<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended JUNE 30, 1997
---------------------------
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 1-9635
------
BISCAYNE APPAREL, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 65-0200397
- --------------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1373 BROAD STREET, CLIFTON, NEW JERSEY 07013
--------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(201) 473-3240
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all the
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 [ ]
At July 31, 1997, there were 10,766,777 outstanding shares of the
registrant's Common Stock, $0.01 par value.
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BISCAYNE APPAREL, INC.
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
PART I. FINANCIAL INFORMATION
Consolidated Balance Sheets
June 30, 1997 and December 31, 1996.................... 2
Consolidated Statements of Operations
Six Months Ended June 30, 1997 and 1996................ 3
Consolidated Statements of Cash Flows
Six Months Ended June 30, 1997 and 1996................ 4
Notes to Consolidated Financial Statements............. 5
Management's Discussion and Analysis of
Financial Condition and Results of Operations.......... 7
PART II. OTHER INFORMATION
Item 1 - Legal Proceedings.............................. 11
Item 4 - Submission of Matters to Vote of Security
Holders................................................. 11
Item 6 - Exhibits and Reports on Form 8-K............... 12
Signatures.............................................. 13
</TABLE>
1
<PAGE> 3
BISCAYNE APPAREL, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
-------- ------------
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 313 $ 327
Trade accounts receivable, less allowances
of $1,575 in 1997 and $2,018 in 1996 11,630 14,374
Inventories 28,030 14,554
Federal income tax receivable 3,007 1,455
Prepaid expenses and other 2,156 2,261
-------- --------
Total current assets 45,136 32,971
Property, plant and equipment, less
accumulated depreciation of $2,188 in 1997
and $1,912 in 1996 2,752 2,864
Other assets, net 440 275
-------- --------
$ 48,328 $ 36,110
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 8,666 $ 4,024
Accrued liabilities 4,136 6,184
Notes payable to banks 15,294 1,473
Current portion of long-term debt 2,000 1,750
-------- --------
Total current liabilities 30,096 13,431
Subordinated notes 6,444 6,444
Long-term debt 2,500 4,500
Other liabilities 401 557
Commitments and contingencies -- --
Stockholders' Equity:
Common stock, $0.01 par value; 25,000,000 shares
authorized; 10,766,499 issued and outstanding
in 1997 and 10,741,748 in 1996 107 107
Additional paid-in capital 26,558 26,311
Unearned stock award (34) (68)
Accumulated deficit (17,744) (15,172)
-------- --------
Total stockholders' equity 8,887 11,178
-------- --------
$ 48,328 $ 36,110
======== ========
</TABLE>
See accompanying notes
2
<PAGE> 4
BISCAYNE APPAREL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------- -------------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Sales $ 12,845 $ 12,893 $ 27,694 $ 29,129
Operating Costs and Expenses:
Cost of Goods Sold 9,824 10,336 20,861 22,606
Selling, General and Administrative 4,791 4,924 9,738 10,642
Restructuring Charges -- 213 -- 302
------------ ------------ ------------ ------------
Operating Loss (1,770) (2,580) (2,905) (4,421)
Other Income and (Expenses):
Interest and Other Expenses (707) (794) (1,262) (1,631)
Interest and Other Income 8 12 21 163
Gain on Sale and Equity in Net
Income of Investee -- -- -- 123
------------ ------------ ------------ ------------
Loss Before Income Tax Benefit (2,469) (3,362) (4,146) (5,766)
Income Tax Benefit (1,011) (1,181) (1,578) (2,172)
------------ ------------ ------------ ------------
Net Loss $ (1,458) $ (2,181) $ (2,568) $ (3,594)
============ ============ ============ ============
Net Loss per Common Share $ (0.14) $ (0.20) $ (0.24) $ (0.33)
============ ============ ============ ============
Shares Used in Computing Net Loss
Per Common Share 10,762,895 10,741,521 10,753,037 10,741,521
============ ============ ============ ============
</TABLE>
See Accompanying Notes.
3
<PAGE> 5
BISCAYNE APPAREL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-----------------------
1997 1996
-------- --------
<S> <C> <C>
Operating Activities
Net loss $ (2,568) $ (3,594)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
(Gain) loss on sale of assets 3 (11)
Gain on sale of equity investee -- (123)
Amortization of unearned stock award compensation 34 34
Amortization of warrant costs 104 --
Depreciation expense 288 279
Amortization expense 73 133
Provision for losses and sales allowances on receivables 1,312 1,937
(Increase) decrease in operating assets:
Trade accounts receivable 1,432 6,215
Inventories (13,476) (5,314)
Prepaid expenses and other 105 (352)
Federal income tax receivable (1,552) (287)
Other assets (116) 13
Increase (decrease) in operating liabilities:
Accounts payable 4,642 3,744
Accrued liabilities (2,048) (1,339)
Other liabilities (115) --
-------- --------
Net cash provided by (used in) operating activities (11,882) 1,335
Investing activities:
Net sale of assets -- 11
Capital expenditures (179) (176)
Proceeds on sale of equity investee -- 1,750
-------- --------
Net cash provided by (used in) investing activities (179) 1,585
Financing activities:
Payments under notes payable to banks (9,258) (19,520)
Borrowings under notes payable to banks 23,079 17,693
Principal payments under term loan (1,750) (1,250)
Principal payments of long-term debt and capital leases (42) (41)
Proceeds from exercise of employee stock options 18 --
-------- --------
Net cash (used in) provided by financing activities 12,047 (3,118)
Net decrease in cash and cash equivalents (14) (198)
Cash and cash equivalents at beginning of year 327 312
-------- --------
Cash and cash equivalents at end of period $ 313 $ 114
======== ========
Supplemental disclosure information:
Interest expense paid $ 1,142 $ 1,611
Income taxes paid $ -- $ 60
</TABLE>
See accompanying notes.
4
<PAGE> 6
BISCAYNE APPAREL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying unaudited consolidated financial statements,
which are for an interim period, do not include all
disclosures provided in the annual consolidated financial
statements. These unaudited consolidated financial statements
should be read in conjunction with the consolidated financial
statements and the footnotes with respect thereto, contained
in the Biscayne Apparel, Inc., ("Company") 1996 Annual Report
on Form 10-K.
The consolidated financial statements of the Company include the
accounts of the parent company, and its wholly-owned subsidiaries,
Biscayne Apparel International, Inc. ("BAII"), and M&L International,
Inc. ("M&L"), which was acquired in November 1994, and its wholly-owned
subsidiaries, Unidex Garments (Philippines), Inc., Watersports Garment
Manufacturing, Inc., Teri Outerwear Manufacturing, Inc., GES Sportswear
Manufacturing Corp. and M&L International (H.K.) Limited. As of March
1, 1996, Unidex, Watersports, Teri, and GES ceased operations due to
operating losses caused by labor increases and production
inefficiencies. BAII operates through two divisions, Andy Johns
Fashions International ("Andy Johns") and Varon, and its wholly-owned
subsidiaries, Mackintosh of New England Co., Mackintosh (U.K.) Limited,
and Amy Industries De Honduras, S.A. de C.V., which was organized
during 1995. All material intercompany balances and transactions have
been eliminated. Certain amounts included in prior period financial
statements have been reclassified to conform with the 1997
presentation.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. The most significant
assumptions and estimates relate to sales allowances, inventory
reserves, and recoverability of assets. Actual results could differ
from those estimates.
2. In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary for a fair presentation of the financial
statements.
3. The results of operations for the three and six month periods ended
June 30, 1997 and 1996 are not necessarily indicative of the results to
be expected for the full year.
5
<PAGE> 7
4. Effective for the year ending December 31, 1997 and thereafter,
earnings per share will be computed in accordance with Statement of
Financial Accounting Standards No. 128 "Earnings Per Share" ("FAS No.
128"). Earlier adoption for interim periods during 1997 is prohibited.
FAS No. 128 establishes the standards for computing basic earnings per
share (excluding dilution) and diluted earnings per share (reflecting
the dilutive effect if securities or other contracts to issue common
stock were exercised or converted), and applies to entities with
publicly held common stock. This standard simplifies the computation of
earnings per share as required under Accounting Principles Board
Opinion No. 15, Earnings Per Share, and makes them comparable to
international earnings per share standards. The application of FAS. No.
128 would not result in a difference to earnings per share as currently
computed under APB No. 15.
5. Inventories at June 30, 1997 and December 31, 1996 are
comprised of the following:
JUNE 30, 1997 DECEMBER 31, 1996
------------- -----------------
Raw materials $ 7,336,000 $ 3,684,000
Work-in-process 4,608,000 785,000
Finished goods 16,086,000 10,085,000
----------- -----------
$28,030,000 $14,554,000
=========== ===========
6. Included in accounts payable at June 30, 1997 and June 30, 1996 are the
Company's obligations under outstanding letters of credit of $3,761,000
and $3,294,000 respectively.
7. On March 24, 1997 Biscayne amended its Loan Agreement to reduce the
Revolver Agreement to $45,000,000; adjust the interest rate for
Revolver Agreement borrowings to prime plus 1.0%, or prime plus 1.75%
for approved collateral overadvances; require additional fees of
$325,000; and waive violations of certain covenants during the 1996
period.
8. During 1996, the Company issued various warrants to its banks, Trivest,
Inc., an affiliate of the Company, and certain officers of the Company.
These warrants were valued at approximately $294,000 and have been
reflected in the Company's financial statements. The amortization of
these costs are included in current year selling, general and
administrative expense and interest expense.
9. In June 1997, Statement of Financial Accounting Standards No. 130
"Reporting Comprehensive Income" and No. 131 "Disclosures about
Segments of an Enterprise and Related Information" were issued,
effective for the fiscal year ending December 31, 1998. Earlier
adoption for interim periods is not required and the Company is
currently evaluating the financial statement impact.
6
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
QUARTER ENDED JUNE 30, 1997 VERSUS QUARTER ENDED JUNE 30, 1996:
Net sales for the second quarter of 1997 were $12,845,000, which approximated
the second quarter 1996 sales of $12,893,000. Increased sales at M&L and
Mackintosh were offset by small decreases in the Andy Johns and Varon divisions.
Second quarter sales typically approximate 10-15% of total year sales, due to
the Company's seasonal business.
Cost of goods sold, as a percentage of net sales was 76% versus 80% for the
quarters ended June 30, 1997 and 1996, respectively. The decrease is
attributable to Andy Johns and M&L realizing lower costs of production, offset
by higher costs of production at Varon.
Selling, general and administrative expenses ("S,G&A") as a percentage of net
sales decreased to 37% in 1997 from 38% in 1996. This decrease is a result of
management's continued efforts to reduce costs. Additionally, the Company
incurred $213,000 of restructuring charges in the 1996 second quarter, with none
in the comparable 1997 period.
OTHER
- -----
Interest and other expenses for the quarter ended June 30, 1997 decreased 11% to
$707,000 from $794,000 for the comparable quarter of 1996. The decrease is
primarily due to lower borrowings during 1997.
Interest and other income declined slightly during the second quarter of 1997 by
$4,000.
SIX MONTHS ENDED JUNE 30, 1997 VERSUS SIX MONTHS ENDED JUNE 30, 1996
- --------------------------------------------------------------------
Net sales for the six months ended June 30, 1997 decreased to $27,694,000 from
$29,129,000 for 1996. This 5% decrease is mainly attributable to the Andy Johns
and Varon divisions.
Consolidated backlog at June 30, 1997 increased to $64,900,000 from $62,700,000
at June 30, 1996. The increase of 3.5% is largely due to increased sales backlog
at M&L.
Cost of goods sold as a percentage of net sales decreased to 75% for the first
half of 1997, from 78% for the first half of 1996. This decline is a result of
Andy Johns and M&L realizing lower production costs, offset by higher Varon
production costs.
7
<PAGE> 9
Selling, general and administrative expenses ("S,G&A") as a percentage of net
sales decreased to 35% for the period ended June 30, 1997 versus 37% for the
period ending June 30, 1996. Declines were realized in the Andy Johns and Varon
divisions due to continued efforts by management to contain costs, offset by
higher costs incurred at M&L to manage the increased sales backlog, which was
necessitated for the higher anticipated sales in the second half of 1997.
Additionally, the Company incurred $302,000 of restructuring charges in the
first six months of 1996, with none in the comparable 1997 period.
During the fourth quarter of 1996, the Consumer Product Safety Commission
("CPSC") issued 1998 rules for the manufacturing of all cotton thermal and long
underwear products. These rules would have had two effects: i) sleepwear
manufacturers would now be able to produce their products in cotton, and ii)
such cotton sleepwear products would now have to be "tight fitting". As a result
of these regulations, the Company expects there may be significant changes in
Varon's competitive environment related to such products. In the 1997 second
quarter, the CPSC announced that the March 1998 implementation date for the
above changes would be extended to June 1998. However, the specter of such
implementation has caused delays in 1997 orders of, and/or reductions of orders
for, some of Varon's cotton thermal and long underwear products.
The impact on Varon's market position once implementation occurs is unknown.
Varon could face the following: i) a decrease in market share due to increased
competition from sleepwear manufacturers, and ii) a potential market shift, from
customers who previously purchased sleepwear when it was not required to be
"tight fitting", now purchasing other products. Alternatively, Varon may gain
market share of newly-approved cotton sleepwear, due to its current expertise in
manufacturing, if it can take away market share from heretofore non-cotton
sleepwear product sales. These regulations could impact up to one-third of
Varon's revenues.
OshKosh B'Gosh, Inc. ("OshKosh") notified M&L during the second quarter of 1997
that it will not renew its outerwear license with M&L after May 31, 1998. As
part of a strategy adopted over the last several years, OshKosh will sell its
outerwear directly to retailers. For the six months ended June 30, 1997 and
1996, M&L's sales of OshKosh outerwear were $2,163,000 and $3,889,000,
respectively. For the years ended December 31, 1996 and 1995, M&L's sales of
OshKosh outerwear were $17,063,000 and $13,678,000, respectively. M&L's strategy
is to ultimately replace and exceed the OshKosh brand sales of outerwear with
several well-known brand name children's outerwear and activewear licenses.
M&L recently announced the signing of a licensing agreement with the Starter
Corporation to manufacture girls' activewear, swimwear, and outerwear in sized
4-6X and 7-16. Initial shipments of Starter girls' activewear and outerwear are
targeted for delivery in Fall 1998.
8
<PAGE> 10
Additionally, M&L announced the signing of a letter of intent with Healthtex, a
division of VF Corporation, to manufacture a new collection of children's
outerwear under the Healthtex brand name in sizes newborn through 16 for girls
and newborn through 7X for boys. Initial shipments are targeted for delivery in
Fall 1998.
OTHER
- -----
Interest and other expenses for the six months ended June 30, 1997 decreased to
$1,262,000 versus $1,631,000 for the six months ended June 30, 1996. The decline
is primarily due to decreased bank borrowings during 1997.
Interest and other income decreased to $21,000 for the first half of 1997 from
$163,000 for the first half of 1996, primarily due to one-time license revenues
earned by M&L in the first quarter of 1996.
On March 27, 1996, the Company sold its 20% interest in Hartwell Sports, Inc.
for $1,750,000. Proceeds were used to reduce notes payable to banks. The sale
resulted in a gain during 1996 of $123,000.
INCOME TAXES
- ------------
For the quarters and six months ended June 30, 1997 and 1996, the income tax
benefit was greater than the benefit which would be derived upon application of
the Federal statutory rate, primarily because of state income tax benefits.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Cash and cash equivalents were $313,000 and $327,000 at June 30, 1997 and
December 31, 1996, respectively. At June 30, 1997, the Company's working capital
was $15,040,000, representing a current ratio of 1.50 to 1.00. This compares to
working capital of $19,540,000 and a current ratio of 2.45 to 1.00 at December
31, 1996. These changes are due to seasonal increases in current assets,
particularly inventory, and increased bank debt offset by seasonal first half
losses.
As presented in the Consolidated Statements of Cash Flows for the six months
ended June 30, 1997, the decrease of accounts receivable of $1,432,000, the
increase in inventories of $13,476,000, accounts payable of $4,642,000 and the
decrease in accrued liabilities of $2,048,000 are due to the seasonality of the
Company's operations. On March 31, 1997 the Company repaid $1,750,000 of its
long-term debt.
Capital expenditures for the six months ended June 30, 1997 remained relatively
constant at $179,000 versus $176,000 in 1996.
9
<PAGE> 11
The Company expects that cash on hand, cash from operations, and borrowings
under its revolving credit agreement will be sufficient to fund current
operations and to enable the Company to meet its obligations as they become due.
EFFECT OF INFLATION AND SEASONALITY
- -----------------------------------
The Company believes that inflation will not significantly effect its profit
margins, or have a material effect on the prices of other goods and services
used in its business operations. However, increases in wool, cotton and labor
costs over the last several years have required the Company to increase offshore
production.
The apparel industry is subject to substantial cyclical variation, with
purchases of apparel and related goods tending to decline during recessionary
periods when disposable income is low. This could have a material adverse effect
on the Company's business.
Sales of women's and children's outerwear and long underwear are seasonal.
Historically, Andy Johns, Mackintosh, M&L, and Varon have significantly higher
revenues in the third and fourth quarters than in the first and second quarters.
Therefore, the results of any interim period are not necessarily indicative of
the results which might be expected during a full year. Additionally, there is a
risk inherently related to the outerwear industry, resulting from consumer
reactions to weather patterns, which have had a material effect on the Company's
sales and profitability in the past.
Certain information included herein contains forward-looking statements which
are made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements involve risks
and uncertainties that could cause actual results to differ materially from the
forward- looking statements. Those risks include, but are not limited to,
product acceptance and availability, changes in the level of consumer demand
and/or spending, fashion trends, weather patterns, further governmental
regulations, etc. All forward-looking statements should be considered in light
of these risks and uncertainties.
10
<PAGE> 12
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- ------- -----------------
The Company is, from time to time, involved in routine
litigation. None such litigation in which the Company is presently involved is
material to its financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
- ------- -------------------------------------------------
a) The Registrant held its Annual Meeting of
Shareholders on June 4, 1997.
b) Not required.
c) The matters voted on at the Annual Meeting of
Shareholders, and the tabulation of votes on such
matters are as follows:
1. ELECTION OF DIRECTORS
---------------------
<TABLE>
<CAPTION>
BROKER
NAME FOR WITHHELD NON-VOTES
---- --- -------- ---------
<S> <C> <C> <C>
Harold E. Berritt 8,024,217 446,120 -0-
Phillip T. George, M.D 8,027,882 442,455 -0-
Joseph B. Gildenhorn 8,027,856 442,481 -0-
Kurt C. Gutfreund 8,027,882 442,455 -0-
R. Stephen Lefler 8,027,875 442,462 -0-
James J. Pinto 8,027,856 442,481 -0-
Earl W. Powell 8,027,882 442,490 -0-
Peter Vandenberg, Jr 8,027,882 442,455 -0-
</TABLE>
2. ADOPTION OF THE COMPANY'S 1997 STOCK OPTION PLAN
------------------------------------------------
<TABLE>
<CAPTION>
BROKER
FOR AGAINST ABSTENTIONS NON-VOTES
--- ------- ----------- ---------
<S> <C> <C> <C>
5,340,073 594,407 32,892 2,502,965
</TABLE>
11
<PAGE> 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------- --------------------------------
a) Exhibits:
10 First Amendment to Second Amended and
Restated Credit Agreement and Guaranty dated
as of May 22, 1997 among the Registrant,
Biscayne Apparel International, Inc.,
Mackintosh of New England Co., and M&L
International, Inc. and The Chase Manhattan
Bank (National Association) as Agent and
Milberg Factors, Inc. as Servicing Agent.
11 Computation of Per Share Earnings
27 Financial Data Schedule
b) Reports on Form 8-K:
During the quarter for which this Quarterly Report on
Form 10-Q is filed, the Registrant did not file any
Current Reports on Form 8-K.
12
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized:
BISCAYNE APPAREL, INC.
Date: August 12, 1997 By: /s/ Earl W. Powell
--------------------------
Earl W. Powell
Chairman of the Board, President
and Chief Executive Officer
Date: August 12, 1997 By: /s/ Peter Vandenberg, Jr.
--------------------------
Peter Vandenberg, Jr.
Executive Vice President,
Treasurer and
Chief Financial Officer
13
<PAGE> 1
EXHIBIT 10
EXECUTION COPY
FIRST AMENDMENT TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT AND GUARANTY
FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT
AGREEMENT AND GUARANTY (the "First Amendment") dated as of May 22, 1997 among
BISCAYNE APPAREL, INC., BISCAYNE APPAREL INTERNATIONAL, INC., MACKINTOSH OF NEW
ENGLAND CO., and M & L INTERNATIONAL, INC., (individually, each a "Borrower" and
collectively, the "Borrowers" and individually, each a "Guarantor" and
collectively, the "Guarantors"), THE CHASE MANHATTAN BANK, CORESTATES BANK,
N.A., BANKBOSTON, N.A. (formerly known as The First National Bank of Boston,
FLEET BANK N.A., and MILBERG FACTORS, INC. (individually, each a "Lender" and
collectively, the "Lenders"), THE CHASE MANHATTAN BANK, as agent for the Lenders
(in such capacity, together with its successors in such capacity, the "Agent"),
and MILBERG FACTORS, INC., as servicing agent for the Lenders (in such capacity,
together with its successors in such capacity, the "Servicing Agent").
PRELIMINARY STATEMENT. The Borrowers, the Guarantors, the
Lenders and the Agents have entered into a Second Amended and Restated Credit
Agreement and Guaranty dated as of March 24, 1997 (the "Credit Agreement"). The
terms defined in the Credit Agreement are used in this First Amendment as in the
Credit Agreement unless otherwise defined in this First Amendment.
The Borrowers, the Lenders and the Agents have agreed to amend
certain provisions of the Credit Agreement as hereinafter set forth.
SECTION 1. AMENDMENTS TO CREDIT AGREEMENT. The Credit
Agreement is, effective as of the date hereof and subject to the satisfaction of
the conditions precedent set forth in Section 2 hereof, hereby amended as
follows:
(1) The definition of "Revolving Credit Loans Permitted
Overadvance (During the Month)" is amended by adding the following at the end of
such definition:
"Notwithstanding the foregoing, the amount specified
for each day during the month of May, 1997 other than the last
day of such month is $5,500,000.
Notwithstanding the foregoing, the amount specified
for each day during the month of June,
<PAGE> 2
1997 other than the last day of such month is $10,000,000."
(2) The definition of "Revolving Credit Loans Permitted
Overadvance (Month End)" is amended by adding the following at the end of such
definition:
"Notwithstanding the foregoing, the amount
specified for the end of the month of May, 1997 is
$5,500,000."
SECTION 2. CONDITIONS OF EFFECTIVENESS TO THIS FIRST
AMENDMENT. This First Amendment shall become effective on the date on which the
Borrowers, the Lenders and the Agents shall each have executed and delivered
this First Amendment.
SECTION 3. REFERENCE TO AND EFFECT ON THE FACILITY DOCUMENTS.
Upon the effectiveness of Section 1 hereof, on and after the date hereof each
reference in the Credit Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import, and each reference in the other Facility
Documents to the Credit Agreement, shall mean and be a reference to the Credit
Agreement as amended hereby.
Except as specifically amended above, the Credit Agreement and
all other Facility Documents shall remain in full force and effect and are
hereby ratified and confirmed.
The execution, delivery and effectiveness of this First
Amendment shall not operate as a waiver of any right, power or remedy of any
Lender or Agent under any of the Facility Documents, nor constitute a waiver of
any provision of the Facility Documents.
SECTION 4. COSTS AND EXPENSES. The Borrowers agree to pay the
Agent, the Servicing Agent, and the Lenders on demand all costs, expenses and
charges, in connection with the preparation, reproduction, execution, delivery,
filing, recording and administration of this First Amendment and any other
instruments and documents to be delivered hereunder, including, without
limitation, the fees and out-of-pocket expenses of counsel for the Agent, the
Servicing Agent, and each Lender with respect thereto and with respect to
advising the Agent, the Servicing Agent, and each Lender as to its rights and
responsibilities under such documents, and all costs and expenses, if any, in
connection with the enforcement of any such documents.
SECTION 5. GOVERNING LAW. This First Amendment shall be
governed by and construed in accordance with the laws of the State of New York.
2
<PAGE> 3
SECTION 6. HEADINGS. Section headings in this First
Amendment are included herein for convenience of reference only and shall not
constitute a part of this First Amendment for any other purpose.
SECTION 7. COUNTERPARTS. This First Amendment may be executed
in any number of counterparts, all of which taken together shall constitute one
and the same instrument, and any party hereto may execute this First Amendment
by signing any such counterpart.
[INTENTIONALLY LEFT BLANK.]
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be duly executed as of the day and year first above written.
BISCAYNE APPAREL, INC.
By /s/ Peter Vandenberg Jr.
--------------------------------
Name: Peter Vandenberg Jr.
Title: Executive Vice President
BISCAYNE APPAREL INTERNATIONAL,
INC.
By /s/ Peter Vandenberg Jr.
--------------------------------
Name: Peter Vandenberg Jr.
Title: President
MACKINTOSH OF NEW ENGLAND CO.
By /s/ Peter Vandenberg Jr.
--------------------------------
Name: Peter Vandenberg Jr.
Title: President
M & L INTERNATIONAL, INC.
By /s/ Peter Vandenberg Jr.
--------------------------------
Name: Peter Vandenberg Jr.
Title: Vice President
THE CHASE MANHATTAN BANK, as Lender
By
--------------------------------
Name:
Title:
MILBERG FACTORS, INC., as Lender
By
--------------------------------
Name:
Title:
4
<PAGE> 5
BISCAYNE APPAREL, INC.
By
--------------------------------
Name: Peter Vandenberg Jr.
Title: Executive Vice President
BISCAYNE APPAREL INTERNATIONAL,
INC.
By
--------------------------------
Name: Peter Vandenberg Jr.
Title: President
MACKINTOSH OF NEW ENGLAND CO.
By
--------------------------------
Name: Peter Vandenberg Jr.
Title: President
M & L INTERNATIONAL, INC.
By
--------------------------------
Name: Peter Vandenberg Jr.
Title: Vice President
THE CHASE MANHATTAN BANK, as Lender
By /s/
--------------------------------
Name:
Title:
MILBERG FACTORS, INC., as Lender
By
--------------------------------
Name:
Title:
5
<PAGE> 6
BISCAYNE APPAREL, INC.
By
--------------------------------
Name: Peter Vandenberg Jr.
Title: Executive Vice President
BISCAYNE APPAREL INTERNATIONAL,
INC.
By
--------------------------------
Name: Peter Vandenberg Jr.
Title: President
MACKINTOSH OF NEW ENGLAND CO.
By
--------------------------------
Name: Peter Vandenberg Jr.
Title: President
M & L INTERNATIONAL, INC.
By
--------------------------------
Name: Peter Vandenberg Jr.
Title: Vice President
THE CHASE MANHATTAN BANK, as Lender
By
--------------------------------
Name:
Title:
MILBERG FACTORS, INC., as Lender
By /s/ David J. Milberg
--------------------------------
Name: David J. Milberg
Title: Vice President
6
<PAGE> 7
CORESTATES BANK, N.A., as Lender
By /s/ John A. Guntes
--------------------------------
Name: John A. Guntes
Title: Assistant Vice President
BANKBOSTON, N.A. (formerly known as
The First National Bank of Boston)
as Lender
By
--------------------------------
Name:
Title:
FLEET BANK, N.A., as Lender
By
--------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as Agent
By
--------------------------------
Name:
Title:
MILBERG FACTORS, INC., as
Servicing Agent
By
--------------------------------
Name:
Title:
7
<PAGE> 8
CORESTATES BANK, N.A., as Lender
By
--------------------------------
Name:
Title:
BANKBOSTON, N.A. (formerly known as
The First National Bank of Boston)
as Lender
By /s/ David F. Eusion
--------------------------------
Name: David F. Eusion
Title: Director
FLEET BANK, N.A., as Lender
By
--------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as Agent
By
--------------------------------
Name:
Title:
MILBERG FACTORS, INC., as
Servicing Agent
By
--------------------------------
Name:
Title:
8
<PAGE> 9
CORESTATES BANK, N.A., as Lender
By
--------------------------------
Name:
Title:
BANKBOSTON, N.A. (formerly known as
The First National Bank of Boston)
as Lender
By
--------------------------------
Name: David F. Eusion
Title: Director
FLEET BANK, N.A., as Lender
By /s/ Anthony Santoro
--------------------------------
Name: Anthony Santoro
Title: Vice President
THE CHASE MANHATTAN BANK, as Agent
By
--------------------------------
Name:
Title:
MILBERG FACTORS, INC., as
Servicing Agent
By
--------------------------------
Name:
Title:
9
<PAGE> 10
CORESTATES BANK, N.A., as Lender
By
--------------------------------
Name:
Title:
BANKBOSTON, N.A. (formerly known as
The First National Bank of Boston)
as Lender
By
--------------------------------
Name:
Title:
FLEET BANK, N.A., as Lender
By
--------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as Agent
By /s/
--------------------------------
Name:
Title:
MILBERG FACTORS, INC., as
Servicing Agent
By
--------------------------------
Name:
Title:
10
<PAGE> 11
CORESTATES BANK, N.A., as Lender
By
--------------------------------
Name:
Title:
BANKBOSTON, N.A. (formerly known as
The First National Bank of Boston)
as Lender
By
--------------------------------
Name:
Title:
FLEET BANK, N.A., as Lender
By
--------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as Agent
By /s/
--------------------------------
Name:
Title:
MILBERG FACTORS, INC., as
Servicing Agent
By /s/ David J. Milberg
--------------------------------
Name: David J. Milberg
Title: Vice President
11
<PAGE> 1
EXHIBIT 11
BISCAYNE APPAREL, INC.
COMPUTATION OF PER SHARE EARNINGS
(DOLLARS IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------- -------------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net loss $ (1,458) $ (2,181) $ (2,568) $ (3,594)
============ ============ ============ ============
PRIMARY:
Common and common equivalent shares:
Weighted average common shares
outstanding 10,762,895 10,741,521 10,753,037 10,741,521
Potential dilution upon exercise
of stock options and warrants -- -- -- --
------------ ------------ ------------ ------------
Shares used in computing net
loss per common share 10,762,895 10,741,521 10,753,037 10,741,521
============ ============ ============ ============
PER SHARE AMOUNTS:
Net loss per share $ (0.14) $ (0.20) $ (0.24) $ (0.33)
============ ============ ============ ============
FULLY DILUTED:
Common and common equivalent shares:
Weighted average common shares
outstanding 10,762,895 10,741,521 10,753,037 10,741,521
Potential dilution upon
exercise of stock options
and warrants -- -- -- --
------------ ------------ ------------ ------------
Shares used in computing
net loss per common share 10,762,895 10,741,521 10,753,037 10,741,521
============ ============ ============ ============
PER SHARE AMOUNTS:
Net loss per share $ (0.14) $ (0.20) $ (0.24) $ (0.33)
============ ============ ============ ============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 313
<SECURITIES> 0
<RECEIVABLES> 13,205
<ALLOWANCES> (1,575)
<INVENTORY> 28,030
<CURRENT-ASSETS> 45,136
<PP&E> 4,940
<DEPRECIATION> (2,188)
<TOTAL-ASSETS> 48,328
<CURRENT-LIABILITIES> 30,096
<BONDS> 0
107
0
<COMMON> 0
<OTHER-SE> 8,780
<TOTAL-LIABILITY-AND-EQUITY> 48,328
<SALES> 27,694
<TOTAL-REVENUES> 27,694
<CGS> 20,861
<TOTAL-COSTS> 20,861
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,262
<INCOME-PRETAX> (4,146)
<INCOME-TAX> (1,578)
<INCOME-CONTINUING> (2,568)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,568)
<EPS-PRIMARY> (0.24)
<EPS-DILUTED> (0.24)
</TABLE>
