SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to _________
Commission file number 1-5354
SWANK, INC.
(Exact name of registrant as specified in its charter)
Delaware 04-1886990
(State or other jurisdiction (IRS employer
of incorporation or organization) identification Number)
6 Hazel Street, Attleboro, Massachusetts 02703
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code 508-222-3400
Former name, former address and former fiscal year, if changed
since last report.
Indicate by X 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 __
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court:
Yes ___ No ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the
issuer's classes of common stock as of the latest practicable
date:
Title of Class Shares Outstanding on April 30, 1999
Common stock, $.10 par value 16,569,423
SWANK, INC.
PART I - FINANCIAL STATEMENTS
Item 1. Financial Statements.CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollars in thousands)
March 31, 1999 December 31, 1998
ASSETS
Current:
Cash and cash equivalents $ 306 $ 757
Accounts receivable, less
allowances
of $8,435 and 9,041 19,553 14,756
Inventories
Raw materials $7,782 $7,028
Work in process 7,952 7,337
Finished goods 24,460 40,194 26,819 41,184
Deferred income taxes 4,069 4,069
Prepaid and other 970 967
Total current assets 65,092 61,733
Property, plant and equipment, at 27,845 26,932
cost
less accumulated depreciation 21,702 6,143 21,358 5,574
and amortization
Other assets 6,008 5,662
Total assets $77,243 $72,969
LIABILITIES
Current:
Notes payable to banks $21,761 $15,321
Current portion of long-term 242 242
debt
Accounts payable 5,485 5,770
Accrued employee compensation 3,517 4,775
Income taxes payable 508 1,888
Other current liabilities 3,895 4,232
Total current 35,408 32,228
liabilities
Long-term obligations 9,918 9,563
Total liabilities 45,326 41,791
Minority Interest in consolidated 608
subsidiary
STOCKHOLDERS' EQUITY
Preferred stock, par value $1.00
Authorized 1,000,000 shares
Common stock, par value $.10
Authorized 43,000,000 shares:
Issued 16,902,942 and 1,690 1,689
16,887,942 shares
Capital in excess of par value 926 913
Retained earnings 29,399 29,285
Accumulated other comprehensive 3
income
32,018 31,887
Treasury stock, at cost, (709) (709)
333,519 shares
Total stockholders' 31,309 31,178
equity
Total liabilities and $77,243 $72,969
stockholders' equity
The accompanying notes are an integral part of the condensed
consolidated financial statements.
SWANK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE QUARTERS ENDED MARCH 31, 1999 AND 1998
(Dollars in thousands except per share data)
---------------------------------
1999 1998
Net Sales $ 37,199 $ 33,630
Cost of goods sold 23,144 19,485
Gross profit 14,055 14,145
Selling and administrative expenses 13,684 12,571
Income from operations 371 1,574
Interest expense, net 348 248
Income before income taxes and minority 23 1,326
interest
Provision for income taxes (90) (517)
Minority interest in loss of consolidated 182 0
subsidiary
Net income $ 115 $ 809
Share and per share information:
Weighted average common shares outstanding 16,566,627 16,511,844
Net income per common share $ .01 $ .05
Weighted average common shares outstanding 16,889,216 16,748,913
assuming dilution
Net income per common share assuming $ .01 $ .05
dilution
The accompanying notes are an integral part of the condensed
consolidated financial statements.
SWANK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE QUARTERS ENDED MARCH 31, 1999 AND 1998
(Dollars in thousands)
--------------
1999 1998
Cash flow from operating activities:
Net income $ 115 $ 809
Adjustments to reconcile net income
to net cash used in operations:
Depreciation and amortization 355 492
Provision (recoveries) for bad debts 13 (404)
Minority interest in net loss of (182)
consolidated subsidiary
Changes in assets and liabilities
Increase in accounts receivable (4,797) (2,992)
Decrease (Increase) in inventory 1,387 (1,491)
Increase in prepaid and other (1) (23)
Increase in other assets (119) (53)
(Decrease) Increase in accounts payable (1,916) (693)
and accrued liabilities
(Decrease) Increase in income taxes (1,380) 436
payable
Increase in long-term obligations 288 338
Net cash used in operations (6,237) (3,581)
Cash flow from investing activities:
Capital expenditures (361) (203)
Premiums on life insurance (227) (326)
Net cash used in investing (588) (529)
activities
Cash flow from financing activities:
Borrowing under revolving credit 21,971 18,023
agreements
Payments of revolving credit obligations (15,531) (13,237)
Principal payments on long-term debt (75) (859)
Proceeds from exercise of employee stock 9 5
options
Net cash provided by 6,374 3,932
financing activities
Net decrease in cash and cash equivalents (451) (178)
Cash and cash equivalents at beginning of 757 1,235
period
Cash and cash equivalents at end of $306 $1,057
period
The accompanying notes are an integral part of the condensed
consolidated financial statements.
SWANK, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(1) The unaudited information furnished herein reflects all
adjustments (consisting only of normal recurring adjustments)
which are, in the opinion of management, necessary to present a
fair statement of the results for the periods ended March 31,
1999 and 1998. The financial information contained herein
represents condensed financial data and, therefore, does not
include all footnote disclosures required to be included in
financial statements prepared in conformity with generally
accepted accounting principles. Certain amounts from previous
periods have been reclassified to conform with the current
presentation. Footnote information was included in financial
statements included in the Company's 1998 Annual Report to
Stockholders which was incorporated by reference in the Company's
annual report on Form 10-K for the fiscal year ended December 31,
1998. The condensed financial data included herein should be
read in conjunction with the information in the annual report.
(2) Effective January 8, 1999, the Company acquired 65% of the
shares of Joyas y Cueros S.A. de Costa Rica ("Joyas"), a newly
formed corporation located in Cartago, Costa Rica in exchange
for approximately $1.7 million in cash, equipment and
inventory. The minority shareholder contributed approximately
$.9 million in equipment and inventory. Joyas presently
manufactures women's jewelry and is initiating the manufacture
of belts. Substantially all of Joyas' revenue is derived from
products manufactured for the Company and the results of
Joyas' operations have been included in the Company's
condensed consolidated financial statements from the
transaction's effective date. The Condensed Consolidated
Financial Statements include the accounts of Swank, Joyas and
a wholly-owned foreign sales corporation. All significant
intercompany amounts have been eliminated. Accumulated other
comprehensive income arises from the effects of currency
translation.
(3) During the three month period ended March 31, 1999, the
Company has not incurred any material changes in commitments
and contingencies set forth in Footnote I of the 1998 Annual
Report to Stockholders.
(4) The following table sets forth the computation of net income
per share for the quarters ending March 31, 1999 and March 31,
1998 (in thousands, except for share and per share data):
Quarter
Ended March 31,
1999 1998
Numerator:
Net income $ 115 $ 809
Denominators:
Shares used in computing net income per
common share 16,566,627 16,511,844
Effect of dilutive options 322,589 237,069
Shares used in computing net income per 16,889,216 16,748,913
common per share assuming dilution
Net income per common share $ .01 $ .05
Net income per common share assuming $ .01 $ .05
dilution
Notes to Condensed Consolidated Financial Statements (Unaudited)
(continued)
(5) Segment Information (in thousands):
Consol-
idated
Men's Women's Other Total
1999
Revenue from
external customers $22,000 $14,164 $1,035 $37,199
Segment profit(loss) (186) 537 (146) 205
1998
Revenue from
external customers $19,203 $13,373 $1,054 $33,630
Segment profit(loss) 625 852 (151) 1,326
(6) Effective January 1, 1999 the Company adopted the provisions
of Statement of Position 98-1 "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use" ("SOP
98-1") which establishes criteria for capitalizing internal and
external costs associated with software development. SOP 98-1
requires that the new accounting treatment be applied
prospectively from the date of adoption. During the quarter
ended March 31, 1999, the Company capitalized software
development costs pursuant to SOP 98-1 which had the effect of
increasing income before income taxes by $50,000 and net income
by approximately $30,500. Exclusive of the effects of this
change, net income per share and net income per share assuming
dilution would have been $.01 and $.00, respectively.
Item 2. Management's Discussion and Analysis of the Financial
Condition and Results of Operations
Results of Operations
As is customary in the fashion accessories industry, the
Company makes modifications to its lines coinciding with the
Spring (approximately January - June) and Fall (approximately
July - December) seasons. The Company believes that results of
operations are more meaningful on a seasonal basis than on a
quarterly basis. The timing of shipments can be affected by the
availability of materials, retail sales and fashion trends. These
factors may shift volume between quarters within a season
differently in one year than in another. Due to seasonality and
other factors, the results of the quarter are not necessarily
indicative of the results to be expected for the full year.
Net Sales
Net sales for the quarter ended March 31, 1999 increased by
10.6% to $37,199,000 compared to $33,630,000 for the quarter
ended March 31, 1998. Net sales of Men's Accessories increased
by $2,797,000 or 14.6% and net sales for Women's Accessories
increased by $791,000 or 5.9%, both compared to the quarter ended
March 31, 1998.
The increase in net sales of Men's Accessories was primarily
due to increased shipments of belts reflecting improved sales to
existing mass merchandising customers and spring shipments of the
Company's Claiborne for Men line, first shipped last summer. In
addition, the Company commenced shipments of a new private-label
personal leather goods program during the quarter.
Women's Accessories net sales increased during the quarter
principally due to initial spring shipments of the Kenneth Cole
Women's jewelry line which was introduced last fall and to
increased sales of out-of-line merchandise compared to the
quarter ended March 31, 1998.
Gross Profit
Gross profit for the quarter ended March 31, 1999 decreased by
$90,000 or less than 1% to $14,055,000 compared to $14,145,000
for the quarter ended March 31, 1998. Gross profit for Men's
Accessories increased by $100,000 and gross profit for Women's
Accessories decreased by $180,000, both compared to the quarter
ended March 31, 1998.
Gross profit expressed as percentage of net sales fell to 33.0%
for Men's Accessories for the quarter ended March 31, 1999
compared to 37.3% last year. Gross profit expressed as percentage
of net sales fell to 43.8% for Women's Accessories for the
quarter ended March 31, 1999 compared to 47.7% last year. The
decline in gross profit in Men's Accessories was primarily due
to an increase in product costs, partially attributable to a
reduction in favorable overhead variances, and to disposition of
excess and discontinued inventory at reduced margins. The decline
in gross profit in Women's Accessories was primarily due to the
Company's share of start-up losses incurred by Joyas y Cueros de
Costa Rica, S.A. and to an increase in product costs, partially
attributable to a reduction in favorable overhead variances. The
Company reduced production at its domestic belt and jewelry
manufacturing facilities during the quarter in response to
current requirements for merchandise and to changes in product
sourcing.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (continued)
Customer returns through March 31, 1999 are within the estimates
utilized in establishing the allowance for returns as of December
31, 1998. First quarter adjustments to the reserve in 1999 and
1998 include routine accruals for estimated returns on current
period sales and charges for actual returns received through
March 31. The extent of the variance, if any, of actual 1999
returns from the allowance established at December 31, 1998 will
be finally determined during the second quarter and recorded at
that time.
Selling and Administrative Expenses
Selling and administrative expenses increased $1,113,000 or
8.9% for the quarter ended March 31, 1999 to $13,684,000 from
$12,571,000 last year. The increase in selling expenses for the
quarter is principally due to increased sales commissions and
other variable costs associated with higher sales volume and to
planned increases in advertising and promotional costs. Total
advertising and promotional expenditures totaled 7.0% and 6.2% of
net sales for the quarters ended March 31, 1999 and March 31,
1998, respectively. Administrative expenses for the quarter
ended March 31, 1999 increased compared to the same period in the
prior year primarily due to a non-recurring reduction in expenses
during the first quarter of 1998. Selling and administrative
expenses as a percentage of net sales decreased to 36.8% for the
quarter ended March 31, 1999 from 37.4% last year reflecting the
higher sales volume.
Interest Expense
Net interest expense increased $100,000 compared to the same
period in the prior year primarily as a result of $78,000 in non-
recurring interest income recorded in the first quarter of 1998.
The effect on interest expense of the increased borrowing levels
during the quarter ended March 31, 1999 was, for the most part,
negated by lower interest rates.
Provision for Income Taxes
The Company recorded a provision for income taxes on
domestic pretax earnings for the quarter ended March 31, 1999 at
approximately the blended state and federal statutory rates. No
income tax benefit is anticipated on the losses incurred by the
Company's Costa Rican subsidiary. In the first quarter of 1998,
the Company recorded a provision for incomes taxes at an
effective rate of 39% which approximated blended state and
federal statutory rates.
Liquidity and Capital Resources
The Company's working capital increased by $179,000 during
quarter ended March 31, 1999 compared to an increase of
$1,385,000 for the quarter ended March 31, 1998.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (continued)
As is customary in the fashion accessories industry,
substantial percentages of the Company's sales and earnings occur
in the months of September, October and November, during which
the Company makes significant shipments of its products to
retailers for sale during the holiday season. As a result,
receivables peak in the fourth quarter. The Company builds its
inventory during the year to meet the demand for the holiday
season. The required cash is provided by a revolving credit
facility.
Cash used in operations for the quarter totaled $6,237,000
consisting primarily of increases in accounts receivable
balances, decreases in accounts payable and accrued liabilities
and a decrease in income taxes payable, offset in part by a
reduction in inventory. Accounts receivable increased $4,797,000
primarily due to increased sales during the quarter and to
seasonal reductions in allowances. Accounts receivable allowances
decreased due to actual charges processed for cash discounts, in-
store markdowns, cooperative advertising, and customer returns
primarily relating to 1998. These reductions are partially offset
by increases resulting from accruals associated with current
period sales activity. Income taxes payable declined by
$1,380,000 after payments made during the quarter. Inventory
levels fell by $1,387,000 reflecting the Company's efforts to
reduce inventory levels and dispose of excess and out-of-line
merchandise.
Cash used in investing activities was $588,000 for capital
expenditures and insurance premiums. Cash provided by financing
activities totaled $6,374,000 consisting primarily of net
borrowings under the Company's revolving credit agreement.
Year 2000
Management's present assessment is that the Company
will be able to modify its significant software systems on a
timely basis to make them Year 2000 compliant without material
effects on the Company's business or results of operations. This
assessment is unchanged from that previously reported.
Management has completed the identification of date
issues associated with key applications software and the
necessary modifications are, for the most part, complete. Most of
the Company's applications software was internally developed and
the necessary modifications have been and are being made
utilizing internal resources.
Through consultation with its vendors the Company
believes that the operating systems for key hardware components
are Year 2000 compliant. Assessment of the Company's network is
substantially complete and various components have been
identified as requiring upgrades from vendors. The nature of
these is currently under consideration but the necessary changes
are expected to be completed by June 30, 1999. Substantial
completion of testing is expected during the second quarter of
1999.
The process of identifying potential issues associated
with embedded technology or so called non-IT systems has been
initiated. Management has considered the Company's manufacturing
processes, the age of its facilities and the associated building
systems in determining that non-IT systems represent relatively
low risk.
The Company's principal retail customers have been
extending the scope of their electronic interfaces with the
Company and management believes that this is likely to continue.
To date, these interfaces have consisted principally of sales
order entry transactions through Electronic Data Interchange
("EDI"). The Company has been able to respond to its customers'
Year 2000 requirements without material effects on the Company's
business or results of operations and management presently has no
reason to believe that the Company will not be able to continue
to do so. The Company has installed Year 2000 compliant EDI
software.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (continued)
In September 1998, the Company implemented a program to
contact third parties with whom it has material business
relationships to obtain information and representations with
respect to the respective readiness of each for Year 2000. Third
parties contacted include major customers, determined regardless
of whether there is an existing EDI relationship, major vendors
and suppliers of key services such as utilities,
telecommunications and banking. The Company has received
responses to most of these requests.
Various third parties with whom the Company has material
business relationships have represented that they have programs
in place to attain Year 2000 compliance but with a completion
date in 1999. Since many of the Company's third party
relationships are with public companies the Company has
instituted a program to review their public filings with respect
to the Year 2000 issue. The most recent information which the
Company has reviewed is set forth in quarterly filings with the
Securities and Exchange Commission for September and October
1998. These filings reveal that, in general, the companies
were not currently Year 2000 compliant but that they expect to
achieve compliance sometime prior to the end of the third quarter
of 1999. The Company will update this process in May following
the completion of the relevant year end filings. Management has
determined that for the time being it is in the best interest of
the Company to periodically monitor the progress of key vendors
and suppliers by obtaining updated representations and/or by
review of their public disclosures, where available. The Company
expects to assess each individual case in the third quarter of
1999 in light of the information then available.
With respect to material customers, management is relatively
less concerned about EDI transactions per se because of their
defined protocols, the utilization of generally available third
party translators and the ability to conduct mutual testing.
However, there remains the risk that EDI customers' may
experience other systems issues internal to them which disrupt
the functionality of otherwise Year 2000 compliant EDI systems.
A significant disruption in EDI processing could materially
impair the Company's shipments. Management has determined that,
for the time being, it is in the best interest of the Company to
periodically monitor the progress of key customers by obtaining
updated representations and/or by review of their public
disclosures (see above), where available. Major customers'
progress will be reassessed in the third and fourth quarters of
1999 and, if issues remain, management anticipates the ability to
ameliorate the problem, at least temporarily, through development
of mutually agreed strategies which might include some
acceleration of order placement during 1999. January and February
are typically important cash flow months as the Company's retail
customers remit payments for their seasonally high pre-holiday
purchases. Irrespective of EDI, it is possible that the ability
of one or more material customers to process payments may be
impaired. Management believes that the existing revolving line
of credit will be adequate for a number of months in the event of
unanticipated delays in customer remittances.
Presently, it is management's view that service providers
represent the greatest conceptual risk to material disruption in
the Company's operations. The Company is dependent upon utilities
and telecommunications entities for day-to-day operations as well
as upon the ability of its banks to provide cash receipts and
disbursements services as well as working capital. To the extent
that any of these entities are significantly impaired for more
than a relatively short period the corresponding impact on the
Company is likely to be material. Service providers are included
among the companies whose public filings the Company is reviewing
as described above.
The Company has not yet developed a contingency plan and has
no definitive plans in this regard other than to quarterly
reassess the need to develop a formal plan during 1999. This
assessment will be based for the most part on the results of the
periodic monitoring of material third parties as described above
and the internal testing anticipated during the second quarter.
Management notes that relatively modest actions may be sufficient
to significantly reduce certain risks to the Company. For
example, if it appears warranted, management has the ability
prior to year end to accelerate procurement of inventories which
would otherwise take place in the first quarter. In addition,
management believes that alternative sources of supply are
readily available for most of its purchased materials and
finished products and that relationships with such sources could
be developed within a few months. Management believes that the
Company's seasonality with reduced activity in the first quarter
provides something of a buffer against the worst case customer
and service provider scenarios. The Company's exposure to lost
revenue and the risk of reduction in its other activities will be
significantly less in the first quarter of 2000 than in the last
quarter of 1999. January will be the first month in a Year 2000
operating environment and January is historically a relatively
low volume month for the Company.
As described above, most of the Company's applications
software was internally developed and the necessary modifications
have been and are being made utilizing existing internal
personnel resources. These resources are included in the
Company's recurring IT budget. Management does not believe that
use of existing resources for Year 2000 remediation has been
materially detrimental to the completion of other significant IT
projects. The Company has had to purchase specific Year 2000
upgrades with respect to certain third party software
applications. The aggregate cost of these upgrades through March
31, 1999 was approximately $75,000. The Company' current
estimate for additional expenditures specifically required in
response to Year 2000 issues is $30,000, principally to make the
Company's network Year 2000 compliant. However, it remains
possible that the planned testing process will reveal new areas
requiring expenditures. The Company has been working toward
standard minimum personal computer (PC) specifications and
common PC operating systems. Acceleration of this program, if
any, required by Year 2000 considerations is not expected to be
significant.
"Forward Looking Statements"
Certain of the preceding paragraphs contain "forward
looking statements" under the securities laws of the United
States. Actual results may vary from anticipated results as a
result of various risks and uncertainties, including sales
patterns, overall economic conditions, competition, pricing,
consumer buying trends and other factors.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit No. Description
10.0 Stock Option Contract dated as of April 22, 1999
between the Company and John J. Macht.
10.1 Stock Option Contract dated as of April 22, 1999
between the Company and Raymond Vise.
10.2 Stock Option Contract dated as of April 22, 1999
between the Company and Mark Abramowitz.
27.0 Financial Data Schedule.
(b) Reports on Form 8-K - none
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
SWANK, INC
Registrant
/s/ Christopher F. Wolf
Christopher F. Wolf
Senior Vice President,
Chief Financial Officer
And Treasurer
Date: May 10, 1999
SWANK, INC.
1994 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
NON-QUALIFIED STOCK OPTION CONTRACT
THIS NON-QUALIFIED STOCK OPTION CONTRACT entered into as of
the 22nd day of April 1999, between Swank, Inc., a Delaware
corporation (the "Company"), and John J. Macht (the
"Optionee").
W I T N E S S E T H
1. The Company, in accordance with the terms and
conditions of the 1994 Non-Employee Director Stock Option Plan of
the Company (the "Plan"), grants as of April 22, 1999 to the
Optionee an option to purchase an aggregate of 5,000 shares of
the Common Stock, $.10 par value per share, of the Company
("Common Stock"), at $1.219 per share, being 100% of the fair
market value of such shares of Common Stock on such date.
2. The term of this option shall be 5 years from April 22,
1999, subject to earlier termination as provided in this Contract
and in the Plan. This option shall be immediately exercisable as
to 100% of the number of shares of Common Stock subject hereto.
3. This option shall be exercised by giving written notice
to the Company at its principal office, presently 6 Hazel Street,
Attleboro, Massachusetts 02703-0962, Attention: Treasurer,
stating that the Optionee is exercising this stock option,
specifying the number of shares being purchased and accompanied
by payment in full of the aggregate purchase price thereof in
cash or by check. In no event may a fraction of a share of
Common Stock be purchased under this option.
4. Notwithstanding the foregoing, and without limiting the
provisions of paragraph 11 of the Plan, this option shall not be
exercisable by the Optionee unless (a) a registration statement
under the Securities Act of 1933, as amended (the "Securities
Act") with respect to the shares of Common stock to be received
upon the exercise of the option shall be effective and current at
the time of exercise or (b) there is an exemption from
registration under the Securities Act for the issuance of the
shares of Common Stock upon exercise. At the request of the
Board of Directors, the Optionee shall execute and deliver to the
Company his representation and warranty, in form and substance
satisfactory to the Board of Directors, that the shares of Common
Stock to be issued upon the exercise of the option are being
acquired by the Optionee for his own account, for investment only
and not with a view to the resale or distribution thereof without
the meaning of the Securities Act. Nothing herein shall be
construed so as to obligate the Company to register the shares
subject to the option under the Securities Act.
-1-
5. Notwithstanding anything herein to the contrary, if at
any time the Board of Directors shall determine, in its
discretion, that the listing or qualification of the shares of
Common Stock subject to this option on any securities exchange or
under any applicable law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of an option,
or the issue of shares of Common Stock thereunder, this option
may not be exercised in whole or in part unless such listing,
qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Board of
Directors, in its discretion.
6. Nothing in the Plan or herein shall confer upon the
Optionee any right to continue as a director of the Company.
7. The Company may endorse or affix appropriate legends
upon the certificates for shares of Common Stock issued upon
exercise of this option and may issue such "stop transfer"
instructions to its transfer agent in respect of such shares as
it determines, in its discretion, to be necessary or appropriate
to (a) prevent a violation of, or to perfect an exemption from,
the registration requirement of the Securities Act, or (b)
implement the provisions of the Plan or any agreement between the
Company and the Optionee with respect to such shares of Common
Stock.
8. The Company and the Optionee agree that they will both
be subject to and bound by all of the terms and conditions of the
Plan, a copy of which is attached hereto and made part hereof.
In the event the Optionee is no longer a director of the Company
or in the event of his death or disability (as defined in the
Plan), his rights hereunder shall be governed by and be subject
to the provisions of the Plan. In the event of a conflict
between the terms of this Contract and the terms of the Plan, the
terms of the Plan shall govern.
9. The Optionee represents and agrees that he will comply
with all applicable laws relating to the Plan and the grant and
exercise of the option and the disposition of the shares of
Common Stock acquired upon exercise of the option, including
without limitation, federal and state securities and "blue sky"
laws.
10. This option is not transferrable otherwise than by will
or the laws of descent and distribution and may be exercised,
during the lifetime of the Optionee, only by him or his legal
representatives.
11. This Contract shall be binding upon and inure to the
benefit of any successor or assign of the Company and to any
heir, distributee, executor, administrator or legal
representative entitled under the Plan and by law to the
Optionee's rights hereunder.
-2-
12. This Contract shall be governed by and construed in
accordance with the laws of the State of Delaware.
13. The invalidity or illegality of any provision herein
shall not affect the validity of any other provision.
14. The Optionee agrees that the Company may amend the Plan
and the options granted to the Optionee under the Plan, subject
to the limitations contained in the Plan
IN WITNESS WHEREOF, the parties hereto have executed this
contract as of the day and year first above written.
SWANK, INC.
By: /s/ John Tulin
Its: President
/s/ John J. Macht, President
Optionee
The Macht Group
99 High St., 20th Fl.
Address
Boston, MA 02110
-3-
SWANK, INC.
1994 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
NON-QUALIFIED STOCK OPTION CONTRACT
THIS NON-QUALIFIED STOCK OPTION CONTRACT entered into as of
the 22nd day of April 1999, between Swank, Inc., a Delaware
corporation (the "Company"), and Raymond Vise (the
"Optionee").
W I T N E S S E T H
1. The Company, in accordance with the terms and
conditions of the 1994 Non-Employee Director Stock Option Plan of
the Company (the "Plan"), grants as of April 22, 1999 to the
Optionee an option to purchase an aggregate of 5,000 shares of
the Common Stock, $.10 par value per share, of the Company
("Common Stock"), at $1.219 per share, being 100% of the fair
market value of such shares of Common Stock on such date.
2. The term of this option shall be 5 years from April 22,
1999, subject to earlier termination as provided in this Contract
and in the Plan. This option shall be immediately exercisable as
to 100% of the number of shares of Common Stock subject hereto.
3. This option shall be exercised by giving written notice
to the Company at its principal office, presently 6 Hazel Street,
Attleboro, Massachusetts 02703-0962, Attention: Treasurer,
stating that the Optionee is exercising this stock option,
specifying the number of shares being purchased and accompanied
by payment in full of the aggregate purchase price thereof in
cash or by check. In no event may a fraction of a share of
Common Stock be purchased under this option.
4. Notwithstanding the foregoing, and without limiting the
provisions of paragraph 11 of the Plan, this option shall not be
exercisable by the Optionee unless (a) a registration statement
under the Securities Act of 1933, as amended (the "Securities
Act") with respect to the shares of Common stock to be received
upon the exercise of the option shall be effective and current at
the time of exercise or (b) there is an exemption from
registration under the Securities Act for the issuance of the
shares of Common Stock upon exercise. At the request of the
Board of Directors, the Optionee shall execute and deliver to the
Company his representation and warranty, in form and substance
satisfactory to the Board of Directors, that the shares of Common
Stock to be issued upon the exercise of the option are being
acquired by the Optionee for his own account, for investment only
and not with a view to the resale or distribution thereof without
the meaning of the Securities Act. Nothing herein shall be
construed so as to obligate the Company to register the shares
subject to the option under the Securities Act.
-1-
5. Notwithstanding anything herein to the contrary, if at
any time the Board of Directors shall determine, in its
discretion, that the listing or qualification of the shares of
Common Stock subject to this option on any securities exchange or
under any applicable law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of an option,
or the issue of shares of Common Stock thereunder, this option
may not be exercised in whole or in part unless such listing,
qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Board of
Directors, in its discretion.
6. Nothing in the Plan or herein shall confer upon the
Optionee any right to continue as a director of the Company.
7. The Company may endorse or affix appropriate legends
upon the certificates for shares of Common Stock issued upon
exercise of this option and may issue such "stop transfer"
instructions to its transfer agent in respect of such shares as
it determines, in its discretion, to be necessary or appropriate
to (a) prevent a violation of, or to perfect an exemption from,
the registration requirement of the Securities Act, or (b)
implement the provisions of the Plan or any agreement between the
Company and the Optionee with respect to such shares of Common
Stock.
8. The Company and the Optionee agree that they will both
be subject to and bound by all of the terms and conditions of the
Plan, a copy of which is attached hereto and made part hereof.
In the event the Optionee is no longer a director of the Company
or in the event of his death or disability (as defined in the
Plan), his rights hereunder shall be governed by and be subject
to the provisions of the Plan. In the event of a conflict
between the terms of this Contract and the terms of the Plan, the
terms of the Plan shall govern.
9. The Optionee represents and agrees that he will comply
with all applicable laws relating to the Plan and the grant and
exercise of the option and the disposition of the shares of
Common Stock acquired upon exercise of the option, including
without limitation, federal and state securities and "blue sky"
laws.
10. This option is not transferrable otherwise than by will
or the laws of descent and distribution and may be exercised,
during the lifetime of the Optionee, only by him or his legal
representatives.
11. This Contract shall be binding upon and inure to the
benefit of any successor or assign of the Company and to any
heir, distributee, executor, administrator or legal
representative entitled under the Plan and by law to the
Optionee's rights hereunder.
-2-
12. This Contract shall be governed by and construed in
accordance with the laws of the State of Delaware.
13. The invalidity or illegality of any provision herein
shall not affect the validity of any other provision.
14. The Optionee agrees that the Company may amend the Plan
and the options granted to the Optionee under the Plan, subject
to the limitations contained in the Plan
IN WITNESS WHEREOF, the parties hereto have executed this
contract as of the day and year first above written.
SWANK, INC.
By: /s/ John Tulin
Its: President
/s/ Raymond Vise
Optionee
8 El Paseo
Address
Irvine, CA 92612-2907
-3-
SWANK, INC.
1994 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
NON-QUALIFIED STOCK OPTION CONTRACT
THIS NON-QUALIFIED STOCK OPTION CONTRACT entered into as of
the 22nd day of April 1999, between Swank, Inc., a Delaware
corporation (the "Company"), and Mark Abramowitz (the
"Optionee").
W I T N E S S E T H
1. The Company, in accordance with the terms and
conditions of the 1994 Non-Employee Director Stock Option Plan of
the Company (the "Plan"), grants as of April 22, 1999 to the
Optionee an option to purchase an aggregate of 5,000 shares of
the Common Stock, $.10 par value per share, of the Company
("Common Stock"), at $1.219 per share, being 100% of the fair
market value of such shares of Common Stock on such date.
2. The term of this option shall be 5 years from April 22,
1999, subject to earlier termination as provided in this Contract
and in the Plan. This option shall be immediately exercisable as
to 100% of the number of shares of Common Stock subject hereto.
3. This option shall be exercised by giving written notice
to the Company at its principal office, presently 6 Hazel Street,
Attleboro, Massachusetts 02703-0962, Attention: Treasurer,
stating that the Optionee is exercising this stock option,
specifying the number of shares being purchased and accompanied
by payment in full of the aggregate purchase price thereof in
cash or by check. In no event may a fraction of a share of
Common Stock be purchased under this option.
4. Notwithstanding the foregoing, and without limiting the
provisions of paragraph 11 of the Plan, this option shall not be
exercisable by the Optionee unless (a) a registration statement
under the Securities Act of 1933, as amended (the "Securities
Act") with respect to the shares of Common stock to be received
upon the exercise of the option shall be effective and current at
the time of exercise or (b) there is an exemption from
registration under the Securities Act for the issuance of the
shares of Common Stock upon exercise. At the request of the
Board of Directors, the Optionee shall execute and deliver to the
Company his representation and warranty, in form and substance
satisfactory to the Board of Directors, that the shares of Common
Stock to be issued upon the exercise of the option are being
acquired by the Optionee for his own account, for investment only
and not with a view to the resale or distribution thereof without
the meaning of the Securities Act. Nothing herein shall be
construed so as to obligate the Company to register the shares
subject to the option under the Securities Act.
-1-
5. Notwithstanding anything herein to the contrary, if at
any time the Board of Directors shall determine, in its
discretion, that the listing or qualification of the shares of
Common Stock subject to this option on any securities exchange or
under any applicable law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of an option,
or the issue of shares of Common Stock thereunder, this option
may not be exercised in whole or in part unless such listing,
qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Board of
Directors, in its discretion.
6. Nothing in the Plan or herein shall confer upon the
Optionee any right to continue as a director of the Company.
7. The Company may endorse or affix appropriate legends
upon the certificates for shares of Common Stock issued upon
exercise of this option and may issue such "stop transfer"
instructions to its transfer agent in respect of such shares as
it determines, in its discretion, to be necessary or appropriate
to (a) prevent a violation of, or to perfect an exemption from,
the registration requirement of the Securities Act, or (b)
implement the provisions of the Plan or any agreement between the
Company and the Optionee with respect to such shares of Common
Stock.
8. The Company and the Optionee agree that they will both
be subject to and bound by all of the terms and conditions of the
Plan, a copy of which is attached hereto and made part hereof.
In the event the Optionee is no longer a director of the Company
or in the event of his death or disability (as defined in the
Plan), his rights hereunder shall be governed by and be subject
to the provisions of the Plan. In the event of a conflict
between the terms of this Contract and the terms of the Plan, the
terms of the Plan shall govern.
9. The Optionee represents and agrees that he will comply
with all applicable laws relating to the Plan and the grant and
exercise of the option and the disposition of the shares of
Common Stock acquired upon exercise of the option, including
without limitation, federal and state securities and "blue sky"
laws.
10. This option is not transferrable otherwise than by will
or the laws of descent and distribution and may be exercised,
during the lifetime of the Optionee, only by him or his legal
representatives.
11. This Contract shall be binding upon and inure to the
benefit of any successor or assign of the Company and to any
heir, distributee, executor, administrator or legal
representative entitled under the Plan and by law to the
Optionee's rights hereunder.
-2-
12. This Contract shall be governed by and construed in
accordance with the laws of the State of Delaware.
13. The invalidity or illegality of any provision herein
shall not affect the validity of any other provision.
14. The Optionee agrees that the Company may amend the Plan
and the options granted to the Optionee under the Plan, subject
to the limitations contained in the Plan
IN WITNESS WHEREOF, the parties hereto have executed this
contract as of the day and year first above written.
SWANK, INC.
By: /s/ John Tulin
Its: President
/s/ Mark Abramowitz
Optionee
Parker Chapin Flattau & Klimpl
1211 Avenue of the Americas
Address
New York, NY 10036
-3-
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000095779
<NAME> SWANK, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 306
<SECURITIES> 0
<RECEIVABLES> 27,988
<ALLOWANCES> 8,435
<INVENTORY> 40,194
<CURRENT-ASSETS> 65,092
<PP&E> 27,845
<DEPRECIATION> 21,702
<TOTAL-ASSETS> 77,243
<CURRENT-LIABILITIES> 35,408
<BONDS> 0
0
0
<COMMON> 1,690
<OTHER-SE> 29,619
<TOTAL-LIABILITY-AND-EQUITY> 77,243
<SALES> 37,199
<TOTAL-REVENUES> 37,199
<CGS> 23,144
<TOTAL-COSTS> 23,144
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 13
<INTEREST-EXPENSE> 348
<INCOME-PRETAX> 23
<INCOME-TAX> 90
<INCOME-CONTINUING> 115
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 115
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
