<PAGE> 1
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 quarterly period ended SEPTEMBER 30, 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 33-80570
APPAREL VENTURES, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as specified in its charter)
DELAWARE 95 - 4475766
-------- ------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
204 WEST ROSECRANS, GARDENA, CALIFORNIA 90248
- --------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(310) 538 - 4980
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
AT NOVEMBER 16, 1998, 1,000 SHARES OF $.01 PAR VALUE COMMON STOCK OF
THE REGISTRANT WERE OUTSTANDING.
<PAGE> 2
APPAREL VENTURES, INC.
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
Consolidated Balance Sheet as of September 30, 1998 (Unaudited)
and June 30, 1998. 3
Consolidated Statement of Operations and Comprehensive Income
for the Three Months ended September 30, 1998 and 1997 (Unaudited). 4
Consolidated Statement of Cash Flows for the Three Months ended
September 30, 1998 and 1997 (Unaudited). 5
Notes to Consolidated Financial Statements (Unaudited). 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION. 9
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 11
SIGNATURE 11
EXHIBIT INDEX 12
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
APPAREL VENTURES, INC.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
A S S E T S
SEPTEMBER 30, JUNE 30,
1998 1998
------------ ------------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS
Cash $ 188,000 $ 487,000
Due from factor 7,178,000 17,324,000
Accounts receivable, net of allowance for doubtful
accounts and discounts of $539,000 and $515,000 1,972,000 3,173,000
Inventories 20,068,000 12,195,000
Deferred charges 2,411,000 2,411,000
Deferred income taxes 2,112,000 640,000
Prepaid expenses 546,000 459,000
------------ ------------
Total current assets 34,475,000 36,689,000
------------ ------------
PROPERTY AND EQUIPMENT, at cost, net of
accumulated depreciation and amortization of
$4,863,000 and $4,625,000 6,030,000 5,867,000
OTHER ASSETS
Goodwill and organizational costs, net of accumulated
amortization of $1,450,000 and $1,356,000 12,064,000 12,158,000
Deferred loan costs, net of accumulated amortization
of $2,290,000 and $2,160,000 942,000 1,072,000
Other 746,000 722,000
------------ ------------
$ 54,257,000 $ 56,508,000
============ ============
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Line of credit $ 12,741,000 $ 12,766,000
Accounts payable 6,067,000 3,084,000
Accrued interest payable 1,360,000 2,512,000
Accrued expenses 2,189,000 3,334,000
Current portion of notes payable 262,000 2,711,000
------------ ------------
Total current liabilities 22,619,000 24,407,000
------------ ------------
SENIOR NOTES PAYABLE 35,695,000 35,664,000
NOTES PAYABLE, net of current portion 1,137,000 1,001,000
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY 170,000 170,000
STOCKHOLDER'S EQUITY (DEFICIT)
Common stock $.01 par value, 10,000 shares authorized, 1,000 shares
issued and outstanding 1,000 1,000
Additional paid-in capital 13,503,000 11,038,000
Due from parent (268,000) (253,000)
Accumulated other comprehensive income (148,000) (194,000)
Accumulated deficit (18,452,000) (15,326,000)
------------ ------------
(5,364,000) (4,734,000)
------------ ------------
$54,257,000 $56,508,000
============ ============
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 4
APPAREL VENTURES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
NET SALES $ 4,091,000 $ 2,710,000
COST OF SALES 2,829,000 1,728,000
----------- -----------
Gross profit 1,262,000 982,000
OPERATING EXPENSES
Design 631,000 731,000
Selling 1,064,000 1,142,000
Shipping 356,000 303,000
General and administrative 2,174,000 2,065,000
----------- -----------
4,225,000 4,241,000
----------- -----------
Loss from operations (2,963,000) (3,259,000)
----------- -----------
OTHER (EXPENSE) INCOME
Interest expense, including amortization of deferred
loan costs of $130,000 and $130,000 (1,614,000) (1,374,000)
Interest income 7,000 5,000
Royalty income 30,000 43,000
Miscellaneous (59,000) (17,000)
----------- -----------
(1,636,000) (1,343,000)
----------- -----------
LOSS BEFORE INCOME TAXES (4,599,000) (4,602,000)
INCOME TAX BENEFIT 1,472,000 1,472,000
----------- -----------
NET LOSS ($3,127,000) ($3,130,000)
----------- -----------
OTHER COMPREHENSIVE INCOME, NET OF TAX
Foreign currency translation adjustment 46,000 (36,000)
----------- -----------
COMPREHENSIVE INCOME (LOSS) ($3,081,000) ($3,166,000)
=========== ===========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE> 5
APPAREL VENTURES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss ($ 3,127,000) ($ 3,130,000)
Depreciation and amortization 473,000 418,000
Other (109,000) (53,000)
Changes in assets and liabilities
Due from factor 10,296,000 8,755,000
Accounts receivable, net 1,201,000 935,000
Inventories (7,873,000) (6,336,000)
Deferred income tax benefits (1,472,000) (1,476,000)
Prepaid expenses and other assets (87,000) (231,000)
Accounts payable 2,983,000 383,000
Accrued interest, expenses and taxes (2,297,000) (1,442,000)
------------ ------------
Net cash (used) by operating activities (12,000) (2,177,000)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of equipment (398,000) (218,000)
------------ ------------
Net cash used by investing activities (398,000) (218,000)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowing under (repayment of) line of credit (25,000) 2,671,000
Notes payable 136,000
Repayment of notes payable (2,450,000) (22,000)
Advances to Parent Company (100,000)
Additional capital infusion 2,450,000
------------ ------------
Net cash (used) by financing activities 111,000 2,549,000
------------ ------------
NET INCREASE IN CASH (299,000) 154,000
CASH, BEGINNING OF PERIOD 487,000 476,000
------------ ------------
CASH, END OF PERIOD $ 188,000 $ 630,000
============ ============
</TABLE>
See notes to consolidated financial statements.
5
<PAGE> 6
APPAREL VENTURES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998 AND 1997
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, the accompanying
consolidated financial statements reflect all adjustments (consisting of normal
recurring adjustments) which are necessary for a fair presentation of the
changes in financial position, results of operations and cash flows for the
interim periods reported.
The results of operations for the three months ended September 30, 1998
are not necessarily indicative of the results to be expected for the full year.
The accompanying financial statements should be read with reference to
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" contained herein and the Notes to consolidated financial statements,
as set forth in the Company's Form 10-K filing for the fiscal year ended June
30, 1998.
COMPANY BACKGROUND AND NATURE OF BUSINESS - Apparel Ventures, Inc. (the
"Company") is a wholly owned subsidiary of AVI Holdings, Inc. The Company was
incorporated in Delaware on April 20, 1994 and is headquartered in Gardena,
California and designs, manufactures and markets branded women's swimwear. The
Company offers seven proprietary lines catering to the Junior and Missy
categories distributed through major department stores and specialty retail
stores nationwide and, through its subsidiary, throughout Europe.
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include the
accounts of the Company and its 79% - owned Portuguese subsidiary, Apparel
Ventures Europa - Textil, LDA, and wholly owned Mexican subsidiary, AVI de
Mexico, S.A. de C.V. Significant intercompany accounts and transactions are
eliminated in consolidation.
REVENUE RECOGNITION - Revenue is recognized when shipment of product occurs. An
estimate for returns and allowances is recorded against gross sales amounts to
arrive at net sales.
TRANSLATION OF FOREIGN CURRENCIES - Cumulative translation adjustments, which
arise from consolidating Portuguese and Mexican operations, are included in
stockholder's equity.
ADVERTISING COSTS - Advertising costs are expensed in the period incurred.
NOTE 2 - INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
September 30, June 30,
1998 1998
----------- -----------
<S> <C> <C>
Piece goods and trim $ 5,625,000 $ 3,457,000
Work-in-process 3,735,000 1,700,000
Finished goods 10,708,000 7,038,000
----------- -----------
$20,068,000 $12,195,000
=========== ===========
</TABLE>
6
<PAGE> 7
NOTE 3 - LINE OF CREDIT
The Company has a line of credit with a bank (the "Credit Facility")
which provides for advances and commercial letters of credit of up to $32.0
million through July 31, 2000. The Credit Facility has a sublimit of $3.0
million for commercial letters of credit. Borrowings are limited to a
predetermined percentage of eligible foreign and domestic factored and non
factored accounts receivable and eligible finished goods inventory, plus a
seasonal overadvance of $2.5 million during September increasing to $4.5 million
from October 1 to March 15, of each year the amount of which is tied to bookings
and an overadvance against owned real estate of $1.75 million from September
1998 through February 28, 1999 decreasing to $1.4 million from March 1, 1999
through March 31, 1999 and $.8 million from April 1, 1999 through April 30, 1999
and zero thereafter. Interest on base borrowings is charged at the bank's prime
rate plus 1/2%; however borrowings may be fixed, at management's discretion for
periods of 30 to 180 days on which interest is charged at LIBOR plus 2.75%.
Interest on seasonal overadvances is charged at the bank's prime rate plus 1
1/2%; however borrowings may be fixed, at management's discretion, for periods
of 30 to 180 days on which interest is charged at LIBOR plus 3.75%. The Credit
Facility is collateralized by receivables, finished goods inventories, real
estate and general intangibles.
The credit agreement included a $2,450,000 term loan due May 23, 1999.
Interest on the term loan was payable monthly at the bank's prime rate or LIBOR
plus 2.5%. On September 24, 1998 the Company repaid the term loan of $2,450,000
with funds contributed by the Parent.
The Credit Facility contains covenants requiring the maintenance of
minimum tangible net worth, fixed charge coverage ratios and other matters. The
Company was in compliance with these covenants for the quarter ended September
30, 1998.
NOTE 4 - SENIOR NOTES PAYABLE
On May 23, 1994, the Company issued $40 million principal amount of
Series A Senior Notes. The Senior Notes are due December 30, 2000 and bear
interest of 12 1/4%, payable July 1 and January 1 each year. The Senior Notes
were issued at a discount of $800,000, which is being amortized over the term of
the Senior Notes to yield a constant interest rate of 12.7%. As of September 30,
1998 there is $36.0 million principal amount of bonds outstanding net of
$305,000 in unamortized discount.
The Company may redeem the Senior Notes, subject to a premium for
redemption, after December 31, 1998. The Senior Notes contain certain
restrictions requiring the Company to offer to redeem the Senior Notes including
a premium for redemption, in the event of a change in control of the Company.
The indenture governing the Senior Notes contains customary covenants
regarding maintaining specified ratios of earnings to fixed charges,
restrictions on transactions with officers and affiliates, and other matters.
For the year ended June 30, 1998 the Company failed to meet the fixed charge
coverage ratio covenant required by the indenture. This violation was waived and
an amendment modifying the indenture was approved by the bond-holders. In
connection with such waiver and amendment the Company paid $360,000 to the
bondholders
NOTE 5 - COMMITMENT - PARENT COMPANY CAPITAL STRUCTURE
In connection with the acquisition of the Company, AVI Holdings, Inc.
(the "Parent") issued $10 million of Subordinated Senior Notes, $3.8 million of
Subordinated Junior Notes, $300,000 of common stock, $1.7 million of Class A
Preferred Stock, $1.7 million of Class B Preferred Stock and $1.0 million of
Class C Preferred Stock. A Subordinated Junior Note in the amount of $650,000
was immediately repaid in full for $350,000. Since the Company is a wholly -
owned subsidiary of the Parent and is the sole operating unit of the
consolidated entity, the Company is the sole source of any cash to be paid by
the parent on such securities in the form of interest, dividends or principal
repayments. The cash required by the Parent to make these payments will be
provided by dividends or cash advances by the Company. While the Parent
company's debt service requirements will be funded by the Company, the debt of
the Parent is not reflected in the balance sheet of the Company since the
Company has not guaranteed, pledged assets as security for, or have plans,
intentions, or a requirement to directly assume or repay the Parent company's
organizational obligations.
On December 5, 1995, in order for the Company to obtain waivers of
certain defaults from the Senior Note holders, the Parent authorized the
issuance of 6,450 shares of Class D Preferred Stock and issued to certain
subscribers 4,000 shares of Class D Preferred Stock for cash consideration of
$4.0 million. Such proceeds were then contributed by the Parent to the Company.
7
<PAGE> 8
On September 24, 1998, the Parent company issued 2,450 shares of Class D
Preferred Stock to the Company's President in exchange for a $2,450,000 cash
contribution. The proceeds were then contributed by the Parent to the Company.
The $10.0 million Senior Subordinated Notes issued by the Parent bear
interest at 12% and require semi-annual interest payments on April 30 and
October 31 each year. The notes are due on April 30, 2004. The remaining $3.15
million Junior Subordinated Notes bear interest at 10.78% and require
semi-annual interest payments on the 150th day following the second and fourth
quarter of each fiscal year. The notes are due in equal annual installments on
June 30, 2002, 2003 and 2004. In the aggregate, annual debt service requirements
for each of the next 5 years are:
<TABLE>
<S> <C>
1999 $1,801,000
2000 $1,801,000
2001 $1,801,000
2002 $2,851,000
2003 $2,851,000
</TABLE>
The Indenture for the Company's Senior Notes prohibits the Company from
making distributions to the Parent for the payment of interest on the Senior
Subordinated Notes unless the Company satisfies a fixed charge coverage ratio
requirement. The Company has not satisfied this requirement and has not made any
advances to the Parent for the payment of interest. However, the Parent has
satisfied this payment obligation by issuing promissory notes (bearing interest
at the default rate) in the amounts of the interest due.
All classes of preferred stock of the Parent are 6% cumulative shares.
The dividends shall be paid, at the option of the Board of Directors, in the
form of cash or preferred stock, payable November 1 of each year. The payment of
cash dividends shall be restricted if such payment would result, directly or
indirectly, in a default under any obligation of the Company. The preferred
shares may be redeemed at any time for $1,000 per share plus accrued but unpaid
dividends. All shares not previously redeemed shall be redeemed by payment of
cash of $1,000 per share plus all accrued and unpaid dividends on September 30,
2004.
NOTE 6 - FINANCIAL INSTRUMENTS
Statements of Financial Accounting Standard No. 107 "Disclosures About
Fair Value of Financial Instruments" (SFAS 107) requires the disclosure of the
fair market value of financial instruments for which it is practicable to
estimate fair value. The Company believes the carrying amount of the following
financial instruments approximates their current fair value: cash, receivables,
accounts payable, line of credit, and notes payable. The estimated fair value
amounts have been estimated by the Company considering the nature of the
instrument and applicable market information.
The current fair value of senior notes payable is believed by management
to be less than the carrying amount, although an estimate of the amount is not
reasonably determinable. A certain amount of these instruments have traded in
the open market, however, an active market for their exchange does not exist.
Management believes historical market transactions are not necessarily
indicative of the current fair value of these instruments. Considerable judgment
is required in interpreting various and volatile market data to develop the
estimates of fair value. Accordingly, estimates, if determinable, are not
necessarily indicative of the amount that the Company could realize in a current
market exchange.
NOTE 7 - OTHER COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
Pre-Tax Tax After Tax
Amount Effect Amount
--------- --------- ---------
<S> <C> <C> <C>
Foreign Currency Translation Adjustment $ 46,000 $ 0 $ 46,000
========= =========
Balance, beginning of period (194,000)
---------
Balance, end of period ($148,000)
=========
</TABLE>
8
<PAGE> 9
PART I - FINANCIAL INFORMATION
APPAREL VENTURES, INC.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following is management's discussion and analysis of certain
significant factors which have affected the Company's financial position and
operating results during the periods included in the accompanying consolidated
financial statements.
RESULTS OF OPERATIONS
The following table sets forth information with respect to the
percentage relationship of net sales of certain items of the consolidated
statement of operations of the Company for the three months ended September 30,
1998 and 1997.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
-----------------------------------------------------------
1998 % 1997 %
----------- ------- ----------- -------
<S> <C> <C> <C> <C>
NET SALES $ 4,091,000 100.0% $ 2,710,000 100.0%
COST OF SALES 2,829,000 69.2% 1,728,000 63.8%
----------- -----------
Gross profit 1,262,000 30.8% 982,000 36.2%
OPERATING EXPENSES
Design 631,000 731,000
Selling 1,064,000 1,142,000
Shipping 356,000 303,000
General and administrative 2,174,000 2,065,000
----------- -----------
4,225,000 103.3% 4,241,000 156.5%
----------- -----------
Loss from operations (2,963,000) -72.4% (3,259,000) -120.3%
OTHER (EXPENSE) INCOME
Interest expense (1,614,000) (1,374,000)
Interest income 7,000 5,000
Royalty income 30,000 43,000
Miscellaneous (59,000) (17,000)
----------- -----------
(1,636,000) -40.0% (1,343,000) -49.6%
----------- -----------
LOSS BEFORE INCOME TAXES (4,599,000) -112.4% (4,602,000) -169.8%
INCOME TAX BENEFIT 1,472,000 36.0% 1,472,000 54.3%
----------- -----------
NET LOSS ($3,127,000) -76.4% ($3,130,000) -115.5%
=========== ===========
</TABLE>
NET SALES
Net sales for the first three months of fiscal 1999 increased by $1.4
million as compared to the same period of fiscal 1998. This increase was
primarily due to increased sales of current season Nautica merchandise of $.4
million, increased sales of current season Sessa merchandise of $.4 million,
increased sales of current season La Blanca merchandise of $.5 million,
increased sales of current season private label merchandise of $.2 million,
increased sales of prior season merchandise of $.5 million offset by increased
returns and allowances of $.6 million.
9
<PAGE> 10
GROSS PROFIT
Gross profit increased from $1.0 million or 36.2% of net sales to $1.3
million or 30.8% of net sales. The $0.3 million increase in gross profit
occurred despite a $0.5 million increase in prior season sales. Prior season
merchandise sales are generally sold at or below cost. The increase in the sale
of prior season merchandise was the primary reason for the reduction in the
gross margin percentage. Gross profit for current season merchandise was
comparable with last year at this point. Appropriate reserves were established
at June 30, 1998 to offset margin erosion for merchandise sold at or below cost.
OPERATING EXPENSES
Operating expenses were constant in comparison to last year. Design
expense decreased $.1 million due primarily to a decrease in design wages.
Selling expense decreased $.1 million due primarily to reduced sample expenses.
Shipping expense increased $.1 million due to the higher minimum wage and
handling costs for the increase in finished goods inventory and the increased
sales during the period. General and administrative expense increased $.1
million due primarily to increased MIS cost for the Year 2000 retrofit program.
OTHER EXPENSES
Other expenses increased $0.3 million or 22% due primarily to an
increase in working capital interest expense which was incurred due to the
increased inventory and accounts receivable levels.
INCOME TAX BENEFIT AND NET LOSS
Net loss before income tax benefit was $(4.6) million for the first
quarter of fiscal 1999 consistent with the same quarter in fiscal 1998.
The income tax benefit is estimated at a 32% effective tax rate,
consistent with the first fiscal quarter ended in 1998. The Company has recorded
a deferred tax asset to the extent it expects to utilize NOL carry forwards in
fiscal 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital requirements are seasonal, with peak needs
arising near the end of the third quarter and the beginning of the fourth
quarter of the fiscal year, primarily as a result of building inventories in the
first and second quarters of the fiscal year to supply third and fourth quarter
demand and the financing of accounts receivable in the fourth quarter of the
fiscal year.
The Company does not have any mandatory long-term debt principal
payment requirements until December 2000. The Company recognizes that
operational cash flow will not likely be sufficient to fund the maturity of
Senior Notes payable in December 2000. The Company has not yet established a
specific plan to address this matter, although several possible courses of
action are currently being considered. The Company expects to thoroughly explore
all viable options and within the next year, expects to have a definitive,
viable plan in place.
On the other hand, based upon current levels of operations and
anticipated growth, the Company expects that sufficient cash flow will be
generated from operations so that, with the other financing alternatives
available to it, the Company will be able to meet all of its debt service
requirements as well as its capital expenditure requirements for the fiscal year
ending June 30, 1999.
At September 30, 1998, the net collateral availability under the line of
credit was approximately $1,600,000.
BACKLOG
Backlog represents booked unshipped customer orders which, although
terminable without penalty, are believed by the Company to be firm. Because of
the seasonality of the Company's business, the Company's backlog varies over the
course of the year. Backlog usually peaks in December and January. At September
30, 1998 the Company's backlog for current season merchandise was approximately
$22.0 million, compared to $19.4 million for the same period in fiscal 1998. See
also "Seasonality" below.
10
<PAGE> 11
SEASONALITY
The Company's business is highly seasonal. In fiscal 1998, approximately
75% of the Company's gross sales were generated in the second half of its fiscal
year. The Company expects this pattern to continue in its current and subsequent
fiscal years. This seasonality and the relatively long times required to design
and manufacture new products have led to the development of this standard
selling cycle. The Company operates with a deficit in cash flow from operations
(seasonal working capital requirements) for the first nine months of each
fiscal year.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
The Exhibits listed in the Index to Exhibits are filed as part of this Quarterly
Report on Form 10-Q.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
APPAREL VENTURES, INC.
November 16, 1998 /s/ WILLIAM F. SINGLETARY
------------------------- ------------------------------------------
Date
WILLIAM F. SINGLETARY
Chief Financial Officer
(Duly authorized officer and
principal financial and
accounting officer)
11
<PAGE> 12
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequential
Exhibit No. Description of Exhibit Page No.
- ----------- -------------------------------- ----------
<S> <C> <C>
27 Financial data schedule. 13
</TABLE>
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 188,000
<SECURITIES> 0
<RECEIVABLES> 9,689,000
<ALLOWANCES> 539,000
<INVENTORY> 20,068,000
<CURRENT-ASSETS> 34,475,000
<PP&E> 10,893,000
<DEPRECIATION> 4,863,000
<TOTAL-ASSETS> 54,257,000
<CURRENT-LIABILITIES> 22,619,000
<BONDS> 37,002,000
0
0
<COMMON> 1,000
<OTHER-SE> (5,365,000)
<TOTAL-LIABILITY-AND-EQUITY> 54,257,000
<SALES> 4,091,000
<TOTAL-REVENUES> 4,091,000
<CGS> 2,829,000
<TOTAL-COSTS> 2,829,000
<OTHER-EXPENSES> 4,247,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,614,000<F1>
<INCOME-PRETAX> (4,599,000)
<INCOME-TAX> (1,472,000)
<INCOME-CONTINUING> (3,127,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,127,000)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>INCLUDES AMORTIZATION OF THE RELATED DEFERRED LOAN COSTS OVER THE TERM OF THE
LOAN.
</FN>
</TABLE>
