senior
Notes and (ii) 500,000  shares of the New Common Stock were  distributed  to the
holders  of  Salant's  Old Common  Stock,  in full  satisfaction  of any and all
interests of such holder in Salant.

Accordingly,  under the Plan, as of the Effective  Date,  Salant's  stockholders
immediately  prior to the  Effective  Date,  who at that time  owned 100% of the
outstanding common stock of Salant, received, in the aggregate, 5% of the issued
and outstanding  shares of New Common Stock,  subject to dilution,  and the Note
holders received, in the aggregate,  95% of the issued and outstanding shares of
New Common Stock, subject to dilution.


Exhibits

Number                     Description


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:     August 16, 1999                          /s/   Awadhesh Sinha
        -------------------                          ---------------------

                                                    Awadhesh Sinha
                                                    Executive Vice President
                                                    And Chief Financial Officer



<TABLE> <S> <C>


<ARTICLE>                     5
<MULTIPLIER>                                   1,000

<S>                             <C>
<PERIOD-TYPE>                   6-MOS
<FISCAL-YEAR-END>                              JAN-01-2000
<PERIOD-END>                                   JUL-03-1999
<CASH>                                         19,551
<SECURITIES>                                   0
<RECEIVABLES>                                  42,387
<ALLOWANCES>                                   (20,446)
<INVENTORY>                                    41,617
<CURRENT-ASSETS>                               89,395
<PP&E>                                         28,758
<DEPRECIATION>                                 (15,631)
<TOTAL-ASSETS>                                 116,256
<CURRENT-LIABILITIES>                          31,842
<BONDS>                                        0
                          0
                                    0
<COMMON>                                       10,000
<OTHER-SE>                                     70,519
<TOTAL-LIABILITY-AND-EQUITY>                   116,256
<SALES>                                        140,402
<TOTAL-REVENUES>                               141,896
<CGS>                                          113,801
<TOTAL-COSTS>                                  30,653
<OTHER-EXPENSES>                               0
<LOSS-PROVISION>                               0
<INTEREST-EXPENSE>                             772
<INCOME-PRETAX>                                (6,318)
<INCOME-TAX>                                   60
<INCOME-CONTINUING>                            (6,378)
<DISCONTINUED>                                 0
<EXTRAORDINARY>                                24,703
<CHANGES>                                      0
<NET-INCOME>                                   16,370
<EPS-BASIC>                                  1.63
<EPS-DILUTED>                                  1.63



</TABLE>


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