<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 MARCH 31, 1998
----------------------------------------------------------
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)
(973) 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 March 31, 1998, there were 10,771,622 outstanding shares of the
registrant's Common Stock, $0.01 par value.
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BISCAYNE APPAREL, INC.
INDEX
PAGE NO.
--------
PART I. FINANCIAL INFORMATION
Consolidated Balance Sheets
March 31, 1998 and December 31, 1997 .............. 2
Consolidated Statements of Operations
Three Months Ended March 31, 1998 and 1997 ........ 3
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1998 and 1997 ........ 4
Notes to Consolidated Financial Statements ........ 5-7
Management's Discussion and Analysis of
Financial Condition and Results of Operations ..... 7
PART II. OTHER INFORMATION
Item 1 - Legal Proceedings ........................ 10
Item 6 - Exhibits and Reports on Form 8-K ......... 10
Signatures ........................................ 11
1
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BISCAYNE APPAREL, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
-------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ................................ $ 356 $ 268
Trade accounts receivable, less allowances
of $1,361 in 1998 and $2,278 in 1997 .................... 7,382 13,509
Inventories .............................................. 21,532 17,258
Prepaid expenses and other ............................... 1,164 962
Federal income tax receivable ............................ 1,170 --
-------- --------
Total current assets .................................. 31,604 31,997
Property, plant and equipment, less
accumulated depreciation of $2,679 in 1998
and $2,517 in 1997 ....................................... 2,732 2,739
Other assets, net .......................................... 367 81
-------- --------
$ 34,703 $ 34,817
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ......................................... $ 5,763 $ 4,320
Accrued liabilities ...................................... 3,077 4,878
Notes payable to banks ................................... 10,777 6,855
Current portion of long-term debt ........................ 2,500 2,000
-------- --------
Total current liabilities ............................. 22,117 18,053
Subordinated notes ......................................... 6,444 6,444
Long-term debt ............................................. -- 2,500
Other liabilities .......................................... 387 162
Commitments and contingencies .............................. -- --
Stockholders' Equity:
Preferred stock - par value $0.01;
5,000,000 shares authorized; no shares issued
Common stock - par value $0.01; 25,000,000 shares
authorized; 10,771,622 and 10,771,308 shares
outstanding at March 31, 1998 and
December 31, 1997, respectively .......................... 108 108
Additional paid-in capital ................................. 26,610 26,610
Accumulated deficit ........................................ (20,963) (19,060)
-------- --------
5,755 7,658
-------- --------
Total stockholders' equity ............................ $ 34,703 $ 34,817
======== ========
</TABLE>
See accompanying notes.
2
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BISCAYNE APPAREL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of dollars, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------------
1998 1997
------------ ------------
<S> <C> <C>
Net sales ..................................................... $ 11,311 $ 14,849
Operating costs and expenses:
Cost of goods sold .......................................... 8,902 11,037
Selling, general and administrative ......................... 4,559 4,947
------------ ------------
Operating loss ................................................ (2,150) (1,135)
Other income and (expenses):
Interest and other expenses .................................. (660) (555)
Interest and other income .................................... 4 13
------------ ------------
Loss before income tax benefit ................................ (2,806) (1,677)
Income tax benefit ............................................ (903) (567)
------------ ------------
Net loss ...................................................... $ (1,903) $ (1,110)
============ ============
Basic and diluted loss per common share ....................... $ (0.18) $ (0.10)
============ ============
Shares used in computing basic and diluted loss per common
share ........................................................ 10,771,622 10,741,819
============ ============
</TABLE>
See accompanying notes.
3
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BISCAYNE APPAREL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------
1998 1997
------- -------
<S> <C> <C>
Operating activities:
Net loss ....................................................... $(1,903) $(1,110)
Adjustments to reconcile net loss to net cash (used in)
provided by operating activities:
Depreciation expense ......................................... 161 144
Amortization expense ......................................... (4) 78
Amortization of unearned stock award compensation ............ -- 17
Amortization of warrant costs ................................ 17 33
Provision for losses and sales allowances on receivables ..... 637 635
(Increase) decrease in operating assets:
Trade accounts receivable ..................................... 5,490 4,421
Inventories ................................................... (4,274) (920)
Prepaid expenses and other .................................... (202) 140
Federal income tax receivable ................................. (1,170) (640)
Other assets .................................................. (300) (306)
Increase (decrease) in operating liabilities:
Accounts payable .............................................. 1,443 534
Accrued liabilities ........................................... (1,798) (1,670)
Other liabilities ............................................. 245 (58)
------- -------
Net cash (used in) provided by operating activities ......... (1,658) 1,298
Investing activities:
Capital expenditures ........................................... (154) (124)
------- -------
Net cash used in investing activities ........................ (154) (124)
Financing activities:
Payments under notes payable to banks .......................... (5,009) (5,306)
Borrowings under notes payable to banks ........................ 8,931 6,190
Principal payments under term loan ............................. (2,000) (1,750)
Principal payments of long-term debt and capital leases ........ (22) (22)
------- -------
Net cash provided by (used in) financing activities .......... 1,900 (888)
Net increase in cash and cash equivalents ....................... 88 286
Cash and cash equivalents at beginning of year .................. 268 327
------- -------
Cash and cash equivalents at end of period ...................... $ 356 $ 613
======= =======
Supplemental disclosure information:
Interest expense paid .......................................... $ 457 $ 366
Income taxes paid .............................................. $ 12 $ --
</TABLE>
See accompanying notes.
4
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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") 1997 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") 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. Through
December 31, 1997, BAII operated through two divisions, Andy Johns
Fashions International ("Andy Johns") and Varon, and its wholly-owned
subsidiaries, Mackintosh of New England Co., ("Mackintosh") Mackintosh
(U.K.) Limited, and Amy Industries De Honduras, S.A. de C.V. As of
January 1, 1998, the assets, liabilities and operations of Andy Johns
were contributed by BAII into Mackintosh. All material intercompany
balances and transactions have been eliminated. Certain amounts
included in prior period financial statements have been reclassified to
conform with the 1998 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 month periods ended March 31,
1998 and 1997 are not necessarily indicative of the results to be
expected for the full year.
5
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4. Effective for the year ending December 31, 1997, the Company
adopted Statement of Financial Accounting Standards No. 128
"Earnings Per Share" ("FAS No. 128") which requires the
presentation of basic earnings per share ("Basic EPS"), and
diluted earnings per share ("Diluted EPS"). Basic EPS
excludes dilution and is computed by dividing net income
(loss) by the weighted-average number of common shares
outstanding for the period. Diluted EPS reflects the dilutive
effect if securities or other contracts to issue common stock
were exercised or converted. FAS No. 128 requires the
restatement of all prior period earnings per share data
presented including interim periods.
The numerator and denominator of the basic and dilutive per share
computations are as follows (in thousands, except per share amounts):
For the Three Months
Ended March 31,
-------------------------------
1998 1997
------------ ------------
Numerator: Net Loss $ (1,903) $ (1,110)
Denominator: Shares
Outstanding 10,771,622 10,741,819
Basic and Dilutive
Net Loss Per Share $ (0.18) $ (0.10)
The Company has not included potential common shares in the Diluted EPS
computation as the result is antidilutive.
Options and warrants to purchase 1,311,838 and 1,344,568 shares of
common stock at prices ranging from $0.75 to $2.44 per share were
outstanding at March 31, 1998 and 1997, respectively. These shares were
not included in the computation of Diluted EPS because the options'
exercise price was greater than the average market price of the common
shares. The options, which expire from June 1997 to November 2007, were
still outstanding at the end of each respective period.
5. Inventories at March 31, 1998 and December 31, 1997 are
comprised of the following:
March 31, 1998 December 31, 1997
-------------- -----------------
Raw materials $ 5,513,000 $ 4,067,000
Work-in-process 5,053,000 1,944,000
Finished goods 10,966,000 11,247,000
----------- -----------
$21,532,000 $17,258,000
=========== ===========
6. Included in accounts payable at March 31, 1998 and March 31, 1997 are
the Company's obligations under outstanding letters of credit of
$1,722,000 and $1,474,000, respectively.
6
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7. On March 25, 1998 Biscayne amended its Loan Agreement to
reduce the Revolver Agreement to $39,000,000; adjust the
interest rate for the Revolver Agreement borrowings to prime
plus 1.5%, require fees of $350,000 for the period March 1998
to March 1999 and waive violations of certain covenants during
the 1997 period. Additionally, if certain Revolver borrowing
levels are exceeded beginning in the 1998 fourth quarter, the
interest rates for the Revolver are increased to prime plus 3%
and the interest rate for the Term Loan is increased to prime
plus 3% or LIBOR plus 5.5%.
8. In June 1997, Statement of Financial Accounting Standards No.
131 "Disclosures about Segments of an Enterprise and Related
Information" was 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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
QUARTER ENDED MARCH 31, 1998 VERSUS QUARTER ENDED MARCH 31, 1997:
Net sales for the first quarter of 1998 decreased to $11,311,000 from the first
quarter 1997 sales of $14,849,000. The 24% decrease was due to soft spring sales
at all of the Company's subsidiaries, most notably Mackintosh. First quarter
sales are historically low, due to the Company's seasonal business.
Consolidated sales backlog at March 31, 1998 was $52,461,000, compared to
$65,420,000 at March 31, 1997. The decrease of 20% is largely due to decreased
sales backlog from M&L and Mackintosh.
Cost of goods sold, as a percentage of net sales, was 79% versus 74% for the
quarters ended March 31, 1998 and 1997, respectively. The increase is mainly
attributable to higher costs of production at Varon.
Selling, general and administrative expenses ("S,G&A") decreased to $4,559,000
for the three months ended March 31, 1998, compared to $4,947,000 in the 1997
first quarter. This 8% decrease results from further cost reductions,
particularly in Mackintosh, and lower sales volume.
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 have had two effects: i) sleepwear manufacturers
are now able to produce their products in cotton, and ii) such cotton sleepwear
products now have to be "tight fitting". As a result of these regulations, the
Company expects significant changes in Varon's competitive
7
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environment related to such products. The impact on Varon's market position 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 be able to increase its 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
directly to retailers. For the three months ended March 31, 1998 and 1997, M&L's
sales of OshKosh outerwear were $3,203,000 and $2,066,000, respectively, and for
the year ended December 31, 1997 M&L's sales of OshKosh outerwear were
$19,888,000. M&L's strategy is to replace the OshKosh brand sales of outerwear
with several well-known brand name children's outerwear and activewear licenses.
It is unknown whether M&L's strategy will be successful in replacing such levels
of OshKosh sales and related margins in the future.
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.
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.
OTHER
Interest and other expenses for the quarter ended March 31, 1998 increased to
$660,000 from $555,000 for the comparable quarter of 1997. The increase is
primarily due to higher borrowings incurred during 1998, due to higher inventory
levels.
Interest and other income decreased to $4,000 during the first quarter of 1998,
compared to $13,000 in 1997. The decline is primarily due to the final payment
in 1997 of a small note receivable and its related interest income.
8
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INCOME TAXES
The Company's effective tax rate for the quarter ended March 31, 1998 was
affected by valuation allowances related to deferred tax debits and Federal and
state operating loss carryforwards recorded at December 31, 1997.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents were $356,000 and $268,000 at March 31, 1998 and
December 31, 1997, respectively. At March 31, 1998, the Company's working
capital was $9,487,000, representing a current ratio of 1.43 to 1. This compares
to working capital of $13,944,000 and a current ratio of 1.77 to 1 at December
31, 1997. These changes are due to seasonal reductions of accounts receivable,
increased inventories, increased bank debt and operating losses sustained.
As presented in the Consolidated Statements of Cash Flows for the three months
ended March 31, 1998, the decrease of accounts receivable of $5,490,000, the
increase in inventories of $4,274,000 and accounts payable of $1,443,000 and the
decrease in accrued liabilities of $1,798,000 are due to the seasonality of the
Company's operations. On March 31, 1998 the Company repaid $2,000,000 of its
long-term debt.
Capital expenditures for the three months ended March 31, 1998 increased to
$154,000 from $124,000 in 1997. The increase is mainly attributable to increased
leasehold improvements at Mackintosh offset by decreased equipment expenditures
at M&L.
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. Further, in connection with increases in wool
and cotton costs over the last several years, the Company has increased offshore
production.
Sales of women's and children's outerwear are seasonal. Historically,
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.
9
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is, from time to time, involved in routine
litigation. None of such litigation in which the Company is presently involved
is material to its financial position or results of operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
10 Fourth Amendment and Waiver to Second
Amended and Restated Credit Agreement and
Guaranty dated as of March 25, 1998 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.
10
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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: May 15, 1998 By: /s/ Earl W. Powell
----------------------------------------
Earl W. Powell
Chairman of the Board and Chief
Executive Officer
Date: May 15, 1998 By: /s/ Peter Vandenberg, Jr.
----------------------------------------
Peter Vandenberg, Jr.
President, Chief Operating Officer,
Treasurer and Chief Financial
Officer
11
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FOURTH AMENDMENT AND WAIVER TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT AND GUARANTY
FOURTH AMENDMENT AND WAIVER TO SECOND AMENDED AND RESTATED
CREDIT AGREEMENT AND GUARANTY (the "FOURTH AMENDMENT") dated as of March 25,
1998 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" and together with the Agent, the "AGENTS").
PRELIMINARY STATEMENTS:
WHEREAS, 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, as amended by a First Amendment, dated as
of May 22, 1997, a Second Amendment, dated as of February 18, 1998 and a Third
Amendment, dated as of March 6, 1998 (as so amended, the "CREDIT AGREEMENT");
and
WHEREAS, the terms defined in the Credit Agreement are used in
this Fourth Amendment as in the Credit Agreement unless otherwise defined in
this Fourth Amendment;
WHEREAS, the Borrowers and the Guarantors have requested that
certain provisions of the Credit Agreement be amended and certain Defaults and
Events of Default be waived as hereinafter set forth;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. WAIVER. Upon the execution of this Fourth Amendment
and satisfaction of all the conditions precedent set forth in Section 3 hereof,
each Lender and each Agent waive the Borrower's failure to comply with each of
the provisions listed on Schedule I attached hereto.
SECTION 2. AMENDMENTS TO CREDIT AGREEMENT. The Credit
Agreement is, subject to the satisfaction of the conditions precedent set forth
in Section 3 hereof, hereby amended as follows:
(a) Section 1.01 of the Credit Agreement is hereby amended by
inserting the following new definitions in the appropriate alphabetical order:
<PAGE> 2
"Commitment Fee" has the meaning specified in Section 2.15.
"Fourth Closing Date" means March 25, 1998.
"Overadvance Default" has the meaning specified in Section
12.01.
"Subsequent Fee" has the meaning specified in Section 2.15.
"Total Commitment" means, at any time, the sum of the
Revolving Credit Commitments at such time.
"Unused Total Commitment" means, at any time, (i) the Total
Commitment LESS (ii) the sum of (x) the aggregate outstanding principal amount
of all Revolving Credit Loans, (y) the Outstanding Letter of Credit Obligations
and (z) the face amount of all Letters of Indemnity then outstanding.
(b) Section 1.01 of the Credit Agreement is hereby further
amended by amending and restating the following definitions in their entirety as
follows:
"Margin" means, (1) with respect to the Revolving Credit
Loans, 1.5% (one hundred fifty basis points), and (2) with respect to the Term
Loans (a) which are Prime Rate Loans, 2% (two hundred basis points), and (b)
which are Eurodollar Loans, 4.5% (four hundred fifty basis points) PROVIDED
that, if the amount of Revolving Credit Loans outstanding exceeds the amounts
specified below at any time during the periods specified below, the applicable
Margin from and after such event until the amount of all outstanding Revolving
Credit Loans has been reduced to zero for a period of ten consecutive Banking
Days shall be (1) with respect to the Revolving Credit Loans, 3% (three hundred
basis points) and (2) with respect to the Term Loans (a) which are Prime Rate
Loans, 3% (three hundred basis points), and (b) which are Eurodollar Loans, 5.5%
(five hundred fifty basis points):
PERIOD AMOUNT
------ ------
September 30, 1998 to and
including October 30, 1998 $19,000,000
October 31, 1998 to and
including November 29, 1998 $12,000,000
November 30, 1998 to and
including December 30, 1998 $ 4,000,000
December 31, 1998 to and
including January 7, 1999 $ 2,000,000
2
<PAGE> 3
"Revolving Credit Commitment" means, with respect to each Lender, the
obligation of such Lender to make its Revolving Credit Loans under this
Agreement in the amounts set forth below for the periods set forth below, as
such amounts may be reduced or otherwise modified from time to time:
(1) During the period from and including the Fourth Closing
Date through October 30, 1998:
The Chase Manhattan Bank $ 7,800,000
The First National Bank of Boston $ 7,800,000
CoreStates Bank, N.A. $ 7,800,000
Fleet Bank, N.A. $ 7,800,000
Milberg Factors, Inc. $ 7,800,000
-----------
Total: $39,000,000
(2) During the period from and including October 31, 1998
through November 14, 1998:
The Chase Manhattan Bank $ 6,000,000
The First National Bank of Boston $ 6,000,000
CoreStates Bank, N.A. $ 6,000,000
Fleet Bank, N.A. $ 6,000,000
Milberg Factors, Inc. $ 6,000,000
-----------
Total: $30,000,000
(3) During the period from and including November 15, 1998
through January 30, 1999:
The Chase Manhattan Bank $ 4,000,000
The First National Bank of Boston $ 4,000,000
CoreStates Bank, N.A. $ 4,000,000
Fleet Bank, N.A. $ 4,000,000
Milberg Factors, Inc. $ 4,000,000
-----------
Total: $20,000,000
(4) During the period from and including January 31, 1999
through February 28, 1999:
The Chase Manhattan Bank $ 5,000,000
The First National Bank of Boston $ 5,000,000
CoreStates Bank, N.A. $ 5,000,000
Fleet Bank, N.A. $ 5,000,000
Milberg Factors, Inc. $ 5,000,000
------------
Total: $25,000,000
3
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and (5) During the period from and including March 1,1999
through the Revolving Credit Termination Date:
The Chase Manhattan Bank $ 6,000,000
The First National Bank of Boston $ 6,000,000
CoreStates Bank, N.A. $ 6,000,000
Fleet Bank, N.A. $ 6,000,000
Milberg Factors, Inc. $ 6,000,000
-----------
Total: $30,000,000
"Revolving Credit Loans Maximum Outstanding" means during the period
specified below the amounts specified below for such period:
PERIOD AMOUNT
------ ------
Fourth Closing Date to and
including April 30, 1998 $13,750,000
May 1, 1998 to and
including May 31, 1998 $16,750,000
June 1, 1998 to and
including June 30, 1998 $18,250,000
July 1, 1998 to and
including July 31, 1998 $22,250,000
August 1, 1998 to and
including August 31, 1998 $27,250,000
September 1, 1998 to and
including October 20, 1998 $28,750,000
October 21, 1998 to and
including October 30, 1998 $23,000,000
October 31, 1998 to and
including November 19, 1998 $20,500,000
November 20, 1998 to and
including November 30, 1998 $10,750,000
December 1, 1998 to and
including December 20, 1998 $ 8,000,000
December 21, 1998 to and
including December 31, 1998 $ 5,000,000
January 1, 1999 to and
including February 28, 1999 $ 7,000,000
March 1, 1999 to and
including March 31, 1999 $ 9,000,000
4
<PAGE> 5
"Revolving Credit Loans Permitted Overadvance (During the Month)" means
the amount specified below for each day during the month specified below other
than the last day of the applicable month:
MONTH AMOUNT
----- ------
March, 1998 $ 5,000,000
April, 1998 $ 9,500,000
May, 1998 $11,500,000
June, 1998 $ 9,000,000
July, 1998 $10,250,000
August, 1998 $10,250,000
September, 1998 $ 7,750,000
October, 1998 $ 500,000
November, 1998 $(4,000,000)
December, 1998 $(8,000,000)
January, 1999 $(4,000,000)
February, 1999 $(2,500,000)
March, 1999 $(1,000,000)
5
<PAGE> 6
In addition, the proceeds of Revolving Credit Loans made to BAI which
are used to finance Varon shall for each day during the period specified below
other than the last day of the applicable month be equal to or less than the sum
of (1) the Eligible Accounts of Varon relied on in computing the Collateral
Borrowing Base as set forth on the Reconciliation Report and (2) the amounts
specified below for each day during the period specified below other than the
last day of the applicable month:
PERIOD AMOUNT
------ ------
March 1, 1998 to and
including August 30, 1998 $ 3,750,000
September 1, 1998 to and
including September 29, 1998 $ 750,000
October 1, 1998 to and
including October 30, 1998 $ (750,000)
November 1, 1998 to and
including November 29, 1998 $(1,750,000)
December 1, 1998 to and
including December 30, 1998 $(2,250,000)
January 1, 1999 to and
including January 30, 1999 $(2,000,000)
February 1, 1999 to and
including February 27, 1999 $ (750,000)
March 1, 1999 to and
including March 30, 1999 $ 0
For purposes of this definition, the numbers set forth in parenthesis
are negative numbers.
"Revolving Credit Loans Permitted Overadvance (Month End)" means the
amounts specified below for the last day of each month specified below:
MONTH AMOUNT
----- -------
March, 1998 $ 4,000,000
April, 1998 $ 9,500,000
May, 1998 $ 7,500,000
June, 1998 $ 6,500,000
July, 1998 $ 6,250,000
August, 1998 $ 3,500,000
September, 1998 $ (750,000)
October, 1998 $ (8,000,000)
November, 1998 $ (9,500,000)
December, 1998 $(10,500,000)
January, 1999 $ (6,000,000)
February, 1999 $ (4,000,000)
March, 1999 $ (1,500,000)
6
<PAGE> 7
Notwithstanding the foregoing, the proceeds of the Revolving Credit
Loans made to Mackintosh shall as of the last day of each month specified below
be equal to or less than the sum of (1) the Eligible Accounts of Mackintosh
relied on in computing the Collateral Borrowing Base as set forth on the
Reconciliation Report and (2) the amounts specified below for each month
specified below:
MONTH AMOUNT
----- ------
March, 1998 $ 3,250,000
April, 1998 $ 4,000,000
May, 1998 $ 4,750,000
June, 1998 $ 6,000,000
July, 1998 $ 6,250,000
August, 1998 $ 6,250,000
September, 1998 $ 5,250,000
October, 1998 $ 1,500,000
November, 1998 $ (750,000)
December, 1998 $ (1,800,000)
January, 1999 $ 0
February, 1999 $ 0
March, 1999 $ 0
In addition, the proceeds of Revolving Credit Loans made to BAI which
are used to finance Varon shall as of the last day of each month specified below
be equal to or less than the sum of (1) the Eligible Accounts of Varon relied on
in computing the Collateral Borrowing Base as set forth on the Reconciliation
Report and (2) the amounts specified below for each month specified below:
MONTH AMOUNT
----- ------
March, 1998 $ 3,000,000
April, 1998 $ 3,000,000
May, 1998 $ 3,000,000
June, 1998 $ 3,000,000
July, 1998 $ 3,000,000
August, 1998 $ 0
September, 1998 $ (1,500,000)
October, 1998 $ (2,500,000)
November, 1998 $ (3,000,000)
December, 1998 $ (2,750,000)
January, 1999 $ (1,500,000)
February, 1999 $ (750,000)
March, 1999 $ 0
7
<PAGE> 8
In addition, each of the Borrowers agree that no further intercompany
loans or advances shall be made by any Borrower or Subsidiary from and after the
Fourth Closing Date and that intercompany loans and advances by and among the
Borrowers outstanding as of the Fourth Closing Date shall not be repaid or
reduced by any amounts, other than reductions or repayments arising from
non-cash offsets of federal income tax provisions and allocations of Apparel's
corporate overhead and management fee expenses among Apparel, BAI, Mackintosh
and M&L conducted in the ordinary course of business in accordance with GAAP.
For purposes of this definition, the numbers set forth in parenthesis
are negative numbers.
"Revolving Credit Termination Date" means, March 31, 1999; provided,
that if such date is not a Banking Day, such date shall be the next preceding
Banking Day.
"Term Loan" means, as of the Fourth Closing Date, with respect to each
Lender, the amount specified below for such Lender:
The Chase Manhattan Bank $ 900,000
The First National Bank of Boston $ 900,000
CoreStates Bank, N.A. $ 900,000
Fleet Bank, N.A. $ 900,000
Milberg Factors, Inc. $ 900,000
-----------
Total: $ 4,500,000
(c) Section 2.02 of the Credit Agreement is hereby amended by deleting the
phrase "Third Closing Date" contained in the first paragraph thereof and
inserting in lieu thereof the phrase "Fourth Closing Date"
(d) Section 2.02 of the Credit Agreement is hereby further amended by deleting
the second paragraph thereof in its entirety and inserting in lieu thereof the
following:
"The Term Loan shall be due and payable in
two installments, on each of the Amortization
Dates as follows:
DATE AMOUNT
------ --------
March 31, 1998 $2,000,000
March 31, 1999 $2,500,000"
8
<PAGE> 9
(e) Section 2.15 of the Credit Agreement is hereby amended and restated in its
entirety as follows:
"Section 2.15 FEES. (a) The Borrowers shall pay on the Fourth Closing
Date to the Agent for the account of the Lenders a non-refundable fee
equal to Two Hundred Fifty Thousand Dollars ($250,000) in consideration
of, among other things, the development and negotiation of the
modification of this Agreement and the transactions contemplated
herein. Each such Lender shall be entitled to twenty percent (20%) of
such fee.
(b) The Borrowers shall pay to the Agent as compensation for
its services hereunder as Agent a non-refundable agency fee in the
amount of One Hundred Thousand Dollars ($100,000). This agency fee
shall be due and payable on the Fourth Closing Date.
(c) The Borrowers shall pay to the Servicing Agent as
compensation for its services hereunder as Servicing Agent, unless and
until the Servicing Agent has resigned or been removed in accordance
with Section 13.10, a fee in the amount of two-tenths of one percent
(.20%) of the gross sales less discounts of all of the Borrowers, due
and payable as such sales are made. The minimum aggregate fee payable
under this paragraph for each year of this Agreement shall be One
Hundred Seventy-Five Thousand Dollars ($175,000), which, to the extent
of any deficiency based on gross sales less discounts (calculated on a
cumulative basis, assuming a minimum rate of Fourteen Thousand Five
Hundred Eighty-Three Dollars ($14,583) per month) shall be due and
payable on the last day of each month.
(d) The Borrower shall pay to the Lenders a commitment fee
(the "COMMITMENT FEE") for the period commencing on the Fourth Closing
Date until the Revolving Credit Termination Date or such earlier date
of the termination in full of the Total Commitment, computed (on the
basis of the actual number of days elapsed over a year of 360 days) at
the rate of one-quarter of one percent (1/4%) per annum on the average
daily Unused Total Commitment. Such Commitment Fee, to the extent then
accrued, shall be payable (x) monthly, in arrears, on the last calendar
day of each month, (y) on the Revolving Credit Termination Date and (z)
upon any reduction or termination in whole or in part of the Total
Commitment."
(e) Without prejudice to any other rights of the Lenders, upon
the occurrence of an Overadvance Default, the Borrower shall
immediately pay to the Agent for the account of the Lenders a
non-refundable fee equal to Two Hundred Fifty Thousand Dollars
9
<PAGE> 10
($250,000) (the "Subsequent Fee"). Each Lender shall be entitled to
twenty percent (20%) of the Subsequent Fee.
(f) Section 2.17 of the Credit Agreement is hereby amended by deleting the word
"BAI" contained in the second line of sub-section (h) of such Section and
inserting in lieu thereof the word "Mackintosh".
(g) Section 3.01 of the Credit Agreement is hereby amended (i) by adding the
following proviso after the semicolon following the first proviso contained in
clause (b) of the first paragraph of such Section:
provided further, that upon the occurrence of an Overadvance
Default (and notwithstanding (x) the payment of the Subsequent
Fee or (y) any other provision to the contrary), Chase shall
not issue any Letters of Credit under this Agreement without
the prior written consent of the Required Lenders.
(ii) by amending and restating the chart contained in the second paragraph of
such Section in its entirety as follows:
PERIOD AMOUNT
------ ------
January 1, 1998 to and
including March 31, 1998 $13,000,000
January 1, 1998 to and
including June 30, 1998 $23,000,000
January 1, 1998 to and
including September 30, 1998 $28,000,000
January 1, 1998 to and
including December 31, 1998 $33,000,000
January 1, 1999 to and
including March 31, 1999 $13,000,000
10
<PAGE> 11
(iii) by amending and restating the chart contained in the third paragraph of
such Section in its entirety as follows:
PERIOD AMOUNT
------ ------
January 1, 1998 to and
including March 31, 1998 $1,750,000
January 1, 1998 to and
including June 30, 1998 $5,700,000
January 1, 1998 to and
including September 30, 1998 $6,000,000
January 1, 1998 to and
including December 31, 1998 $6,200,000
January 1, 1999 to and
including March 31, 1999 $ 500,000
(iv) by adding the following proviso at the end of the third paragraph of such
Section:
; provided further, that the maximum amount of all Letters of
Credit issued for the account of Mackintosh (1) during the
period from and including January 1, 1998 through December 31,
1998 which are not issued against an order shall not exceed
$750,000 in the aggregate and (2) during the period from and
including August 31, 1998 through the Revolving Credit
Termination Date shall not exceed $500,000 in the aggregate;
(v) by deleting the date "March 31, 1998" contained in the fourth paragraph of
such Section each time the same appears therein and inserting in lieu thereof in
each instance the defined term "Revolving Credit Termination Date" and (vi) by
deleting the date "November 30, 1998" contained in the first sentence of the
fourth paragraph of such Section and inserting in lieu thereof the date
"November 30, 1999".
(h) Section 3.03 of the Credit Agreement is hereby amended by deleting the
amount "five-sixteenths of one percent (5/16%)" contained in the second
paragraph of such Section and inserting in lieu thereof the amount "three-
eighths of one percent (3/8%)".
(i) Section 5.02 of the Credit Agreement is hereby amended by deleting the
phrase "five-sixteenths of one percent (5/16%)" contained in the first paragraph
of such Section and inserting in lieu thereof the phrase "three-eighths of one
percent (3/8%)".
(j) Section 8.05 of the Credit Agreement is hereby amended by deleting the
period at the end of such Section and inserting in lieu thereof the phrase "and,
the press release dated March 6, 1998 and Form 10-Q's distributed to the Lenders
during 1997."
(k) Section 9.09 of the Credit Agreement is hereby amended by (i) deleting the
word "and" contained at the end of sub-section (t) of such
11
<PAGE> 12
Section, (ii) relettering sub-section "(u)" of such Section as a new sub-section
"(v)" and (iii) inserting the following new sub-section "(u)" immediately
following sub-section (t):
(u) all material information furnished to the Borrowers by the
investment advisor retained by the Borrowers pursuant to
Section 9.10 of this Agreement promptly upon receipt thereof
and within five business days following the end of each month,
provide a written report of the progress and activity of such
investment advisor during each preceding month.
(l) Article 9 of the Credit Agreement is hereby amended by adding the following
new Section at the end thereof:
Section 9.10. INVESTMENT ADVISOR. Retain an
investment advisor reasonably satisfactory to
the Agents for purposes of strategic planning.
(m) Section 10.02 of the Credit Agreement is hereby amended by amending and
restating clause (b) of such Section as follows:
(b) guaranties by BAI of domestic suppliers of the Borrowers,
not exceeding Two Million Three Hundred Thousand Dollars
($2,300,000) in the aggregate, given in connection with the
purchase of raw materials.
(n) Section 11.02 of the Credit Agreement is hereby amended and restated in its
entirety as follows:
"Section 11.02. MINIMUM TANGIBLE NET WORTH. Consolidated
Tangible Net Worth shall not be less than the amounts specified below for the
dates specified below:
DATE AMOUNT
------ --------
March 31, 1998 $5,250,000
June 30, 1998 $4,750,000
September 30, 1998 $7,750,000
December 31, 1998 $9,000,000
March 31, 1999 $7,750,000
In addition, Consolidated Tangible Net Worth shall not be less than
$7,750,000 for the period from October 1, 1998 through and including
12
<PAGE> 13
December 30, 1998 and at no time may Consolidated Tangible Net Worth be
less than $4,750,000."
(o) Section 11.03 of the Credit Agreement is hereby amended by deleting
the phrase ".80 to 1.00 at December 31, 1997" and inserting in lieu
thereof the phrase ".90 to 1.00 at December 31, 1998".
(p) Section 11.04 of the Credit Agreement is hereby amended by deleting
the date "December 31, 1997" and inserting in lieu thereof the date
"December 31, 1998".
(q) Section 11.05 of the Credit Agreement is hereby amended by deleting
the phrase "January 1, 1997 to December 31, 1997 to exceed $750,000"
and inserting in lieu thereof the phrase "January 1, 1998 to December
31, 1998 to exceed $850,000".
(r) Section 12.01 of the Credit Agreement is hereby amended by (i)
deleting the word "or" contained at the end of sub-section (n) of such
section, (ii) deleting the period contained at the end of sub-section
(o) of such section and inserting in lieu thereof a semicolon and the
word "or" and (iii) adding the following new sub-section "(p)" at the
end of such Section:
(p) the Borrowers shall have failed to comply with the
provisions of the definition of Revolving Credit Loans
Permitted Overadvance (Month End) for the month of October
1998 (an "Overadvance Default").
SECTION 3. CONDITIONS OF EFFECTIVENESS TO THIS FOURTH AMENDMENT. This
Fourth Amendment shall become effective on the date on which each of the
following conditions have been satisfied or waived which date shall not be later
than March 31, 1998:
(i) the Borrowers, the Lenders and the Agents shall each
have executed and delivered this Fourth Amendment;
(ii) payment by the Borrower of the fees specified in
Section 2.15 of the Credit Agreement as amended by
this Fourth Amendment;
(iii) execution and delivery by the Borrowers of an
amendment to the Warrant Agreement substantially in
the form of Exhibit A hereto;
(iv) execution and delivery by the Borrowers of UCC-1
financing statements covering imported inventory and
appropriate amendments to the Security Agreements as
may be required by the Agents;
(v) receipt by the Agents of a satisfactory collateral
field exam;
13
<PAGE> 14
(vi) the Borrowers shall have retained an investment
banking firm reasonably satisfactory to the Agents
for purposes of strategic planning and the Agents
shall have received a copy of the executed retention
agreement for such investment banking firm;
(vii) receipt by the Agents of projections in form and
substance satisfactory to the Agents;
(viii) good standing certificates for each Borrower, dated
reasonably near the Fourth Closing Date, from the
Secretary of State (or other appropriate official) of
the jurisdiction of incorporation of each Borrower
certifying as to due incorporation and good standing
of such Borrower and certificates dated reasonably
near the Fourth Closing Date, from the Secretary of
State (or other appropriate official) of each other
jurisdiction where such Borrower is required to be
qualified to conduct business, certifying that such
Borrower is qualified to do business in such
jurisdiction;
(ix) a certificate of the Secretary or Assistant Secretary
of each Borrower, dated the Fourth Closing Date,
attesting to all corporate action taken by each
Borrower including resolutions of its Board of
Directors authorizing the execution, delivery and
performance of this Fourth Amendment and each other
document to be delivered pursuant to this Fourth
Amendment;
(x) a certificate of the Secretary or Assistant Secretary
of each Borrower, dated the Fourth Closing Date,
certifying the names and true signatures of the
officers of such Borrower authorized to sign this
Fourth Amendment and the other documents to be
delivered by such Borrower under this Fourth
Amendment;
(xi) a certificate of a duly authorized officer of each
Borrower, dated the Fourth Closing Date, stating that
the representations and warranties in Article 8 of
the Credit Agreement are true and correct on such
date as though made on and as of such date and that
no event has occurred and is continuing which
constitutes a Default or Event of Default;
(xii) a schedule specifying the locations of all of the
Borrowers' inventory, work-in-process and equipment,
the chief place of business for each Borrower and the
location(s) where the Borrowers' business records are
located, which schedule shall be confirmed by a
responsible office;
(xiii) a favorable opinion of counsel for the Borrowers,
dated the Fourth Closing Date, in substantially the
form of Exhibit B hereto and as to such other matters
as the Agent, the Servicing Agent or any Lender may
reasonably request;
(xiv) a borrowing base certificate (calculated as of the
Fourth Closing Date) in form and substance
satisfactory to the Agents which certificate shall
include specific information as to the Eligible
Accounts of Mackintosh and Varon;
14
<PAGE> 15
(xv) evidence that (1) all insurance required to be
maintained under the Facility Documents is in full
force and effect, and (2) to the extent required
under the Facility Documents, the Agent has been
designated a loss payee and additional insured;
(xvi) payment by the Borrower of all costs and expenses of
the Agents and the Lenders (including, without
limitation, reasonable attorneys' fees and expenses)
incurred in connection with this Fourth Amendment and
the Credit Agreement; and
(xvii) receipt of such other documents, opinions or
agreements as either of the Agents or any of the
Lenders may reasonably request.
SECTION 4. POST CLOSING CONDITIONS. Within 90 days of the
effectiveness of this Fourth Amendment, the Borrowers shall execute and deliver
(i) a pledge agreement in form and substance satisfactory to the Agent pursuant
to which 65% of the issued and outstanding stock of M&L International (H.K.)
Limited shall be pledged to the Agent for the benefit of the Lenders and which
pledge shall be subject to no other liens and (ii) a trademark security
agreement pursuant to which Mackintosh shall grant a security interest in its
trademark known as "Chas. Macintosh". Failure to satisfy either of the foregoing
post-closing conditions shall constitute an immediate Event of Default.
SECTION 5. REFERENCE TO AND EFFECT ON THE FACILITY DOCUMENTS.
Upon the effectiveness of Section 2 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. Except as specifically waived herein, the
execution, delivery and effectiveness of this Fourth 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 6. REPRESENTATIONS AND WARRANTIES. The Borrowers
hereby represent and warrant that each of the representations and warranties
contained in Article 8 of the Credit Agreement and in each of the other Facility
Documents is true and correct as of the date hereof (provided that any
representations and warranties which speak to a specific date shall remain true
and correct as of such date). The Borrowers hereby further represent and warrant
that the stockholders' equity of Mackintosh U.K. Limited as of December 31, 1997
is $2,189.00 and that the value of the assets thereof do not exceed $168,000.00.
SECTION 7. 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 Fourth 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
15
<PAGE> 16
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 8. GOVERNING LAW. This Fourth Amendment shall be governed by
and construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed wholly within such State.
SECTION 9. HEADINGS. Section headings in this Fourth Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Fourth Amendment for any other purpose.
SECTION 10. COUNTERPARTS. This Fourth 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 Fourth Amendment by
signing any such counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this Fourth
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: 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
16
<PAGE> 17
THE CHASE MANHATTAN BANK,
as Lender
By: /s/ John Murphy
-------------------------------------
Name: John Murphy
Title: Vice President
MILBERG FACTORS, INC., as Lender
By: /s/ Harold H. Oertell
-------------------------------------
Name: Harold H. Oertell
Title: Treasurer
CORESTATES BANK, N.A., as Lender
By: /s/ C.B. Cook
-------------------------------------
Name: C.B. Cook
Title: Vice President
BANKBOSTON, N. A., as Lender
By: /s/ David F. Eusden
-------------------------------------
Name: David F. Eusden
Title: Director
FLEET BANK, N.A., as Lender
By: /s/ Edward J. Wol
-------------------------------------
Name: Edward J. Wol
Title: Senior Vice President
THE CHASE MANHATTAN BANK, as Agent
By: /s/ John Murphy
-------------------------------------
Name: John Murphy
Title: Vice President
MILBERG FACTORS, INC., as
Servicing Agent
By: /s/ Harold H. Oertell
-------------------------------------
Name: Harold H. Oertell
Title:
17
<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
MARCH 31,
-----------------------------
1998 1997
---------- ------------
<S> <C> <C>
Net loss ...................................... $ (1,903) $ (1,110)
========== ============
BASIC:
Weighted average common shares outstanding .... 10,771,622 10,741,819
========== ============
Basic net loss per share ...................... $ (0.18) $ (0.10)
========== ============
DILUTED:
Weighted average common shares outstanding .... 10,771,622 10,741,819
Potential dilution upon exercise of stock
options and warrants ........................ -- --
---------- ------------
Shares used in computing diluted net loss
per common share ............................ 10,771,622 10,741,819
========== ============
Diluted net loss per share .................... $ (0.18) $ (0.10)
========== ============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 356
<SECURITIES> 0
<RECEIVABLES> 8,743
<ALLOWANCES> (1,361)
<INVENTORY> 21,532
<CURRENT-ASSETS> 31,604
<PP&E> 5,411
<DEPRECIATION> (2,679)
<TOTAL-ASSETS> 34,703
<CURRENT-LIABILITIES> 22,117
<BONDS> 0
0
0
<COMMON> 108
<OTHER-SE> 5,647
<TOTAL-LIABILITY-AND-EQUITY> 34,703
<SALES> 11,311
<TOTAL-REVENUES> 11,311
<CGS> 8,902
<TOTAL-COSTS> 8,902
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 660
<INCOME-PRETAX> (2,806)
<INCOME-TAX> (903)
<INCOME-CONTINUING> (1,903)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,903)
<EPS-PRIMARY> (0.18)
<EPS-DILUTED> (0.18)
</TABLE>
