<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 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 no. 1-5354
SWANK, INC.
(Exact name of Registrant as specified in its charter)
Delaware 04-1886990
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6 Hazel Street, Attleboro, Massachusetts 02703
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (508) 222-3400
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common
Stock, $.10 par value
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X . No .
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of the Registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /
<PAGE>
The aggregate market value of the Common Stock of the
Registrant held by non-affiliates of the Registrant on March 12,
1999 was $8,174,013. Such aggregate market value is computed by
reference to the last sale price of the Common Stock on such date.
The number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date:
16,569,423 shares of Common Stock as of the close of business on
March 12, 1999.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to
Stockholders for the fiscal year ended December 31,
1998 - Incorporated by reference into Parts I and II of
this Form 10-K.
Portions of the Registrant's Proxy Statement relating
to the Registrant's 1999 Annual Meeting of Stockholders -
Incorporated by reference into Part III of this Form 10-K
<PAGE>
PART I
Item 1. Business.
Swank, Inc. (the "Company") was incorporated on April 17,
1936. The Company is engaged in the manufacture, sale and
distribution of men's and women's fashion accessories under the
names "Geoffrey Beene", "Pierre Cardin", "Claiborne", "Kenneth
Cole", "Yves Saint Laurent", "Swank", "Slates", "Colours by
Alexander Julian", "Anne Klein", "Anne Klein II" and "Guess?",
among others.
Products
The Company's segments, men's accessories and women's
accessories, are described below:
Men's Accessories. Men's leather accessories, principally
belts, wallets and other small leather goods including billfolds,
key cases, card holders and other items, and suspenders are
distributed under the names "Geoffrey Beene", "Pierre Cardin",
"Claiborne", "Kenneth Cole", "Yves Saint Laurent", "Guess?",
"Swank" and "Colours by Alexander Julian". In addition, belts and
small leather goods are distributed under the name "Slates". The
Company also manufactures and distributes men's leather accessories
for customers' private labels. Men's jewelry consists principally
of cuff links, tie klips, chains and tacs, bracelets, neck chains,
vest chains, collar pins, key rings, money klips which are
distributed under the names "Geoffrey Beene", "Pierre Cardin",
"Claiborne", "Kenneth Cole", "Yves Saint Laurent", "Guess?",
"Swank" and "Colours by Alexander Julian".
Women's Accessories. Women's accessories consist of women's
jewelry products, primarily necklaces, earrings, pendants, chokers,
bracelets, hair ornaments and scarf clips which are distributed
under the names "Anne Klein" and "Anne Klein II", "Guess?", "Yves
Saint Laurent" and "Kenneth Cole". The Company also manufactures
women's jewelry (principally necklaces, brooches, hair accessories
and earrings) for private label distribution.
As is customary in the fashion accessories industry,
substantial percentages of the Company's sales and earnings for
each of its segments 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. The
Company's bank borrowings are at a peak during the months of
August, September, October and November to enable the Company to
carry significant amounts of inventory and accounts receivable.
In addition to product, pricing and terms of payment, the
Company's customers generally consider one or more factors, such as
electronic order processing and timeliness and completeness of
shipments, as important in maintaining ongoing relationships. In
addition, the Company generally will allow customers to return
merchandise in order to achieve proper stock balances. These
factors, among others, have resulted in the Company increasing its
inventory levels in order to meet customer imposed requirements.
These practices are applicable to each of the Company's segments
and the Company believes that they are substantially consistent
throughout the fashion accessories industry.
<PAGE>
The relative contributions to total net sales and gross
profit from the Company's segments, men's accessories
and women's accessories, for the last three fiscal
years and the relative year-to-year changes in such
contributions during such period are shown in the following
table:
Fiscal Year Ended December 31,
Percentage Change
1998 1997 1996 1998-97 1997-96
Contribution to Net Sales
$ 95,356 $ 86,574 $ 82,830 Men's Accessories 10% 5%
49,972 43,999 41,386 Women's Accessories 14% 6%
6,442 6,501 8,426 Other (1)% (23)%
$151,770 $ 137,074 $132,642 Total Net Sales 11% 3%
Contribution to Gross Profit
$ 36,986 $ 34,594 $ 35,123 Men's Accessories 7% (2)%
24,008 21,276 18,679 Women's Accessories 13% 14%
3,646 3,657 4,444 Other 0% (18)%
$ 64,640 $ 59,527 $54,246 Total Gross Profit 9% 2%
The components of Net Sales are gross sales less cash
discounts, allowances, and customer returns. Other includes sales
of the Company's products and other products through the Company's
factory outlet stores.
Certain other financial information with regard to men's
accessories and women's accessories, including revenue, segment
profit and segment assets, appears in Note K to the Company's
consolidated financial statements on pages 14 and 15 of the
Company's 1998 Annual Report to Stockholders (the "1998 Annual
Report"), which is Exhibit 13.01 to this Annual Report on
Form 10-K, which information is incorporated herein by reference.
Sales and Distribution
The Company's customers are primarily major retailers within the
United States. Sales to the Company's two largest customers,
Federated Department Stores, Inc. and The May Department Stores
Company, accounted for approximately 16% and 15%, respectively, of
consolidated net sales in 1998, approximately 17% and 13%,
respectively, in 1997 and approximately 17% and 13%, respectively,
in 1996. In addition, Dayton Hudson Corp. accounted for
approximately 10% of consolidated net sales in 1998. No other
customer accounted for more than 10% of consolidated net sales
during fiscal years 1998, 1997 and 1996 . Exports to foreign
countries accounted for 5%, 8% and 9% of consolidated net sales in
each of the Company's fiscal years ended December 31, 1998, 1997
and 1996, respectively.
<PAGE>
Approximately 97 salespeople and district managers are
engaged in the sale of products of the Company, working out of
sales offices located in four major cities in the United States.
The Company has separate sales forces to handle the distribution
to retailers of men's accessories and women's accessories. In
addition, the Company sells certain of its products at retail in 15
factory outlet stores located in 10 states. The Company has
licensed or sub-licensed the production and sale of certain of its
lines in certain foreign countries under royalty arrangements.
Manufacturing
Items manufactured by the Company accounted for
approximately 53% of consolidated net sales in fiscal 1998. The
Company manufactures and/or assembles women's and men's jewelry
products at the Company's plant in Attleboro, Massachusetts. The
Company's 65% owned subsidiary, Joyas y Cueros de Costa Rica, S.A.
("Joyas y Cueros"), manufactures women's jewelry at a plant
located in Cartago, Costa Rica. The Company manufactures belts at
the Company's plant located in Norwalk, Connecticut and is in the
process of commencing the manufacture of belts through Joyas y
Cueros at a second facility located in Cartago, Costa Rica.
Reference is made to the information with regard to Joyas y Cueros
set forth below in this Item 1 under the caption "Recent
Developments".
The Company purchases substantially all of its small
leather goods, principally wallets, from a single supplier in
India. Unexpected disruption of this source of supply could have
an adverse effect on the Company's small leather goods business in
the short-term depending upon the Company's inventory position and
on the seasonal shipping requirements at that time. However, the
Company believes that alternative sources for small leather goods
are available and could be utilized by the Company in several
months. The Company also purchases finished women's jewelry,
finished belts and other accessories as well as certain belt
components, including buckles, from a number of suppliers in
Europe, South America and the Far East. The Company believes that
alternative suppliers are readily available for substantially all
purchased items. Raw materials are purchased in the open market
from a number of domestic and foreign suppliers and are readily
available.
Advertising Media and Promotion
Substantial expenditures on advertising and promotions
are an integral part of the Company's business. Approximately 7%
of net sales was expended on promotions in 1998, of which
approximately 1% was for advertising media, principally in national
consumer magazines, trade publications, newspapers, radio and
television. The remaining approximately 6% was expended for in-
store promotions, cooperative advertising, fixtures, displays and
point-of-sale materials.
<PAGE>
Competition
The businesses in which the Company is engaged are highly
competitive. The Company competes with, among others, Trafalgar,
Salant, Humphrey, Textan, Tandy Brands Accessories, Inc. and
private label programs in men's belts; Tandy Brands Accessories,
Inc., Mundy and retail private label programs in small leather
goods; David Donahue in men's jewelry; and Monet, Carol Lee and
Victoria Creations in women's jewelry. The ability of the Company
to continue to compete will depend largely upon its ability to
create new designs and products, to meet the increasing service and
technology requirements of its customers and to offer consumers
high quality merchandise at popular prices.
Patents, Trademarks and Licenses
The Company owns the rights to various patents,
trademarks, trade names and copyrights and has exclusive licenses
in the United States for, among other things, (i) men's and women's
leather accessories under the name "Pierre Cardin", (ii) men's
costume jewelry under the name "Pierre Cardin", (iii) women's
costume jewelry under the names "Anne Klein" and "Anne Klein II",
and "Kenneth Cole", (iv) men's leather accessories and costume
jewelry under the names "Geoffrey Beene", "Claiborne", "Kenneth
Cole", "Yves Saint Laurent" and "Colours by Alexander Julian", (v)
men's small leather goods and men's and women's costume jewelry
under the name "Guess?" and (vi) men's belts and small leather
goods under the name "Slates". The Company also has exclusive
licenses for men's and women's costume jewelry under the name "Yves
Saint Laurent" in the United States and certain other areas of the
world. The Company's "Geoffrey Beene", "Pierre Cardin",
"Claiborne", "Kenneth Cole", "Yves Saint Laurent", "Anne Klein" and
"Anne Klein II" and "Guess?" licenses collectively may be consid-
ered material to the Company's business. The Company does not
believe that its business is materially dependent on any one
license agreement. The "Pierre Cardin" licenses provide for
percentage royalty payments not exceeding 5% of sales. The "Anne
Klein", "Anne Klein II" , "Claiborne" and "Slates" licenses provide
for percentage royalty payments not exceeding 6% of sales. The
"Guess?" and "Geoffrey Beene" licenses provide for percentage
royalty payments not exceeding 7% of sales. The "Yves Saint
Laurent" leather accessories and "Kenneth Cole" licenses provide
for percentage royalty payments not exceeding 8% of sales. The
"Yves Saint Laurent" jewelry licenses provide for percentage
royalty payments not exceeding 10% of sales. The license
agreements to which the Company is a party generally specify
minimum royalties and minimum advertising and promotion
expenditures. The Company's "Geoffrey Beene" license expires June
30, 2002. The Company's license to distribute "Pierre Cardin"
jewelry expires December 31, 1999. The Company's licenses to
distribute "Pierre Cardin" leather accessories and "Kenneth Cole"
leather accessories expire December 31, 2000. The Company's
"Kenneth Cole" jewelry licenses and its "Claiborne", "Slates" and
"Yves Saint Laurent" licenses expire December 31, 2001. The
Company's "Anne Klein" and "Anne Klein II" license expires December
31, 1999. The Company's "Guess?" licenses expire June 30, 2000.
<PAGE>
Employees
The Company has approximately 1,490 employees, of whom
approximately 1,135 are production employees. Approximately 265
employees are employed by Joyas y Cueros at its facilities located
in Costa Rica. None of the Company's or Joyas y Cueros' employees
are represented by labor unions and management believes its
relationships with their respective employees to be satisfactory.
Recent Developments
In January 1999, the Company and Garnier & Garnier, S.A. of
San Jose, Costa Rica formed a joint venture, Joyas y Cueros, for
the manufacture in Costa Rica of jewelry and belts. The Company
contributed approximately $1,700,000 in cash, equipment and
inventory to the newly-formed joint venture in exchange for 65% of
the shares of Joyas y Cueros. Garnier & Garnier, S.A., through its
wholly-owned subsidiary Manufacturera J.P. Nina, S.A., contributed
approximately $900,000 in equipment and inventory in exchange for
35% of the shares of Joyas y Cueros. Substantially all of the
revenues of Joyas y Cueros are presently derived from the sale of
products to the Company.
Item 2. Properties.
The Company's main administrative office is located in a
three-story building, containing approximately 193,000 square feet,
on a seven-acre site owned by the Company in Attleboro,
Massachusetts. The Company manufactures and/or assembles jewelry
products for both the women's accessories and men's accessories
segments at this facility.
The Company's national and international sales offices,
executive offices and regional sales offices are located in leased
premises at 90 Park Avenue, New York City. The leases of such pre-
mises expire in 2000. Regional sales offices are also located in
leased premises in Atlanta, Chicago and Beverly Hills and a branch
office is leased in Scottsdale. The leases for the preceding
premises expire from 1998 to 2003. Collectively, these offices
contain approximately 25,000 square feet.
The Company also leases a warehouse containing
approximately 242,000 square feet in Taunton, Massachusetts, which
is used in the distribution of all of the Company's products. In
addition, one of the Company's factory stores is located within
the Taunton location. The lease for these premises expires in
2001.
Men's belts, suspenders and certain other leather
accessories within the men's accessories segment are manufactured
in premises owned by the Company in Norwalk, Connecticut consisting
of a manufacturing plant and office space in a 126,500 square foot
building, located on approximately seven and one-half acres.
<PAGE>
The Company manufactures and/or assembles women's
jewelry products in a leased building of approximately 27,700
square feet. The Company is in the process of commencing the
manufacture of men's belts in a leased building of approximately
45,600 square feet. Both of these buildings are located in
Cartago, Costa Rica. The leases for these premises expire in 2003.
The Company's manufacturing and distribution facilities
are equipped with modern machinery and equipment, substantially all
of which is owned by the Company with the remainder leased. In
management's opinion, the Company's properties and machinery and
equipment are adequate for the conduct of the respective businesses
to which they relate.
The Company presently operates 14 factory outlet stores
in addition to the outlet store in Taunton, Massachusetts as
described above. These stores have leases with terms not in excess
of five years and contain approximately 32,000 square feet in the
aggregate.
Item 3. Legal Proceedings.
(a) On June 7, 1990, the Company received notice from
the United States Environmental Protection Agency ("EPA") that it,
along with fifteen others, had been identified as a Potentially
Responsible Party ("PRP") in connection with the release of
hazardous substances at a Superfund site located in Massachusetts.
This notice does not constitute the commencement of a proceeding
against the Company nor necessarily indicate that a proceeding
against the Company is contemplated. The Company, along with six
other PRP's, has entered into an Administrative Order pursuant to
which, inter alia, they have undertaken to conduct a remedial
investigation/feasibility study (the "RI/FS") with respect to the
alleged contamination at the site.
It is the position of the PRPs who have undertaken to
perform the RI/FS at the Massachusetts Superfund site that the
remedial investigation has been completed. The Massachusetts
Superfund site is adjacent to a municipal landfill that is in the
process of being closed under Massachusetts law. The Company
believes that the issues regarding the site are under discussion
among state and federal agencies due to the proximity of the site
to the landfill and the composition of waste at the site.
Therefore, it is premature to make a determination whether this
matter may have a material adverse effect on the company's
operating results and financial condition. The PRP Group's
accountant's records reflect group expenses since December 31,
1990, independent of legal fees, in the amount of $1,940,767 as of
December 31, 1998. The Company's share of costs for the RI/FS is
being allocated on an interim basis at 12.5177%.
In September 1991, the Company signed a judicial consent
decree relating to the Western Sand and Gravel site located in
Burrillville and North Smithfield, Rhode Island. The consent
decree was entered on August 28, 1992 by the United States District
Court for the District of Rhode Island. The most likely scenario
for remediation of the ground water at this site is through natural
attenuation which will be monitored for a period of up to 24 years.
Estimates of the costs of remediation range from approximately $2.8
million for natural attenuation to approximately $7.8
<PAGE>
million for other remediation. Based on current
participation, the Company's share is 7.99% of
approximately 75% of the costs. Management believes
that this site will not result in any material adverse
effect on the Company's operating results or financial condition
based on the results of periodic tests conducted at the site.
In 1988, the Company received notice from the Department
of Pollution Control and Ecology of the State of Arkansas that the
Company, together with numerous other companies, had been
identified as a PRP in connection with the release or threatened
release of hazardous substances from the Diaz Refinery, Incor-
porated site in Diaz, Arkansas. The Company has advised the State
of Arkansas that it intends to participate in negotiations with the
Department of Pollution Control and Ecology through the committees
formed by the PRPs. The Company has not received further
communications regarding the Diaz site. Therefore, it is premature
to make a determination whether this matter may have a material
adverse effect on the Company's operating results and financial
condition.
(b) No material pending legal proceedings were
terminated during the three-month period ended December 31, 1998.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Executive Officers of the Registrant
The executive officers of the Company are as follows:
Name Age Title
Marshall Tulin 81 Chairman of the Board and Director
John A. Tulin 52 President and Chief Executive
Officer and Director
James E. Tulin 47 Senior Vice President - Merchandising
and Director
Richard V. Byrnes, Jr. 39 Senior Vice President - Operations
Paul Duckett 58 Senior Vice President - Distribution and
Retail Store Operations
<PAGE>
Name Age Title
Melvin Goldfeder 62 Senior Vice President - Special Markets
Division
Eric P. Luft 43 Senior Vice President - Men's Division
Lewis Valenti 59 Senior Vice President - Women's Division
Christopher F. Wolf 50 Senior Vice President, Chief Financial
Officer, Treasurer and Secretary
There are no family relationships among any of the
persons listed above or among such persons and the directors of the
Company except that John A. Tulin and James E. Tulin are the sons
of Marshall Tulin.
Marshall Tulin has served as Chairman of the Board since
October 1995. He joined the Company in 1940, was elected a Vice
President in 1954 and President in 1957. Mr. Tulin has served as
a director of the Company since 1956.
John A. Tulin has served as President and Chief Executive
Officer of the Company since October 1995. Mr. Tulin joined the
Company in 1971, was elected a Vice President in 1974, Senior Vice
President in 1979 and Executive Vice President in 1982. He has
served as a director since 1975.
James E. Tulin has been Senior Vice President-
Merchandising since October 1995. For more than five years prior
to October 1995, Mr. Tulin served as a Senior Vice President of the
Company. Mr. Tulin has been a director of the Company since 1985.
Richard V. Byrnes, Jr. has been Senior Vice President-
Operations since October 1995. Mr. Byrnes joined the Company in
December 1991 as a Divisional Vice President of the Crestline
Division and was elected a Vice President in April 1994. Prior to
joining the Company, Mr. Byrnes was a consultant with the
accounting firm of Coopers & Lybrand L.L.P.
Paul Duckett has been Senior Vice President-Distribution
and Retail Store Operations since October 1995. For more than five
years prior to October 1995, Mr. Duckett served as a Senior Vice
President of the Company.
Melvin Goldfeder has been Senior Vice President-Special
Markets Division since October 1995. For more than five years
prior to October 1995, Mr. Goldfeder served as a Senior Vice
President of the Company.
Eric P. Luft has been Senior Vice President-Men's
Division since October 1995. Mr. Luft served as a Divisional Vice
President of the Men's Products Division from June 1989 until
January 1993, when he was elected a Senior Vice President of the
Company.
Lewis Valenti has been Senior Vice President-Women's
Division since October 1995. For more than five years prior to
October 1995, Mr. Valenti served as a Senior Vice President of the
Company.
Christopher F. Wolf joined the Company as Senior Vice
President, Chief Financial Officer, Treasurer and Secretary in
October 1996. For more than the five years prior to joining the
Company, Mr. Wolf was a partner in the accounting firm of Coopers
& Lybrand L.L.P..
Each officer of the Company serves, at the pleasure of
the Board of Directors, for a term of one year and until his
successor is elected and qualified.
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters.
The information called for by this Item 5 with respect to
market information and the number of holders of the Registrant's
Common Stock is incorporated herein by reference to the caption
"Market for the Company's Common Stock and Related Stockholder
Matters" on page 16 of the Company's Annual Report to Stockholders
for the year ended December 31, 1998 (the "1998 Annual Report"),
which is Exhibit 13.01 to this Annual Report on Form 10-K.
The Company's financing agreement with its lender
prohibits the payment of cash dividends on the Company's
Common Stock (see "Management's Discussion and Analysis of
Financial Condition and Results of Operations" incorporated by
reference in Item 7 of this Report). The Company has not paid any
cash dividends on its Common Stock in the last ten years and has no
current expectation that cash dividends will be paid in the
foreseeable future.
Item 6. Selected Financial Data.
The information called for by this Item 6 is incorporated
herein by reference to the information under the caption "Financial
Highlights" on page 1 of the Company's 1998 Annual Report.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
The information called for by this Item 7 is
incorporated herein by reference to the information under the
caption "Management's Discussion and Analysis of Financial
Condition and Results of Operations" on pages 2- 5 of the
Company's 1998 Annual Report.
Item 7A. Quantitative and Qualitative Disclosures about Market
Risk.
The information called for by this Item 7A is
incorporated herein by reference to the information under the
caption "Notes to Consolidated Financial Statements B. Summary
of Significant Accounting Policies" on page 9 of the Company's
1998 Annual Report.
Item 8. Financial Statements and Supplementary Data.
The information called for by this Item 8 is incorporated
herein by reference to the information under the following captions
on pages 6-16 of the Company's 1998 Annual Report:
I. Consolidated Balance Sheets as of December 31, 1998 and 1997.
II. Consolidated Statements of Operations for each of
the three years ended December 31, 1998, 1997 and 1996.
III. Consolidated Statements of Changes in Stockholders'
Equity for each of the three years ended December 31,
1998, 1997 and 1996.
IV. Consolidated Statements of Cash Flows for each of
the three years ended December 31, 1998, 1997 and 1996.
. Notes to Consolidated Financial Statements.
. Report of Independent Accountants
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant.
The information called for by this Item 10 (except for
information as to the Company's executive officers, which
information appears following Part I in this Annual Report on Form
10-K under the caption "Executive Officers of the Registrant") is
incorporated herein by reference to the Company's definitive proxy
statement relating to the Company's 1999 Annual Meeting of
Stockholders filed pursuant to Regulation 14A under the Securities
Act of 1934, as amended (the "1999 Proxy Statement").
Item 11. Executive Compensation.
The information called for by this Item 11 is
incorporated herein by reference to the 1999 Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The information called for by this Item 12 is
incorporated herein by reference to the 1999 Proxy Statement.
Item 13. Certain Relationships and Related Transactions.
The information called for by this Item 13 is
incorporated herein by reference to the 1999 Proxy Statement.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) Documents filed as part of this Report
1. Financial Statements filed as part of this Report:
The financial statements of the
Company and the report of
independent accountants thereon,
included on pages 6-16 of the 1998
Annual Report, are incorporated
herein by reference to Item 8 of
this Annual Report on Form 10-K.
2. Financial Statement Schedules filed as part of this
Report:
The following financial statement
schedule and the report of
independent accountants thereon are
submitted herewith in response to
Item 14(d) of Part IV of this Annual
Report on Form 10-K:
Report of Independent Accountants on Financial
Statement Schedule
Financial Statement Schedule for the years ended
December 31, 1998, 1997 and 1996:
II. Valuation and Qualifying Accounts
(b) Current Reports on Form 8-K during the quarter ended
December 31, 1998
No reports on Form 8-K were filed by the Company during
the last fiscal quarter of the period covered by this Report.
<PAGE>
(c) Exhibits
Exhibit Description
3.01 Restated Certificate of Incorporation of the
Company dated May 1, 1987, as amended to date. (The first exhibit
to the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1995, File No. 1-5354, is incorporated herein by
reference).
3.02 By-laws of the Company, as amended to date.
(Exhibit 3.02 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995, File No. 1-5354, is incor-
porated herein by reference).
4.01 Form of Certificate of Designation of the
Series A Participating Preferred Stock and Series B Participating
Preferred Stock. (Exhibit A to Annex 1 to the Proxy
Statement/Prospectus contained in the Company's Registration
Statement, File No.33-19501, filed on January 4, 1988, is
incorporated herein by reference).
4.02 Revolving Credit and Security Agreement dated
as of July 27, 1998 between the Company and PNC Bank, National
Association, as Lender and as Agent ("PNC"). (Exhibit 4.1 to the
Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1998, File No. 1-5354, is incorporated herein by
reference).
4.03 Pledge Agreement dated as of July 27, 1998
between the Company and PNC. (Exhibit 4.2 to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
1998, File No. 1-5354, is incorporated herein by reference).
10.01 Employment Agreement dated June 20, 1991
between the Company and Marshall Tulin. (Exhibit 10.01 to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1991, File No. 1-5354, is incorporated herein by
reference).+
10.01.1 Amendment dated as of September 1, 1993 to
Employment Agreement between the Company and Marshall Tulin.
(Exhibit 10.01.1 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1993, File No. 1-5354, is
incorporated herein by reference).+
10.01.2 Amendment effective as of October 30, 1995 to
Employment Agreement between the Company and Marshall Tulin.
(Exhibit 10.01.2 to the Company's Annual Report on Form 10K for the
fiscal year ended December 31, 1996, File No. 1-5354, is
incorporated herein by reference).+
10.01.3 Amendment effective as of January 1, 1992 to
Employment Agreement between the Company and Marshall Tulin. *+
<PAGE>
10.01.4 Amendment dated as of May 4, 1998 to Employment
Agreement between the Company and Marshall Tulin. (Exhibit 10.0 to
the Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1998, File No. 1-5354, is incorporated herein by
reference).+
10.02 Employment Agreement dated as of January 1,
1990 between the Company and John Tulin. (Exhibit 10-03 to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1989, File No. 1-5354, is incorporated herein by
reference).+
10.02.1 Amendments dated as of September 1, 1993 and
September 2, 1993, respectively, between the Company and John
Tulin. (Exhibit 10.02.1 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1993, File No. 1-5354, is
incorporated herein by reference).+
10.02.2 Amendment dated as of January 1, 1997 to
Employment Agreement between the Company and John Tulin. (Exhibit
10.02.2 to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996, File No. 1-5354, is incorporated
herein by reference).+
10.02.3 Amendment dated as of January 1, 1992 to
Employment Agreement between the Company and John Tulin. *+
10.02.4 Amendment dated as of December 10, 1998 to
Employment Agreement between the Company and John Tulin. *+
10.03 Employment Agreement dated as of March 1, 1989
between the Company and James Tulin. (Exhibit 10.05 to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1988, File No. 1-5354, is incorporated herein by
reference).+
10.03.1 Amendment dated as of January 4, 1990 to
Employment Agreement between the Company and James Tulin. (Exhibit
10.05 to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1989, File No. 1-5354, is incorporated
herein by reference).+
10.03.2 Amendment dated as of September 1, 1993 to
Employment Agreement between the Company and James Tulin. (Exhibit
10.03.2 to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1993, File No. 1-5354, is incorporated
herein by reference).+
10.03.3 Amendment dated as of January 1, 1997 to
Employment Agreement between the Company and James Tulin. (Exhibit
10.03.3 to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996, File No. 1-5354, is incorporated
herein by reference).+
<PAGE>
10.03.4 Amendment dated as of January 1, 1992 to
Employment Agreement between the Company and James Tulin. *+
10.03.5 Amendment dated as of December 10, 1998 to
Employment Agreement between the Company and James Tulin. *+
10.04 1987 Incentive Stock Option Plan of the Com-
pany. (Exhibit 10.05 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996, File No. 1-5354, is
incorporated herein by reference).+
10.05 Form of Termination Agreement effective January
1, 1999 between the Company and each of the Company's officers
listed on Schedule A thereto. *+
10.06 Deferred Compensation Plan of the Company dated
as of January 1, 1987. (Exhibit 10.12 to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1988,
File No. 1-5354, is incorporated herein by reference).+
10.07 Agreement dated as of July 14, 1981 between the
Company and Marshall Tulin, John Tulin and Raymond Vise as
investment managers of the Company's pension plans. (Exhibit
10.12(b) to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1981, File No. 1-5354, is incorporated
herein by reference).
10.08 The New Swank, Inc. Retirement Plan Trust
Agreement dated as of January 1, 1994 among the Company and
Marshall Tulin, John Tulin and Raymond Vise, as co-trustees.
(Exhibit 10.12 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994, File No. 1-5354, is
incorporated herein by reference).
10.09 Plan of Recapitalization of the Company dated
as of September 28, 1987, as amended (Exhibit 2.01 to
Post-Effective Amendment No.1 to the Company's S-4 Registration
Statement, File No.33-19501, filed on February 9, 1988, is
incorporated herein by reference).
10.10 Key Employee Deferred Compensation Plan.
(Exhibit 10.17 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993, File No. 1-5354, is
incorporated herein by reference).+
10.10.1 First Amendment effective January 1, 1997 to
Key Employee Deferred Compensation Plan. (Exhibit 10.14.1 to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, File No. 1-5354, is incorporated herein by
reference).+
10.11 1994 Non-Employee Director Stock Option Plan.
(Exhibit 10.15 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994, File No. 1-5354, is
incorporated herein by reference).+
<PAGE>
10.11.1 Stock Option Contracts dated as of December 31,
1994 between the Company and each of Mark Abramowitz and Raymond
Vise. (Exhibit 10.15.1 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1994, File No. 1-5354, is
incorporated herein by reference).+
10.11.2 Stock Option Contract dated as of April 20,
1995 between the Company and Raymond Vise. (The third exhibit to
the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995, File No. 1-5354, is incorporated herein by
reference).+
10.11.3 Stock Option Contract dated as of April 20,
1995 between the Company and Mark Abramowitz. (The fifth exhibit to
the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995, File No. 1-5354, is incorporated herein by
reference).+
10.11.4 Stock Option Contract dated December 12, 1995
between the Company and John J. Macht. (Exhibit 10.15.5 to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, File No. 1-5354, is incorporated herein by
reference).+
10.11.5 Stock Option Contracts dated as of July 31,
1996 between the Company and each of Mark Abramowitz, Raymond Vise
and John J. Macht. (Exhibit 10.15.5 to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1996, File No.
1-5354, is incorporated herein by reference).+
10.11.6 Stock Option Contracts dated as of April 24,
1997 between the Company and each of Mark Abramowitz, Raymond Vise
and John J. Macht. (Exhibit 10.13 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1997, File No. 1-
5354, is incorporated herein by reference). +
10.11.7 Stock Option Contract dated as of April 23,
1998 between the Company and John J. Macht.. *+
10.11.8 Stock Option Contract dated as of April 23,
1998 between the Company and Raymond Vise. *+
10.11.9 Stock Option Contract dated as of April 23,
1998 between the Company and Mark Abramowitz. *+
10.12 Stock Option Contract dated as of October 1,
1996 between the Company and Christopher F. Wolf. (Exhibit 10.16
to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996, File No. 1-5354, is incorporated herein by
reference).+
<PAGE>
10.13 Letter Agreement effective August 1, 1996
between the Company and John J. Macht. (Exhibit 10.18 to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, File No. 1-5354, is incorporated herein by
reference).+
10.14 Letter Agreement effective August 1, 1998
between the Company and The Macht Group. * +
10.15 Swank, Inc. 1998 Equity Incentive Compensation
Plan (Exhibit 10.0 to the Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended September 30, 1998, File No. 1-5354,
is incorporated herein by reference).+
10.16 Notice Of Performance Award And Award Agreement
as of October 21, 1998 to John Tulin under Swank, Inc. 1998 Equity
Incentive Compensation Plan. *+
10.17 Notice Of Performance Award And Award Agreement
as of October 21, 1998 to Eric P. Luft under Swank, Inc. 1998
Equity Incentive Compensation Plan. *+
10.18 Notice Of Performance Award And Award Agreement
as of October 21, 1998 to Lewis Valenti under Swank, Inc. 1998
Equity Incentive Compensation Plan. *+
10.19 Notice Of Performance Award And Award Agreement
as of October 21, 1998 to James Tulin under Swank, Inc. 1998 Equity
Incentive Compensation Plan. *+
13.01 1998 Annual Report to Stockholders.*
21.01 Subsidiaries of the Company.*
23.01 Consent of independent accountants.*
27.01 Financial Data Schedule.*
___________________________
*Filed herewith.
+Management contract or compensatory plan or arrangement.
<PAGE>
Report of Independent Accountants on
Financial Statement Schedule
To the Stockholders of Swank, Inc.
Our audits of the consolidated financial statements referred
to in our report dated February 16, 1999 appearing on page 16
of the 1998 Annual Report to Stockholders of Swank, Inc.
(which report and consolidated financial statements are
incorporated by reference in this Annual Report on Form 10-K)
also included an audit of the financial statement schedule
listed in Item 14(a)(2) of this Form 10-K. In our opinion,
the financial statement schedule presents fairly, in all
material respects, the information set forth therein when read
in conjunction with the related consolidated financial
statements.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 16, 1999
<PAGE>
Swank, Inc.
Schedule II - Valuation and Qualifying Accounts
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
Balance at Additions Balance
Beginning Charged End of
of Period to Expense Deductions Period
<S> <C> <C> <C> <C>
For the year ended December 31, 1998
Reserve for Receivables
Allowance for doubtful accounts $1,500,000 $ (171,000) (G) $ (171,000) (A) (I) $1,500,000
Allowance for cash discounts 227,000 1,381,000 (H) 1,378,000 (B) 230,000
Allowance for customer returns 5,213,000 7,033,000 (F) 7,910,000 (C) 4,336,000
Allowance for cooperative advertising 456,000 1,355,000 (G) 1,211,000 (D) 600,000
Allowance for in-store markdowns 2,310,000 7,059,000 (G) 6,994,000 (E) 2,375,000
Total 9,706,000 16,657,000 17,322,000 9,041,000
Reserve for Inventory Obsolescence $874,000 0 $389,000 (K) $485,000
For the year ended December 31, 1997
Reserve for Receivables
Allowance for doubtful accounts $1,481,000 $92,000 (G) $73,000 (A) $1,500,000
Allowance for cash discounts 176,000 1,427,000 (H) 1,376,000 (B) 227,000
Allowance for customer returns 4,826,000 7,025,000 (F) 6,638,000 (C) 5,213,000
Allowance for cooperative advertising 537,000 1,106,000 (G) 1,187,000 (D) 456,000
Allowance for in-store markdowns 3,443,000 5,717,000 (G) 6,850,000 (E) 2,310,000
Total 10,463,000 15,367,000 16,124,000 9,706,000
Reserve for Inventory Obsolescence $574,000 $439,000 (J) $139,000 (K) $874,000
For the year ended December 31, 1996
Reserve for Receivables
Allowance for doubtful accounts $1,050,000 $631,000 (G) $200,000 (A) $1,481,000
Allowance for cash discounts 91,000 1,368,000 (H) 1,283,000 (B) 176,000
Allowance for customer returns 4,504,000 6,528,000 (F) 6,206,000 (C) 4,826,000
Allowance for cooperative advertising 652,000 1,094,000 (G) 1,209,000 (D) 537,000
Allowance for in-store markdowns 2,800,000 6,120,000 (G) 5,477,000 (E) 3,443,000
Total 9,097,000 15,741,000 14,375,000 10,463,000
Reserve for Inventory Obsolescence 0 $574,000 (J) 0 $574,000
(A) Bad debts charged off as uncollectable, net of reserves.
(B) Cash discounts taken by customers.
(C) Customer returns.
(D) Credits issued to customers for cooperative advertising.
(E) Credits issued to customers for in-store markdowns.
(F) Net reduction in sales and cost of sales.
(G) Located in selling and administrative.
(H) Located in net sales.
(I) Accounts receivable recoveries in excess of charge-offs.
(J) Located in cost of sales.
(K) Inventory charged-off.
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: March 29, 1999 SWANK, INC.
(Registrant)
By: /s/ Christopher F. Wolf
Christopher F. Wolf
Senior Vice President,
Chief Financial Officer,
Treasurer and Secretary
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.
Signature Title Date
/s/ John A. Tulin President and Chief Executive March 29, 1999
John A. Tulin Officer and Director
(principal executive
officer)
/s/ Christopher F. Wolf Senior Vice President, March 29, 1999
Christopher F. Wolf Chief Financial Officer,
Treasurer and Secretary
(principal financial and
accounting officer)
/s/ Mark Abramowitz Director March 29, 1999
Mark Abramowitz
/s/ John J. Macht Director March 29, 1999
John J. Macht
<PAGE>
Signature Title Date
/s/ James E. Tulin Director March 29, 1999
James E. Tulin
/s/ Marshall Tulin Director March 29, 1999
Marshall Tulin
/s/ Raymond Vise Director March 29, 1999
Raymond Vise
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
to
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1998
SWANK, INC.
<PAGE>
Exhibit Description
3.01 Restated Certificate of Incorporation of the Company
dated May 1, 1987, as amended to date. (The first
exhibit to the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1995, File No. 1-5354, is
incorporated herein by reference).
3.02 By-laws of the Company, as amended to date. (Exhibit
3.02 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995, File No. 1-5354, is
incorporated herein by reference).
4.01 Form of Certificate of Designation of the Series A
Participating Preferred Stock and Series B Participating
Preferred Stock. (Exhibit A to Annex 1 to the Proxy
Statement/Prospectus contained in the Company's
Registration Statement, File No.33-19501, filed on
January 4, 1988, is incorporated herein by reference).
4.02 Revolving Credit and Security Agreement dated as of July
27, 1998 between the Company and PNC Bank, National
Association, as Lender and as Agent ("PNC"). (Exhibit
4.1 to the Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended June 30, 1998, File No. 1-5354,
is incorporated herein by reference).
4.03 Pledge Agreement dated as of July 27, 1998 between the
Company and PNC. (Exhibit 4.2 to the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended June 30,
1998, File No. 1-5354, is incorporated herein by
reference).
10.01 Employment Agreement dated June 20, 1991 between the
Company and Marshall Tulin. (Exhibit 10.01 to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1991, File No. 1-5354, is incorporated
herein by reference).+
10.01.1 Amendment dated as of September 1, 1993 to Employment
Agreement between the Company and Marshall Tulin.
(Exhibit 10.01.1 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1993, File
No. 1-5354, is incorporated herein by reference).+
10.01.2 Amendment effective as of October 30, 1995 to Employment
Agreement between the Company and Marshall Tulin.
(Exhibit 10.01.2 to the Company's Annual Report on Form
10K for the fiscal year ended December 31, 1996, File No.
1-5354, is incorporated herein by reference).+
<PAGE>
10.01.3 Amendment effective as of January 1, 1992 to Employment
Agreement between the Company and Marshall Tulin. *+
10.01.4 Amendment dated as of May 4, 1998 to Employment Agreement
between the Company and Marshall Tulin. (Exhibit 10.0 to
the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended June 30, 1998, File No. 1-5354, is
incorporated herein by reference).+
10.02 Employment Agreement dated as of January 1, 1990 between
the Company and John Tulin. (Exhibit 10-03 to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1989, File No. 1-5354, is incorporated
herein by reference).+
10.02.1 Amendments dated as of September 1, 1993 and September 2,
1993, respectively, between the Company and John Tulin.
(Exhibit 10.02.1 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1993, File
No. 1-5354, is incorporated herein by reference).+
10.02.2 Amendment dated as of January 1, 1997 to Employment
Agreement between the Company and John Tulin. (Exhibit
10.02.2 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1996, File No. 1-5354,
is incorporated herein by reference).+
10.02.3 Amendment dated as of January 1, 1992 to Employment
Agreement between the Company and John Tulin. *+
10.02.4 Amendment dated as of December 10, 1998 to Employment
Agreement between the Company and John Tulin. *+
10.03 Employment Agreement dated as of March 1, 1989 between
the Company and James Tulin. (Exhibit 10.05 to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1988, File No. 1-5354, is incorporated
herein by reference).+
10.03.1 Amendment dated as of January 4, 1990 to Employment
Agreement between the Company and James Tulin. (Exhibit
10.05 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1989, File No. 1-5354, is
incorporated herein by reference).+
10.03.2 Amendment dated as of September 1, 1993 to Employment
Agreement between the Company and James Tulin. (Exhibit
10.03.2 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1993, File No. 1-5354,
is incorporated herein by reference).+
<PAGE>
10.03.3 Amendment dated as of January 1, 1997 to Employment
Agreement between the Company and James Tulin. (Exhibit
10.03.3 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1996, File No. 1-5354,
is incorporated herein by reference).+
10.03.4 Amendment dated as of January 1, 1992 to Employment
Agreement between the Company and James Tulin. *+
10.03.5 Amendment dated as of December 10, 1998 to Employment
Agreement between the Company and James Tulin. *+
10.04 1987 Incentive Stock Option Plan of the Company.
(Exhibit 10.05 to the Company's Annual Report on Form 10-
K for the fiscal year ended December 31, 1996, File No.
1-5354, is incorporated herein by reference).+
10.05 Form of Termination Agreement effective January 1, 1999
between the Company and each of the Company's officers
listed on Schedule A thereto. *+
10.06 Deferred Compensation Plan of the Company dated as of
January 1, 1987. (Exhibit 10.12 to the Company's Annual
Report on Form 10-K for the fiscal year ended December
31, 1988, File No. 1-5354, is incorporated herein by
reference).+
10.07 Agreement dated as of July 14, 1981 between the Company
and Marshall Tulin, John Tulin and Raymond Vise as
investment managers of the Company's pension plans.
(Exhibit 10.12(b) to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1981, File
No. 1-5354, is incorporated herein by reference).
10.08 The New Swank, Inc. Retirement Plan Trust Agreement dated
as of January 1, 1994 among the Company and Marshall
Tulin, John Tulin and Raymond Vise, as co-trustees.
(Exhibit 10.12 to the Company's Annual Report on Form 10-
K for the fiscal year ended December 31, 1994, File No.
1-5354, is incorporated herein by reference).
10.09 Plan of Recapitalization of the Company dated as of
September 28, 1987, as amended (Exhibit 2.01 to
Post-Effective Amendment No.1 to the Company's S-4
Registration Statement, File No.33-19501, filed on
February 9, 1988, is incorporated herein by reference).
<PAGE>
10.10 Key Employee Deferred Compensation Plan. (Exhibit 10.17
to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993, File No. 1-5354, is
incorporated herein by reference).+
10.10.1 First Amendment effective January 1, 1997 to Key Employee
Deferred Compensation Plan. (Exhibit 10.14.1 to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996, File No. 1-5354, is incorporated
herein by reference).+
10.11 1994 Non-Employee Director Stock Option Plan. (Exhibit
10.15 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994, File No. 1-5354, is
incorporated herein by reference).+
10.11.1 Stock Option Contracts dated as of December 31, 1994
between the Company and each of Mark Abramowitz and
Raymond Vise. (Exhibit 10.15.1 to the Company's Annual
Report on Form 10-K for the fiscal year ended December
31, 1994, File No. 1-5354, is incorporated herein by
reference).+
10.11.2 Stock Option Contract dated as of April 20, 1995 between
the Company and Raymond Vise. (The third exhibit to the
Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1995, File No. 1-5354, is incorporated
herein by reference).+
10.11.3 Stock Option Contract dated as of April 20, 1995 between
the Company and Mark Abramowitz. (The fifth exhibit to
the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1995, File No. 1-5354, is incor-
porated herein by reference).+
10.11.4 Stock Option Contract dated December 12, 1995 between the
Company and John J. Macht. (Exhibit 10.15.5 to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995, File No. 1-5354, is incorporated
herein by reference).+
10.11.5 Stock Option Contracts dated as of July 31, 1996 between
the Company and each of Mark Abramowitz, Raymond Vise and
John J. Macht. (Exhibit 10.15.5 to the Company's Annual
Report on Form 10-K for the fiscal year ended December
31, 1996, File No. 1-5354, is incorporated herein by
reference).+
<PAGE>
10.11.6 Stock Option Contracts dated as of April 24, 1997 between
the Company and each of Mark Abramowitz, Raymond Vise and
John J. Macht. (Exhibit 10.13 to the Company's Annual
Report on Form 10-K for the fiscal year ended December
31, 1997, File No. 1-5354, is incorporated herein by
reference). +
10.11.7 Stock Option Contract dated as of April 23, 1998 between
the Company and John J. Macht.. *+
10.11.8 Stock Option Contract dated as of April 23, 1998 between
the Company and Raymond Vise. *+
10.11.9 Stock Option Contract dated as of April 23, 1998 between
the Company and Mark Abramowitz. *+
10.12 Stock Option Contract dated as of October 1, 1996 between
the Company and Christopher F. Wolf. (Exhibit 10.16 to
the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996, File No. 1-5354, is
incorporated herein by reference).+
10.13 Letter Agreement effective August 1, 1996 between the
Company and John J. Macht. (Exhibit 10.18 to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996, File No. 1-5354, is incorporated
herein by reference).+
10.14 Letter Agreement effective August 1, 1998 between the
Company and The Macht Group. * +
10.15 Swank, Inc. 1998 Equity Incentive Compensation Plan
(Exhibit 10.0 to the Company's Quarterly Report on Form
10-Q for the fiscal quarter ended September 30, 1998,
File No. 1-5354, is incorporated herein by reference).+
10.16 Notice Of Performance Award And Award Agreement as of
October 21, 1998 to John Tulin under Swank, Inc. 1998
Equity Incentive Compensation Plan. *+
10.17 Notice Of Performance Award And Award Agreement as of
October 21, 1998 to Eric P. Luft under Swank, Inc. 1998
Equity Incentive Compensation Plan. *+
10.18 Notice Of Performance Award And Award Agreement as of
October 21, 1998 to Lewis Valenti under Swank, Inc. 1998
Equity Incentive Compensation Plan. *+
<PAGE>
10.19 Notice Of Performance Award And Award Agreement as of
October 21, 1998 to James Tulin under Swank, Inc. 1998
Equity Incentive Compensation Plan. *+
13.01 1998 Annual Report to Stockholders.*
21.01 Subsidiaries of the Company.*
23.01 Consent of independent accountants.*
27.01 Financial Data Schedule.*
___________________________
*Filed herewith.
+Management contract or compensatory plan or arrangement.
EXHIBIT 10.01.3
<PAGE>
Swank, Inc.
90 Park Avenue
New York, New York 10016
As of January 1, 1992
Mr. Marshall Tulin
Paine Road
Hewlett, New York, 11557
Dear Mr. Tulin:
Reference is hereby made to the Agreement dated as of June
20, 1991 between Swank, Inc. (the "Corporation") and you
concerning your employment as the Chief Executive Officer of the
Corporation (the "Existing Employment Agreement"). This letter
will serve to confirm our agreement to amend the Existing
Employment Agreement as of January 1, 1992 as follows:
1. Paragraph 4 of the Existing Employment Agreement is
hereby deleted in its entirety and the following new paragraph is
hereby inserted in its place.
"4. For the full, prompt and faithful
performance of the services to be rendered as
aforesaid, the Corporation agrees to pay, and Tulin
agrees to accept, (a) for the period beginning July 1,
1991 and ending December 31, 1991 a base salary of
$123,000, (b) for the period beginning January 1, 1992
and ending December 31, 1992 a base salary at the rate
of $355,000 per annum, (c) for the period beginning
January 1, 1993 and ending June 30, 1994 a base salary
at the rate of $360,000 per annum, payable in such
installments as shall be mutually agreed upon, and
such additional compensation, if any, as the Board of
Directors of the Corporation shall from time to time
determine."
2. This letter may be executed in any number of
counterparts, each of which shall be deemed an original and all
of which taken together shall constitute one and the same
agreement.
3. This letter shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York,
without regard to principles of conflicts or choice of law.
<PAGE>
Mr. Marshall Tulin
-2-
4. Except as modified and amended by this letter, the
Existing Employment Agreement shall remain and continue in full
force and effect on and after the date hereof.
If the foregoing correctly sets forth our understanding and
agreement, kindly countersign this letter in the space provided
below.
Very truly yours,
SWANK, INC.
By: /s/ A. C. Corsini
Title: Sr. V.P., CFO
ACCEPTED AND AGREED:
/s/ Marshall Tulin
Marshall Tulin
EXHIBIT 10.02.3
<PAGE>
Swank, Inc.
90 Park Avenue
New York, New York 10016
As of January 1, 1992
Mr. John Tulin
1196 Elinore Road
Hewlett, New York 11557
Dear Mr. Tulin:
Reference is hereby made to the Agreement dated as of
January 1, 1990 between Swank, Inc. (the "Corporation") and you
concerning your employment as the Executive Vice President of the
Corporation (the "Existing Employment Agreement"). This letter
will serve to confirm our agreement to amend the Existing
Employment Agreement as of January 1, 1992 as follows:
1. Paragraph 4 of the Existing Employment Agreement is
hereby deleted in its entirety and the following new paragraph is
hereby inserted in its place.
"4. For the full, prompt and faithful
performance of the services to be rendered as
aforesaid, the Corporation agrees to pay, and Tulin
agrees to accept, (a) for the period beginning January
1, 1990 and ending December 31, 1990 a base salary at
the rate of $210,000 per annum, (b) for the period
beginning January 1, 1991 and ending December 31, 1991
a base salary at the rate of $193,000 per annum, (c)
for the period beginning January 1, 1992 and ending
December 31, 1992 a base salary at the rate of
$215,000 per annum, and (d) for the period beginning
January 1, 1993 and ending December 31, 1994 a base
salary at the rate of $220,000 per annum, payable in
such installments as shall be mutually agreed upon,
and such additional compensation, if any, as the Board
of Directors of the Corporation shall from time to
time determine."
2. This letter may be executed in any number of
counterparts, each of which shall be deemed an original and all
of which taken together shall constitute one and the same
agreement.
3. This letter shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York,
without regard to principles of conflicts or choice of law.
<PAGE>
Mr. John Tulin
-2-
4. Except as modified and amended by this letter, the
Existing Employment Agreement shall remain and continue in full
force and effect on and after the date hereof.
If the foregoing correctly sets forth our understanding and
agreement, kindly countersign this letter in the space provided
below.
Very truly yours,
SWANK, INC.
By: /s/ A. C. Corsini
Title: Sr. V.P., CFO
ACCEPTED AND AGREED:
/s/ John Tulin
John Tulin
EXHIBIT 10.02.4
<PAGE>
Swank, Inc.
90 Park Avenue
New York, New York 10016
December 10, 1998
Mr. John A. Tulin
1196 Elinore Road
Hewlett, New York 11557
Dear Mr. Tulin:
Reference is hereby made to the Agreement dated as of
January 1, 1990 between Swank, Inc. (the "Corporation") and you
concerning your employment by the Corporation, as amended by
letter agreements dated as of January 1, 1992, September 1,1993
and January 1, 1997 between the Corporation and you (as amended,
the "Existing Employment Agreement"). This letter will serve to
confirm our agreement to amend the Existing Employment Agreement
as of the date hereof as follows:
The term of the Existing Employment Agreement is hereby
extended for an additional three (3) year period, commencing on
January 1, 1999 and ending on December 31, 2001 (the "Extension
Period"). During the Extension Period, the Corporation shall pay
to you, and you agree to accept, a base salary at the rate of
$400,000, payable in such installments as shall be mutually
agreed upon by you and the Corporation, plus such additional
compensation, if any, as the Board of Directors of the
Corporation shall from time to time determine.
Except as modified and amended by this letter, the Existing
Employment Agreement shall remain and continue in full force and
effect on and after the date hereof.
This letter may be executed in any number of counterparts,
each of which shall be deemed an original and all of which taken
together shall constitute one and the same agreement.
This letter shall be governed by, and construed and enforced
in accordance with, the laws of the State of New York, without
regard to principles of conflicts or choice of law.
<PAGE>
If the foregoing correctly sets forth our understanding and
agreement, kindly countersign this letter in the space provided
below.
Very truly yours,
SWANK, INC.
By: /s/ Christopher F. Wolf
Name: Christopher F. Wolf
Title: Chief Financial Officer
ACCEPTED AND AGREED:
/s/ John A. Tulin
John A. Tulin
EXHIBIT 10.03.4
<PAGE>
Swank, Inc.
90 Park Avenue
New York, New York 10016
As of January 1, 1992
Mr. James Tulin
180 Pond Crossing
Lawrence, New York, 11509
Dear Mr. Tulin:
Reference is hereby made to the Agreement dated as of March
1, 1989 between Swank, Inc. (the "Corporation") and you
concerning your employment as the Senior Vice President of the
Corporation, as amended by a letter agreement dated January 4,
1990 between the Corporation and you (as amended, the "Existing
Employment Agreement"). This letter will serve to confirm our
agreement to amend the Existing Employment Agreement as of
January 1, 1992 as follows:
1. Paragraph 4 of the Existing Employment Agreement is
hereby deleted in its entirety and the following new paragraph is
hereby inserted in its place.
"4. For the full, prompt and faithful
performance of the services to be rendered as
aforesaid, the Corporation agrees to pay, and Tulin
agrees to accept, (a) for the period beginning March
1, 1989 and ending December 31, 1989 a base salary at
the rate of $150,000 per annum, (b) for the period
beginning January 1, 1990 and ending December 31, 1990
a base salary at the rate of $180,000 per annum, (c)
for the period beginning January 1, 1991 and ending
December 31, 1991 a base salary at the rate of
$163,000 per annum, (d) for the period beginning
January 1, 1992 and ending December 31, 1992 a base
salary at the rate of $185,000 per annum, and (e) for
the period beginning January 1, 1993 and ending
February 28, 1994 a base salary at the rate of
$190,000 per annum, payable in such installments as
shall be mutually agreed upon, and such additional
compensation, if any, as the Board of Directors of the
Corporation shall from time to time determine."
2. This letter may be executed in any number of
counterparts, each of which shall be deemed an original and all
of which taken together shall constitute one and the same
agreement.
<PAGE>
Mr. James Tulin
-2-
3. This letter shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York,
without regard to principles of conflicts or choice of law.
4. Except as modified and amended by this letter, the
Existing Employment Agreement shall remain and continue in full
force and effect on and after the date hereof.
If the foregoing correctly sets forth our understanding and
agreement, kindly countersign this letter in the space provided
below.
Very truly yours,
SWANK, INC.
By: /s/ A. C. Corsini
Title: Sr. V.P., CFO
ACCEPTED AND AGREED:
/s/ James Tulin
James Tulin
EXHIBIT 10.03.5
<PAGE>
Swank, Inc.
90 Park Avenue
New York, New York 10016
December 10, 1998
Mr. James E. Tulin
c/o Swank, Inc.
8800 North Gainey Center Drive
Scottsdale, Arizona 85258
Dear Mr. Tulin:
Reference is made to the Agreement dated as of March 1,
1989 between Swank, Inc. (the "Corporation") and you, as amended
to date (as so amended, the "Existing Employment Agreement"),
concerning your employment by the Corporation. This letter will
serve to confirm our agreement to amend the Existing Employment
Agreement as of the date hereof as follows:
The term of the Existing Employment Agreement is hereby
extended for an additional period, commencing on January 1, 1999
to and including December 31, 2001(the "Extension Period").
During the Extension Period, the Corporation shall pay to you,
and you agree to accept, a base salary at the rate of $250,000,
payable in such installments as shall be mutually agreed upon by
you and the Corporation, plus such additional compensation, if
any, as the Board of Directors of the Corporation shall from time
to time determine.
Except as modified and amended by this letter, the Existing
Employment Agreement shall remain and continue in full force and
effect on and after the date hereof.
This letter may be executed in any number of counterparts,
each of which shall be deemed an original and all of which taken
together shall constitute one and the same agreement.
This letter shall be governed by, and construed and enforced
in accordance with, the laws of the State of New York, without
regard to principles of conflicts or choice of law.
<PAGE>
If the foregoing correctly sets forth our understanding and
agreement, kindly countersign this letter in the space provided
below.
Very truly yours,
SWANK, INC.
By: /s/ Christopher F. Wolf
Name: Christopher F. Wolf
Title: Chief Financial Officer
ACCEPTED AND AGREED:
/s/ James E. Tulin
James E. Tulin
EXHIBIT 10.05
<PAGE>
TERMINATION AGREEMENT
TERMINATION AGREEMENT effective as of January 1, 1999
between SWANK, INC., a Delaware corporation having its principal
office at 90 Park Avenue, New York, New York (the "Company"), and
_________________________, residing at _____________________,
___________________________________ ("Employee").
W I T N E S S E T H:
WHEREAS, in consideration of the contribution that has
been, and can continue to be, made by Employee toward the success
of the business of the Company, the Company desires to enter into
this Agreement with Employee; and
WHEREAS, Employee desires to enter into this Agreement
with the Company.
NOW, THEREFORE, in consideration of the mutual
covenants contained herein and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the Company and Employee hereby agree as follows:
1. Term and Operation of Agreement. This Agreement
shall be effective for a term (the "Term") commencing as of
January 1, 1999 and ending on the earlier of (i) December 31,
2001 (subject to extension as provided below) and (ii) the
termination of Employee's employment prior to a Change in Control
(as hereinafter defined) of the Company; provided, however, that
(x) prior to a Change in Control, the December 31, 2001
expiration date set forth in clause (i) above shall be
automatically extended on each December 31 during the Term,
commencing on December 31, 2001, until the next December 31
unless the Company shall have given the Employee not less than 30
days' written notice prior to the then current December 31
expiration date that there shall be no extension (in which event
the expiration date set forth in such clause (i), as theretofore
extended, shall not thereafter be further extended) and (y)
notwithstanding the foregoing, if there is a Change in Control
subsequent to December 31, 1998, but prior to the termination of
this Agreement in accordance with the foregoing, then the Term
shall be automatically be fixed as a two-year term commencing on
the date such Change in Control shall have occurred and ending on
the second anniversary of the date of such Change in Control.
For purposes of this Agreement, Employee's employment
by the Company shall be deemed to be continuing (i) for any
period during which, in accordance with any contract between him
and the Company ("Employment Agreement"), provision shall be made
for Employee to perform services as an employee of the Company
and Employee shall be entitled to compensation from the Company
for same, or (ii) if there is no Employment Agreement, for any
period during which Employee is in fact performing services as an
employee of the Company and receiving compensation from the
Company for same.
Anything in this Agreement to the contrary
notwithstanding, except as expressly set forth herein, neither
this Agreement nor any provision hereof shall be operative until
a Change in Control has occurred, at which time this Agreement
and all of its provisions shall become operative immediately.
2. Change in Control-Termination of Employment and
Compensation in Event of Termination.
(a) After a Change in Control has occurred, Employee may
terminate his employment within two years thereafter upon the
occurrence of any of the following events:
(i) Failure to elect or appoint, or re-elect or reappoint,
Employee to, or removal of Employee from, his office and/or
position with the Company as constituted immediately prior to the
Change in Control, except in connection with the termination of
Employee's employment pursuant to subparagraph 3(a) hereof.
(ii) A reduction in Employee's overall compensation
(including any reduction in pension or other benefit programs or
perquisites) or a significant change in the nature or scope of
the authorities, powers, functions or duties normally attached to
Employee's position with the Company as referred to in clause (i)
of subparagraph 2(a) hereof.
(iii) A determination by Employee made in good faith
that, as a result of a Change in Control, he is unable effectively to
carry out the authorities, powers, functions or duties attached
to his position with the Company as referred to in clause (i) of
subparagraph 2 (a) hereof, and the situation is not remedied
within thirty (30) calendar days after receipt by the Company of
written notice from Employee of such determination.
(iv) A breach by the Company of any provision of this
Agreement not covered by clauses (i), (ii) or (iii) of this subparagraph
2(a), which is not remedied within thirty (30) calendar days
after receipt by the Company of written notice from Employee of
such breach.
(v) A change in the location at which substantially all of
Employee's duties with the Company are to be performed to a
location which is not within a 20-mile radius of the address of
the place where Employee is performing services immediately prior
to the Change in Control.
(vi) A failure by the Company to obtain the assumption of,
and the agreement to perform, this Agreement by any successor (within
the meaning of paragraph 8).
An election by Employee to terminate his employment
under the provisions of this subparagraph 2(a) shall not be
deemed a voluntary termination of employment by Employee for the
purpose of interpreting the provisions of any of the Company's
employee benefit plans, programs or policies. Employee's right
to terminate his employment for good reason shall not be affected
by his illness or incapacity, whether physical or mental, unless
the Company shall at the time be entitled to terminate his
employment under paragraph 3(a)(ii) of this Agreement.
Employee's continued employment with the Company for any period
of time less than two years after a Change in Control shall not
be considered a waiver of any right he may have to terminate his
employment pursuant to this paragraph 2(a).
(b) After a Change in Control has occurred, if Employee
terminates his employment with the Company pursuant to
subparagraph 2(a) hereof or if Employee's employment is
terminated by the Company for any reason other than pursuant to
paragraph 3(a) hereof, Employee (i) shall be entitled to his
salary, bonuses, awards, perquisites and benefits, including,
without limitation, benefits and awards under the Company's stock
option plans and the Company's pension and retirement plans and
programs, through the Termination Date (as hereafter defined)
and, in addition thereto, (ii) shall be entitled to be paid in a
lump-sum, on the Termination Date, an amount of cash (to be
computed, at the expense of the Company, by
PricewaterhouseCoopers, independent certified public accountants
to the Company, or such other independent certified accountants
regularly employed by the Company (the "Accountants") in charge
of the Company's account immediately prior to the Change in
Control, whose computation shall be conclusive and binding upon
Employee and the Company) equal to 2.99 times Employee's "base
amount" as defined in Section 280G(b)(3) of the Internal Revenue
Code of 1986, as amended (the "Code"). Such lump-sum payment is
hereinafter referred to as the "Termination Compensation." Upon
payment of the Termination Compensation and all amounts to which
Employee may be entitled under subparagraph 2(b)(i) , any
Employment Agreement between Employee and the Company shall
terminate and be of no further force or effect; provided,
however, that (x) if Employee shall, in terminating his
employment with the Company pursuant to paragraph 2(a), include
in his Notice of Termination (as hereafter defined) his election
to enforce his rights under the provisions of his Employment
Agreement and not under the provisions of this Agreement or (y)
if Employee shall, within thirty (30) calendar days after he has
obtained actual knowledge of the termination of his employment by
the Company other than pursuant to paragraph 3(a) of this
Agreement, notify the Company that he intends to enforce his
rights under the Employment Agreement, then, in each such case,
any Employment Agreement between Employee and the Company shall
remain in full force and effect and the provisions of this
Agreement shall terminate and be of no further force or effect
and Employee shall hold, for the benefit of the Company, any
payment on account of the Termination Compensation theretofore
received by him hereunder, pending the satisfaction of the
Company's obligations to Employee under the provisions of any
Employment Agreement between Employee and the Company (whereupon
Employee shall return any such Termination Compensation to the
Company).
(c) For purposes hereof, a Change in Control shall be deemed
to have occurred if there has occurred a change in control as the
term "control" is defined in Rule 12b-2 promulgated under the
Securities Exchange Act of 1934 as in effect on the date hereof
(the "Act"); (ii) when any "person" (as such term is defined in
Sections 3(a)(9) and 13(d)(3) of the Act), except for an employee
stock ownership trust (or any of the trustees thereof) of the
Company, becomes a beneficial owner, directly or indirectly, of
securities of the Company representing twenty-five (25%) percent
or more of the Company's then outstanding securities having the
right to vote on the election of directors; (iii) during any
period of not more than two (2) consecutive years (not including
any period prior to the execution of this Agreement), individuals
who at the beginning of such period constitute the Board, and any
new director (other than a director designated by a person who
has entered into an agreement with the Company to effect a
transaction described in clauses (i), (ii), (iv), (v), (vi) or
(vii) of this subparagraph 2(c)) whose election by the Board or
nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds (2/3) of the directors
then still in office who were either directors at the beginning
of the period or whose election or nomination for election was
previously approved, cease for any reason to constitute at least
seventy-five (75%) percent of the entire Board of Directors; (iv)
when a majority of the directors elected at any annual or special
meeting of stockholders (or by written consent in lieu of a
meeting) are not individuals nominated by the Company's incumbent
Board of Directors; (v) if the stockholders of the Company
approve a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would
result in the holders of voting securities of the Company
outstanding immediately prior thereto being the holders of at
least eighty (80%) percent of the voting securities of the
surviving entity outstanding immediately after such merger or
consolidation; (vi) if the shareholders of the Company approve a
plan of complete liquidation of the Company; or (vii) if the
shareholders of the Company approve an agreement for the sale or
disposition of all or substantially all of the Company's assets.
However, the foregoing notwithstanding, no Change in Control
shall be deemed to have occurred as a result of any event
specified in clauses (i)-(vii) of this paragraph 2(c) if Marshall
Tulin or John Tulin shall be the chief executive officer of the
Company following such event.
(d) Notwithstanding anything in this Agreement to the contrary,
Employee shall have the right, prior to the receipt by him of any
amounts due hereunder on amounts referred to in subparagraph
2(b)(i), to waive the receipt thereof or, subsequent to the
receipt by him of any amounts due hereunder, to treat some or all
of such amounts as a loan from the Company which Employee shall
repay to the Company, within ninety (90) days from the date of
receipt, with interest at the rate provided in Section 7872 of
the Code. Notice of any such waiver or treatment of amounts
received as a loan shall be given by Employee to the Company in
writing and shall be binding upon the Company.
(e) It is intended that the "present value" of the payments and
benefits to Employee, whether under this Agreement or otherwise,
which are includable in the computation of "parachute payments"
shall not, in the aggregate, exceed 2.99 times the "base amount"
(the terms "present value", parachute payments" and "base amount"
being determined in accordance with Section 280G of the Code).
Accordingly, if Employee receives payments or benefits from the
Company prior to payment of the Termination Compensation which,
when added to the Termination Compensation and any other payments
or benefits which are required to be included in the computation
of parachute payments which have not been waived or treated as a
loan (as contemplated by subparagraph 2 (d)), would, in the
opinion of the Accountants, subject any of the payments or
benefits to Employee to the excise tax imposed by Section 4999 of
the Code, the Termination Compensation shall be reduced by the
smallest amount necessary, in the opinion of the Accountants, to
avoid such tax. In addition, the Company shall have no
obligation to make any payment or provide any benefit to Employee
subsequent to payment of the Termination Compensation which, in
the opinion of the Accountants, would subject any of the payments
or benefits to Employee to the excise tax imposed by Section 4999
of the Code. No reduction in Termination Compensation or release
of the Company from any payment or benefit obligation in reliance
upon any aforesaid opinion of the Accountants shall be permitted
unless the Company shall have provided to Employee a copy of any
such opinion, specifically entitling Employee to rely thereon, no
later than the date otherwise required for payment of the
Termination Compensation or any such later payment or benefit.
(f) Promptly after a Change in Control occurs, or before a
Change in Control occurs if there is a high degree of probability
that a Change in Control will occur in the immediate future, as
determined by the Chief Executive Officer of the Company, the
Company shall deliver to a bank, or other institution approved by
Employee, as escrow agent, an amount of cash funds or short term
investments necessary to fund the Termination Compensation and
instruct such escrow agent to make the payments of such employee
benefits due Employee in the amounts and at the time provided in
paragraph 2(b). The amount to be delivered to such escrow agent
hereunder shall be sufficient to fund such payments from
principal, and all income on the escrowed funds shall be paid to
the Company at the time the principal is paid to the Employee;
provided, however, that any income earned after the Termination
Date on principal not paid to Employee at the time provided in
paragraph 2(b) shall be paid to Employee at reasonable intervals.
3. Termination by The Company.
(a) Except as otherwise provided in any other agreement between
Employee and the Company, Employee's employment may be terminated
by the Company without any further liability under this Agreement
if Employee shall (i) die; (ii) be totally unable to perform the
duties and services attached to his position with the Company for
a period of not less than 365 consecutive days due to illness or
incapacity, whether physical or mental; (iii) violate any written
contractual covenant of Employee then in effect in favor of the
Company prohibiting Employee from competing with the Company in
any manner materially detrimental to the Company; or (iv) be
convicted of a felony involving an act against the Company and
said conviction shall not have been reversed or be subject to
further appeal, it being expressly understood, however, that
conviction for violation of a criminal statute by reason of
actions taken in the course of performance of Employee's duties
as an executive of the Company shall not be deemed to involve an
act against the Company for purposes hereof unless involving a
theft, embezzlement or other fraud against the Company or any of
its officers, directors or employees, or unless involving an act
of physical harm to any of such persons.
(b) After a Change in Control has occurred, if Employee's
employment is terminated by the Company pursuant to subparagraph
3(a) hereof, Employee (or his widow, or if she shall not survive
him, any party designated by Employee by notice to the Company,
or Employee's estate, in the absence of such notice) shall
receive the sums (if any) Employee would otherwise have received
if a Change in Control had not occurred.
4. Notice of Termination and Termination Date.
(a) Any termination of Employee's employment by the Company or
by Employee shall be communicated by a Notice of Termination to
the other party hereto. For purposes hereof, a "Notice of
Termination" shall mean a notice which shall state the
"Termination Date" (as hereafter defined) and the specific
reasons, and shall set forth in reasonable detail the facts and
circumstances, for such determination and, in the case of
Employee's termination of employment pursuant to paragraph 2 (a)
(iii) hereof, shall state that Employee has made the good faith
determination required by that subparagraph.
(b) "Termination Date" shall mean the date specified in the
Notice of Termination as the last day of Employee's employment by
the Company, which date shall not be sooner than the date on
which the Notice of Termination is given.
(c) If within thirty (30) calendar days after any Notice of
Termination is given, or, if later, prior to the Termination Date
(as determined without regard to this paragraph 4(c)), the party
hereto receiving such Notice of Termination notifies the other
party hereto that a dispute exists concerning the termination,
the Termination Date shall be the date on which the dispute is
finally determined, either by mutual written agreement of the
parties hereto, by a binding arbitration award or by a final
judgment, order or decree of a court of competent jurisdiction
(which is not appealable or with respect to which the time for
appeal therefrom has expired and no appeal has been perfected);
provided, however, that the Termination Date shall be extended by
a notice of dispute only if such notice is given in good faith
and the party hereto giving such notice pursues the resolution of
such dispute with reasonable diligence. Notwithstanding the
pendency of such dispute, the Company will continue to pay to
Employee his full compensation (including perquisites and other
benefits) in effect when the notice of dispute was given and
continue Employee as a participant in all employee benefit plans
and programs in which he was participating when the notice of
dispute was given, until the dispute is finally resolved as
hereinabove provided.
5. Mitigation. Employee shall not be required to use his best
efforts to mitigate the payment of the Termination Compensation
by seeking other employment. To the extent that Employee shall,
during or after the Term, receive compensation from any other
employment, the payment of Termination Compensation shall not be
adjusted.
6. Arbitration. In the event any dispute arises between the
parties hereto, Employee and the Company shall each have the
right to seek arbitration in New York, New York under the rules
of the American Arbitration Association by giving written notice
of intention to arbitrate to the other party. Any award rendered
in any such arbitration proceeding shall be non-appealable and
final and binding upon the parties hereto, and judgment thereon
may be entered in any court of competent jurisdiction. If
Employee prevails in any litigation or arbitration proceeding
brought in accordance herewith, or if any such litigation or
arbitration proceeding is settled, Employee shall be entitled, to
the extent not prohibited by applicable law, to reimbursement
from the Company for his reasonable attorneys' fees and expenses
incurred in connection with such litigation or arbitration
proceeding.
7. Indemnification.
(a) The Company agrees that all rights to indemnification
existing immediately prior to a Change in Control and all rights
to indemnification existing immediately prior to the Termination
Date in favor of Employee as provided in the respective corporate
charters and by-laws of the Company and its subsidiaries shall
survive the Termination Date and shall continue in full force and
effect for a period of not less than ten (10) years after the
Termination Date. Until the expiration of such period, the
Company shall also indemnify Employee to the fullest extent
permitted by the Delaware General Corporation Law; provided, that
in the event that any claim shall be asserted or made within such
ten-year period, all rights to indemnification in respect of any
such claim shall continue until disposition of such claim.
Without limiting the foregoing, in the event that Employee
becomes involved in any capacity in any action, proceeding or
investigation in connection with any activities involving the
Company occurring on or prior to the Termination Date, the
Company will, subject to paragraph 7(b), advance to Employee his
reasonable legal and other expenses (including the cost of any
investigation and preparation) incurred in connection therewith.
(b) Employee shall give prompt written notice to the Company of
any claim and the commencement of any action, suit or proceeding
for which indemnification may be sought under this paragraph 7,
and the Company, through counsel reasonably satisfactory to
Employee, may assume the defense thereof; provided, however, that
Employee shall be entitled to participate in any such action,
suit or proceeding with counsel of his own choice but at his own
expense; and provided, further, the Employee shall be entitled to
participate in any such action, suit or proceeding with counsel
of his own choice at the expense of the Company if, in the good
faith judgment of Employee's counsel, representation by the
Company's counsel may present a conflict of interest or there may
be defenses available to Employee which are different from or in
addition to those available to the Company. In any event, if the
Company fails to assume the defense within a reasonable time,
Employee may assume such defense and the reasonable fees and
expenses of his attorneys shall be borne by the Company. No
action, suit or proceeding for which indemnification may be
sought shall be compromised or settled in any manner which might
adversely affect the interest of the Company without the prior
written consent of the Company. Notwithstanding anything in this
Agreement to the contrary, the Company shall not, without the
written consent of Employee, (i) settle or compromise any action,
suit or proceeding or consent to the entry of any judgment which
does not include as an unconditional term thereof the delivery by
the claimant or plaintiff to Employee of a written release from
all liability in respect of such action, suit or proceeding or
(ii) settle or compromise any action, suit or proceeding in any
manner that may materially and adversely affect Employee other
than as a result of money damages or other money payments for
which the Company fully pays.
(c) The Company shall cause to be maintained in effect, for not
less than two (2) years after the Termination Date, the then
current policies of the directors' and officers' liability
insurance maintained by the Company and the Company's
subsidiaries provided that the Company may substitute therefor
policies of at least the same coverage containing terms and
conditions which are no less advantageous so long as no lapse in
coverage occurs as a result of such substitution, and shall use
its best efforts to provide such insurance for an additional
three (3) years after the expiration of such two-year period,
subject to the availability of such insurance at commercially
reasonable rates (or, if not available at reasonable rates, then
the Company shall purchase similar insurance but with such lower
limits of liability, without change in retention amounts, as may
be available for a premium comparable to that paid by the Company
for the last year of such two-year period), with respect to all
matters occurring prior to and including the Termination Date;
provided, that in the event that any claim shall be asserted or
made within such period during which insurance has been or is to
be provided, such insurance shall be continued in respect of any
such claim until final disposition of any and all such claims.
The Company shall pay all expenses, including reasonable
attorneys' fees, that may be incurred by Employee in enforcing
the indemnity and other obligations provided for in this
paragraph 7. The covenant in this paragraph 7 shall survive the
Termination Date and shall continue without time limit (except as
expressly provided in this paragraph 7).
8. Assignability. This Agreement may not be assigned by
Employee and all of its terms and conditions shall be binding
upon and enure to the benefit of Employee and his heirs, legatees
and legal representatives and the Company and its successors and
assignees. Successors of the Company shall include, without
limitation, any corporation or corporations acquiring directly or
indirectly all or substantially all of the assets of the Company,
whether by merger, consolidation, purchase or otherwise, and such
successor shall thereafter be deemed the "Company" for purposes
hereof.
9. Notices. All notices, requests, demands and other
communications provided for hereby shall be in writing and shall
be deemed to have been duly given when delivered personally when
received, or sent by registered or certified mail, return receipt
requested, or by Federal Express or other equivalent overnight
courier, in each case with the cost of delivery prepaid, to the
party entitled thereto at the address first above written (in the
case of the Company) or to such address as contained in the
Company's records (in the case of Employee) or to such other
address as may be designated by notice pursuant to this
paragraph.
10. Modification. This Agreement may be modified or amended
only by an instrument in writing signed by Employee and the
Company and any provision hereof may be waived only by an
instrument in writing signed by the party hereto against whom any
such waiver is sought to be enforced.
11. Severability. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or
enforceability of any other provision contained herein.
12. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York,
without regard to principles of conflicts of law.
13. Captions. The captioned headings herein are for convenience
of reference only and are not intended and shall not be construed
to have any substantive effect.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date first above written.
SWANK, INC.
By: /s/ John Tulin
Name: John Tulin
Title: President
___________________________________
Name of Employee:
<PAGE>
Schedule A
Richard V. Byrnes, Jr. 45 Adams Ave. By: /s/ Richard V. Byrnes, Jr.
Norwalk, Connecticut
Paul Duckett 100 Delmage Rd. By: /s/ Paul Duckett
Swansea, Massachusetts
Melvin Goldfeder 70-12 Maine Ave. By: /s/ Mel Goldfeder
Rockville Centre,
New York
Barry Heuser 88 Catbrier Rd By: /s/ William Barry Heuser
Weston, Connecticut
Jennifer C. Heuser 88 Catbrier Rd. By: /s/ Jennifer C. Heuser
Weston, Connecticut
Jerold R. Kassner 14 Cheryl Dr. By: /s/ Jerold R. Kassner
Sharon, Massachusetts
Eric P. Luft 15 Fenimore Ln. By: /s/ Eric P. Luft
Huntington, New York
Frederick M. Moehle 12 Rock Rd. By: /s/ Frederick Moehle
Attleboro, Massachusetts
Kimberly Renk 782 Webster Ave., #2 By: /s/ Kimberly Renk
Newport, Rhode Island
Robert Rosenberg 22 Old Pond Rd. By: /s/ Robert Rosenberg
Great Neck, New York
William Rubin 3787 Paces Ferry West By: /s/ William F. Rubin
Atlanta, Georgia
Bruce Shopoff 268 N. Crescent Dr. By: /s/ Bruce Shopoff
Apt. 101
Beverly Hills, California
James Tulin 12112 North 120th Way By: /s/ James E. Tulin
Scottsdale, Arizona
John Tulin 1196 Elinor Rd. By: /s/ Christopher F. Wolf
Hewlett, L.I., New York By: /s/ John Tulin
Marshall Tulin 1361 Paine Rd. By: /s/ Marshall Tulin
Hewlett, L.I., New York
Lewis Valenti 44 Holiday Ct. By: /s/ Lewis A. Valenti
Riverdale, New Jersey
Christopher F. Wolf 116 E. Emerson Rd. By: /s/ Christopher F. Wolf
Lexington, Massachusetts
EXIBIT 10.11.7
<PAGE>
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 23rd day of April 1998, 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 23, 1998 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 $1.281 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 23,
1998, 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-
<PAGE>
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 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.
<PAGE>
-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
Optionee
The Macht Group
176 Federal St. 5th Floor
Address
Boston, MA 02110
-3-
EXHIBIT 10.11.8
<PAGE>
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 23rd day of April 1998, 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 23, 1998 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 $1.281 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 23,
1998, 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-
<PAGE>
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 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-
<PAGE>
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-
EXIBIT 10.11.9
<PAGE>
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 23rd day of April 1998, 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 23, 1998 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 $1.281 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 23,
1998, 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-
<PAGE>
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 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-
<PAGE>
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-
EXHIBIT 10.14
<PAGE>
SWANK, INC.
90 PARK AVENUE
NEW YORK, NEW YORK 10016
Effective August 1, 1998
The Macht Group
99 High Street
20th Floor
Boston, Massachusetts 02110
Attention: John J. Macht, President
Dear John:
This will confirm the understanding between The Macht Group
("Macht") and Swank, Inc. ("Swank") as follows:
Macht may from time to time bring to Swank's attention
certain potential license arrangements pursuant to which Swank
shall be the exclusive licensee for the manufacture, promotion,
distribution and sale of products under the trademark or trade
name owned by licensor in such arrangement (each, a "License").
Macht and Swank hereby agree that if, during the period from and
after August 1, 1998 to and including July 31, 1999, Swank shall
enter into any License with a licensor to whom Swank has not
previously been introduced or with whom Swank has not had
previous discussions or business arrangements, Macht will be
entitled to receive an amount equal to one (1%) percent of
Swank's Net Sales (as defined below) under and during the term,
including all renewals of the term (the "Term"), of such License.
For purposes of this letter agreement, the term "Net Sales" shall
have the same meaning as set forth in the License executed by
Swank; provided, that if such term is not so defined, the term
"Net Sales" shall mean the gross sales price of goods sold
pursuant to such License less all manufacturing, sales, luxury,
purchase and other taxes of any kind or nature and less trade
discounts, returns, credits and allowances. Amounts payable to
Macht by Swank will be paid contemporaneously with the payment of
royalties by Swank to the licensor under such License.
Discounts, returns, credits and/or allowances not deducted by
Swank in determining amounts payable or paid to Macht at any time
and from time to time under this letter agreement may be deducted
from amounts payable thereafter to Macht. Any amounts not so
deducted by Swank shall be repaid to Swank by Macht promptly upon
request by Swank. In the event of a termination of any License,
Swank's obligation to pay amounts to Macht in respect of such
License shall terminate contemporaneously therewith. Nothing
herein shall require Swank to amend, modify or renew any such
License or to keep any such License in effect.
Nothing in this letter agreement shall require Swank to
agree to or to enter into any License. The decision to agree to
any License shall be made, in each and every case, by Swank in
its sole and absolute discretion. In addition, nothing in this
letter agreement shall be deemed or construed to confer upon
Macht or any other party any rights or interests, including that
of a third-party beneficiary, in any License.
This letter agreement constitutes the entire agreement
between Swank and Macht with respect to the subject matter
hereof, supersedes all other agreements and understandings
between Swank and Macht and may not be amended or modified expect
by a written instrument signed by both Swank and Macht. Macht
may not, voluntarily or involuntarily, by operation of law or
otherwise, assign, convey, or in any other manner transfer or
encumber, any or all of its rights or delegate any or all of its
duties hereunder without the prior written consent of Swank.
Subject to the foregoing, this letter agreement shall be binding
upon and shall inure to the benefit of the parties hereto and
their respective successors and assigns. This letter agreement
shall be governed by and construed and enforced in accordance
with the laws of the State of New York, without regard to
principles of conflicts or choice of law.
If the foregoing correctly reflects our understanding,
please sign this letter agreement where indicated below and
return it to Swank. The enclosed copy if for your records.
Very truly yours,
SWANK, INC.
By: /s/ John A. Tulin
John A. Tulin, President
AGREED:
THE MACHT GROUP
By: /s/ John J. Macht
John J. Macht, President
EXHIBIT 10.16
<PAGE>
SWANK, INC. 1998 EQUITY INCENTIVE COMPENSATION PLAN
NOTICE OF PERFORMANCE AWARD AND AWARD AGREEMENT
SWANK, INC. (the "Company") is pleased to inform you
that on October 21, 1998 the committee (the "Committee")
administering the 1998 Equity Incentive Compensation Plan (the
"Plan") of the Company granted to you a Performance Award (the
"Award") under the Plan upon the terms and subject to the
conditions of this Award Agreement and the Plan and subject to
your written agreement to such terms and conditions.
Accordingly, please confirm below your agreement with the Company
as follows:
1. Performance Award. (a) Provided that the
Cumulative Pretax Income of the Company (as defined below) is at
least $22,058,000, you shall be entitled to receive (i) an amount
in cash equal to $504,000, which shall be paid to you pursuant to
Section 2 hereof and (ii) the number of shares of the Company's
common stock, $.10 par value per share (the "Common Stock"),
equal to the quotient of (A) $336,000 divided by (B) the Fair
Market Value per share on the Payment Date (rounded down to the
nearest whole share), which shall be issuable to you pursuant to
Section 3 hereof;
(b) Provided that the Cumulative Pretax Income of the
Company is at least $20,765,000 but is less than $22,058,000, you
shall be entitled to receive (i) an amount in cash equal to
$453,600, which shall be paid to you pursuant to Section 2 hereof
and (ii) the number of shares of Common Stock equal to the
quotient of (A) $302,400 divided by (B) the Fair Market Value per
share of Common Stock on the Payment Date (rounded down to the
nearest whole share),which shall be issuable to you pursuant to
Section 3 hereof;
(c) Provided that the Cumulative Pretax Income of the
Company is at least $19,475,000 but is less than $20,765,000, you
shall be entitled to receive (i) an amount in cash equal to
$403,200, which shall be paid to you pursuant to Section 2 hereof
and (ii) the number of shares of Common Stock equal to the
quotient of (A) $268,800 divided by (B) the Fair Market Value per
share of Common Stock on the Payment Date (rounded down to the
nearest whole share),which shall be issuable to you pursuant to
Section 3 hereof; or
(d) Provided that the Cumulative Pretax Income of the
Company is at least $18,180,000 but is less than $19,475,000, you
shall be entitled to receive (i) an amount in cash equal to
$352,800, which shall be paid to you pursuant to Section 2 hereof
and (ii) the number of shares of Common Stock equal to the
quotient of (A) $235,200 divided by (B) the Fair Market Value per
share of Common Stock on the Payment Date (rounded down to the
nearest whole share),which shall be issuable to you pursuant to
Section 3 hereof.
The term "Cumulative Pretax Income of the Company"
means the sum of the income before income taxes of the Company
for each of the fiscal years ending December 31, 1998, 1999 and
2000, in each case as set forth on the Consolidated Statement of
Operations of the Company contained in the audited consolidated
financial statements of the Company for such years as certified
by PricewaterhouseCoopers LLP, or such other independent
certified public accounting firm as shall then be retained by the
Company to audit and report on its financial statements. In
calculating Cumulative Pretax Income of the Company, income
before income taxes of the Company shall be reduced by all
amounts required to be accrued pursuant to generally accepted
accounting principles, as in effect from time to time, in respect
of all compensation heretofore and hereafter granted or awarded
under the Plan for each of the fiscal years ending December 31,
1998, 1999 and 2000. Without limiting the generality of the
foregoing, in no event will the Company have any obligation to
make any payments or distributions pursuant to the Plan unless
the consolidated balance sheet of the Company as of December 31,
2000 contained in the audited consolidated financial statements
of the Company for such year includes an accrued liability of at
least $2,103,360 in respect of such payments and distributions.
The determination by the Company of all amounts required to be
accrued and all other matters herein shall be final and binding
for all purposes.
2. Payment of Cash Amounts. Cash amounts payable to
you pursuant to this Award Agreement shall be paid no later than
thirty (30) days after the Accountants shall have completed their
audit on and shall have delivered their signed opinion to the
Company with respect to the audited consolidated financial
statements of the Company for the fiscal year ending December 31,
2000 containing an audited Consolidated Statement of Operations
for each of the three years ending December 31, 2000.
3. Vesting and Issuance of Shares of Common Stock; No
Registration. (a) Shares of Common Stock earned by you under
Section 1 hereof shall vest and be issuable to you over a three-
year period as follows: one-third of the shares of Common Stock
shall vest on and shall be issued to you on April 30, 2001, one-
third of the shares of Common Stock shall vest on and shall be
issued to you on April 30, 2002 and the remainder of the shares
of Common Stock shall vest on and shall be issued to you on April
30, 2003, in each case rounded down to the nearest whole share.
(b) Neither the Award nor the shares of Common Stock
issuable pursuant to the Award and this Award Agreement have been
or will be registered under the Securities Act of 1933, as
amended (the "Securities Act") or any state securities or "blue
sky" laws. Accordingly, you hereby represent and warrant that
the Award is being acquired by you for your own account and not
with a view to the distribution of the Award within the meaning
of the Securities Act. In addition, you hereby represent and
warrant that the shares of Common Stock, when issued, will be
acquired by you for your own account and not with a view to the
distribution of such shares of Common Stock within the meaning of
the Securities Act. You also acknowledge that any pledge, sale,
assignment, transfer or other disposition of such shares by you
may be made only pursuant to a registration statement under the
Securities Act which is effective and current with respect to the
sale of such shares, or a specific exemption from the
registration requirements of the Securities Act, and, in any
event, in accordance with all applicable state securities and
"blue sky" laws. Nothing herein shall be construed as requiring
the Company to register the Shares under the Securities Act or to
qualify or register the Shares under any applicable state
securities or "blue sky" laws. Any attempted pledge, sale,
assignment, transfer or other disposition of any or all of the
Shares in violation of this Award Agreement shall be void and of
no force or effect. The Company may affix legends upon the
certificates for the Shares and may issue such "stop transfer"
instructions to its transfer agent in respect of the Shares as
may be necessary or appropriate to prevent a violation of, or to
perfect an exemption from, the registration requirements of the
Securities Act and any applicable state securities or "blue sky"
laws, or to otherwise effect the intent and purposes of this
Agreement.
(b) If at any time the Company shall determine that
the listing or qualification of the shares of Common Stock
issuable pursuant to this Award Agreement 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 to, or in connection with, the pledge, sale,
assignment, transfer or other disposition of such shares, the
Company may delay or refuse to issue such shares unless and until
same may be effected or obtained free of any conditions not
acceptable to the Company.
4. No Right to Employment. Nothing in the Plan or in
this Award Agreement, nor the grant to you of the Award, shall
confer on you any right to continue in the employ of the Company
or interfere in any way with any right of the Company to
terminate such employment at any time for any reason whatsoever
without liability to the Company.
5. Termination of Employment. Notwithstanding
anything contained in this Award Agreement to the contrary, in
the event your employment with the Company shall cease for any
reason, including upon your death or disability, then (a) if such
termination shall be on or prior to December 31, 2000, this Award
Agreement shall terminate contemporaneously therewith, and no
cash amount shall be payable and no shares of Common Stock shall
vest or be issued under this Award Agreement and (b) if such
termination shall be subsequent to December 31, 2000 and such
termination shall be for any reason other than for "cause", the
cash amount payable hereunder but not theretofore paid shall be
paid to you, or, in the event or your death, your legal
representatives, in accordance with the terms and conditions of
this Award Agreement, but no shares of Common Stock not
theretofore vested and issued to you shall thereafter vest or be
issuable under this Award Agreement; provided, that if such
termination shall be for "cause", then this Award Agreement shall
terminate contemporaneously with the termination of your
employment, and no cash amount shall thereafter be payable and no
shares of Common Stock shall thereafter vest or be issuable under
this Award Agreement.
6. Award Subject to Plan. The Award, including the
shares of Common Stock issuable under this Award Agreement, are
subject to the terms and conditions of the Plan, a copy of which
is attached hereto, incorporated by reference herein and made a
part hereof. In the event of a conflict between the terms of
this Award Agreement and the terms of the Plan, the terms of the
Plan shall govern. Capitalized terms used but not defined herein
shall have the meanings assigned to such terms as set forth in
the Plan.
7. No Rights as a Stockholder. You shall have no
rights as a stockholder with respect to any of the shares of
Common Stock issuable hereunder until such shares have vested and
certificates representing such shares shall have been issued to
you. No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property),
distributions or other rights, or for any other reason, for which
the record date is prior to the date any such stock certificate
shall be issued.
8. Miscellaneous. (a) Neither the Award nor this
Award Agreement shall be assigned, alienated, pledged, attached,
sold or otherwise transferred or encumbered by you otherwise than
by will or by the laws of descent and distribution, and any such
purported assignment, alienation, pledge, attachment, sale,
transfer or encumbrance shall be void and unenforceable against
the Company. Subject to the foregoing, this Award Agreement
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 to your rights
under this Award Agreement.
(b) This Award Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State
of Delaware, without regard to the conflicts of law rules thereof
(or any other law that would make the laws of any state or
jurisdiction other than the State of Delaware applicable hereto).
(c) The invalidity, illegality or unenforceability of
any provision in this Award Agreement shall not affect the
validity, legality or enforceability of any other provision.
(d) This Award Agreement may be executed in any number
of counterparts, each of which shall be an original and all of
which, when taken together, shall constitute one and the same
instrument.
(e) This Award Agreement (together with the Plan)
constitutes the entire agreement between the parties with respect
to the subject matter hereof. No amendment or supplement or
waiver of any provision of this Award Agreement shall be
effective unless the same shall be in writing and signed by each
of parties hereto (in the case of an amendment or supplement) or
by the waiving party (in the case of a waiver).
IN WITNESS WHEREOF, the parties hereto have executed
this Award Agreement as of the day and year first above written.
SWANK, INC.
By: /s/ Christopher F. Wolf
Title: Christopher F. Wolf, Senior Vice President, Chief
Financial Officer
/s/ John Tulin
John Tulin
1196 Elinor Road
Street Address
Hewlett, NY 11557
Town or City, State and Zip Code
###-##-####
(Soc. Sec. or Tax ID No.)
EXHIBIT 10.17
<PAGE>
SWANK, INC. 1998 EQUITY INCENTIVE COMPENSATION PLAN
NOTICE OF PERFORMANCE AWARD AND AWARD AGREEMENT
SWANK, INC. (the "Company") is pleased to inform you
that on October 21, 1998 the committee (the "Committee")
administering the 1998 Equity Incentive Compensation Plan (the
"Plan") of the Company granted to you a Performance Award (the
"Award") under the Plan upon the terms and subject to the
conditions of this Award Agreement and the Plan and subject to
your written agreement to such terms and conditions.
Accordingly, please confirm below your agreement with the Company
as follows:
1. Performance Award. (a) Provided that the
Cumulative Pretax Income of the Company (as defined below) is at
least $22,058,000, you shall be entitled to receive (i) an amount
in cash equal to $324,000, which shall be paid to you pursuant to
Section 2 hereof and (ii) the number of shares of the Company's
common stock, $.10 par value per share (the "Common Stock"),
equal to the quotient of (A) $216,000 divided by (B) the Fair
Market Value per share on the Payment Date (rounded down to the
nearest whole share), which shall be issuable to you pursuant to
Section 3 hereof;
(b) Provided that the Cumulative Pretax Income of the
Company is at least $20,765,000 but is less than $22,058,000, you
shall be entitled to receive (i) an amount in cash equal to
$291,600, which shall be paid to you pursuant to Section 2 hereof
and (ii) the number of shares of Common Stock equal to the
quotient of (A) $194,400 divided by (B) the Fair Market Value per
share of Common Stock on the Payment Date (rounded down to the
nearest whole share),which shall be issuable to you pursuant to
Section 3 hereof;
(c) Provided that the Cumulative Pretax Income of the
Company is at least $19,475,000 but is less than $20,765,000, you
shall be entitled to receive (i) an amount in cash equal to
$259,200, which shall be paid to you pursuant to Section 2 hereof
and (ii) the number of shares of Common Stock equal to the
quotient of (A) $172,800 divided by (B) the Fair Market Value per
share of Common Stock on the Payment Date (rounded down to the
nearest whole share),which shall be issuable to you pursuant to
Section 3 hereof; or
(d) Provided that the Cumulative Pretax Income of the
Company is at least $18,180,000 but is less than $19,475,000, you
shall be entitled to receive (i) an amount in cash equal to
$226,800, which shall be paid to you pursuant to Section 2 hereof
and (ii) the number of shares of Common Stock equal to the
quotient of (A) $151,200 divided by (B) the Fair Market Value per
share of Common Stock on the Payment Date (rounded down to the
nearest whole share),which shall be issuable to you pursuant to
Section 3 hereof.
The term "Cumulative Pretax Income of the Company"
means the sum of the income before income taxes of the Company
for each of the fiscal years ending December 31, 1998, 1999 and
2000, in each case as set forth on the Consolidated Statement of
Operations of the Company contained in the audited consolidated
financial statements of the Company for such years as certified
by PricewaterhouseCoopers LLP, or such other independent
certified public accounting firm as shall then be retained by the
Company to audit and report on its financial statements. In
calculating Cumulative Pretax Income of the Company, income
before income taxes of the Company shall be reduced by all
amounts required to be accrued pursuant to generally accepted
accounting principles, as in effect from time to time, in respect
of all compensation heretofore and hereafter granted or awarded
under the Plan for each of the fiscal years ending December 31,
1998, 1999 and 2000. Without limiting the generality of the
foregoing, in no event will the Company have any obligation to
make any payments or distributions pursuant to the Plan unless
the consolidated balance sheet of the Company as of December 31,
2000 contained in the audited consolidated financial statements
of the Company for such year includes an accrued liability of at
least $2,103,360 in respect of such payments and distributions.
The determination by the Company of all amounts required to be
accrued and all other matters herein shall be final and binding
for all purposes.
2. Payment of Cash Amounts. Cash amounts payable to
you pursuant to this Award Agreement shall be paid no later than
thirty (30) days after the Accountants shall have completed their
audit on and shall have delivered their signed opinion to the
Company with respect to the audited consolidated financial
statements of the Company for the fiscal year ending December 31,
2000 containing an audited Consolidated Statement of Operations
for each of the three years ending December 31, 2000.
3. Vesting and Issuance of Shares of Common Stock; No
Registration. (a) Shares of Common Stock earned by you under
Section 1 hereof shall vest and be issuable to you over a three-
year period as follows: one-third of the shares of Common Stock
shall vest on and shall be issued to you on April 30, 2001, one-
third of the shares of Common Stock shall vest on and shall be
issued to you on April 30, 2002 and the remainder of the shares
of Common Stock shall vest on and shall be issued to you on April
30, 2003, in each case rounded down to the nearest whole share.
(b) Neither the Award nor the shares of Common Stock
issuable pursuant to the Award and this Award Agreement have been
or will be registered under the Securities Act of 1933, as
amended (the "Securities Act") or any state securities or "blue
sky" laws. Accordingly, you hereby represent and warrant that
the Award is being acquired by you for your own account and not
with a view to the distribution of the Award within the meaning
of the Securities Act. In addition, you hereby represent and
warrant that the shares of Common Stock, when issued, will be
acquired by you for your own account and not with a view to the
distribution of such shares of Common Stock within the meaning of
the Securities Act. You also acknowledge that any pledge, sale,
assignment, transfer or other disposition of such shares by you
may be made only pursuant to a registration statement under the
Securities Act which is effective and current with respect to the
sale of such shares, or a specific exemption from the
registration requirements of the Securities Act, and, in any
event, in accordance with all applicable state securities and
"blue sky" laws. Nothing herein shall be construed as requiring
the Company to register the Shares under the Securities Act or to
qualify or register the Shares under any applicable state
securities or "blue sky" laws. Any attempted pledge, sale,
assignment, transfer or other disposition of any or all of the
Shares in violation of this Award Agreement shall be void and of
no force or effect. The Company may affix legends upon the
certificates for the Shares and may issue such "stop transfer"
instructions to its transfer agent in respect of the Shares as
may be necessary or appropriate to prevent a violation of, or to
perfect an exemption from, the registration requirements of the
Securities Act and any applicable state securities or "blue sky"
laws, or to otherwise effect the intent and purposes of this
Agreement.
(b) If at any time the Company shall determine that
the listing or qualification of the shares of Common Stock
issuable pursuant to this Award Agreement 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 to, or in connection with, the pledge, sale,
assignment, transfer or other disposition of such shares, the
Company may delay or refuse to issue such shares unless and until
same may be effected or obtained free of any conditions not
acceptable to the Company.
4. No Right to Employment. Nothing in the Plan or in
this Award Agreement, nor the grant to you of the Award, shall
confer on you any right to continue in the employ of the Company
or interfere in any way with any right of the Company to
terminate such employment at any time for any reason whatsoever
without liability to the Company.
5. Termination of Employment. Notwithstanding
anything contained in this Award Agreement to the contrary, in
the event your employment with the Company shall cease for any
reason, including upon your death or disability, then (a) if such
termination shall be on or prior to December 31, 2000, this Award
Agreement shall terminate contemporaneously therewith, and no
cash amount shall be payable and no shares of Common Stock shall
vest or be issued under this Award Agreement and (b) if such
termination shall be subsequent to December 31, 2000 and such
termination shall be for any reason other than for "cause", the
cash amount payable hereunder but not theretofore paid shall be
paid to you, or, in the event or your death, your legal
representatives, in accordance with the terms and conditions of
this Award Agreement, but no shares of Common Stock not
theretofore vested and issued to you shall thereafter vest or be
issuable under this Award Agreement; provided, that if such
termination shall be for "cause", then this Award Agreement shall
terminate contemporaneously with the termination of your
employment, and no cash amount shall thereafter be payable and no
shares of Common Stock shall thereafter vest or be issuable under
this Award Agreement.
6. Award Subject to Plan. The Award, including the
shares of Common Stock issuable under this Award Agreement, are
subject to the terms and conditions of the Plan, a copy of which
is attached hereto, incorporated by reference herein and made a
part hereof. In the event of a conflict between the terms of
this Award Agreement and the terms of the Plan, the terms of the
Plan shall govern. Capitalized terms used but not defined herein
shall have the meanings assigned to such terms as set forth in
the Plan.
7. No Rights as a Stockholder. You shall have no
rights as a stockholder with respect to any of the shares of
Common Stock issuable hereunder until such shares have vested and
certificates representing such shares shall have been issued to
you. No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property),
distributions or other rights, or for any other reason, for which
the record date is prior to the date any such stock certificate
shall be issued.
8. Miscellaneous. (a) Neither the Award nor this
Award Agreement shall be assigned, alienated, pledged, attached,
sold or otherwise transferred or encumbered by you otherwise than
by will or by the laws of descent and distribution, and any such
purported assignment, alienation, pledge, attachment, sale,
transfer or encumbrance shall be void and unenforceable against
the Company. Subject to the foregoing, this Award Agreement
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 to your rights
under this Award Agreement.
(b) This Award Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State
of Delaware, without regard to the conflicts of law rules thereof
(or any other law that would make the laws of any state or
jurisdiction other than the State of Delaware applicable hereto).
(c) The invalidity, illegality or unenforceability of
any provision in this Award Agreement shall not affect the
validity, legality or enforceability of any other provision.
(d) This Award Agreement may be executed in any number
of counterparts, each of which shall be an original and all of
which, when taken together, shall constitute one and the same
instrument.
(e) This Award Agreement (together with the Plan)
constitutes the entire agreement between the parties with respect
to the subject matter hereof. No amendment or supplement or
waiver of any provision of this Award Agreement shall be
effective unless the same shall be in writing and signed by each
of parties hereto (in the case of an amendment or supplement) or
by the waiving party (in the case of a waiver).
IN WITNESS WHEREOF, the parties hereto have executed
this Award Agreement as of the day and year first above written.
SWANK, INC.
By: /s/ John Tulin
Title: John Tulin, President
/s/ Eric P. Luft
Eric P. Luft
15 Fenimore Ln.
Street Address
Huntington, NY 11743
Town or City, State and Zip Code
###-##-####
(Soc. Sec. or Tax ID No.)
EXHIBIT 10.18
<PAGE>
SWANK, INC. 1998 EQUITY INCENTIVE COMPENSATION PLAN
NOTICE OF PERFORMANCE AWARD AND AWARD AGREEMENT
SWANK, INC. (the "Company") is pleased to inform you
that on October 21, 1998 the committee (the "Committee")
administering the 1998 Equity Incentive Compensation Plan (the
"Plan") of the Company granted to you a Performance Award (the
"Award") under the Plan upon the terms and subject to the
conditions of this Award Agreement and the Plan and subject to
your written agreement to such terms and conditions.
Accordingly, please confirm below your agreement with the Company
as follows:
1. Performance Award. (a) Provided that the
Cumulative Pretax Income of the Company (as defined below) is at
least $22,058,000, you shall be entitled to receive (i) an amount
in cash equal to $324,000, which shall be paid to you pursuant to
Section 2 hereof and (ii) the number of shares of the Company's
common stock, $.10 par value per share (the "Common Stock"),
equal to the quotient of (A) $216,000 divided by (B) the Fair
Market Value per share on the Payment Date (rounded down to the
nearest whole share), which shall be issuable to you pursuant to
Section 3 hereof;
(b) Provided that the Cumulative Pretax Income of the
Company is at least $20,765,000 but is less than $22,058,000, you
shall be entitled to receive (i) an amount in cash equal to
$291,600, which shall be paid to you pursuant to Section 2 hereof
and (ii) the number of shares of Common Stock equal to the
quotient of (A) $194,400 divided by (B) the Fair Market Value per
share of Common Stock on the Payment Date (rounded down to the
nearest whole share),which shall be issuable to you pursuant to
Section 3 hereof;
(c) Provided that the Cumulative Pretax Income of the
Company is at least $19,475,000 but is less than $20,765,000, you
shall be entitled to receive (i) an amount in cash equal to
$259,200, which shall be paid to you pursuant to Section 2 hereof
and (ii) the number of shares of Common Stock equal to the
quotient of (A) $172,800 divided by (B) the Fair Market Value per
share of Common Stock on the Payment Date (rounded down to the
nearest whole share),which shall be issuable to you pursuant to
Section 3 hereof; or
(d) Provided that the Cumulative Pretax Income of the
Company is at least $18,180,000 but is less than $19,475,000, you
shall be entitled to receive (i) an amount in cash equal to
$226,800, which shall be paid to you pursuant to Section 2 hereof
and (ii) the number of shares of Common Stock equal to the
quotient of (A) $151,200 divided by (B) the Fair Market Value per
share of Common Stock on the Payment Date (rounded down to the
nearest whole share),which shall be issuable to you pursuant to
Section 3 hereof.
The term "Cumulative Pretax Income of the Company"
means the sum of the income before income taxes of the Company
for each of the fiscal years ending December 31, 1998, 1999 and
2000, in each case as set forth on the Consolidated Statement of
Operations of the Company contained in the audited consolidated
financial statements of the Company for such years as certified
by PricewaterhouseCoopers LLP, or such other independent
certified public accounting firm as shall then be retained by the
Company to audit and report on its financial statements. In
calculating Cumulative Pretax Income of the Company, income
before income taxes of the Company shall be reduced by all
amounts required to be accrued pursuant to generally accepted
accounting principles, as in effect from time to time, in respect
of all compensation heretofore and hereafter granted or awarded
under the Plan for each of the fiscal years ending December 31,
1998, 1999 and 2000. Without limiting the generality of the
foregoing, in no event will the Company have any obligation to
make any payments or distributions pursuant to the Plan unless
the consolidated balance sheet of the Company as of December 31,
2000 contained in the audited consolidated financial statements
of the Company for such year includes an accrued liability of at
least $2,103,360 in respect of such payments and distributions.
The determination by the Company of all amounts required to be
accrued and all other matters herein shall be final and binding
for all purposes.
2. Payment of Cash Amounts. Cash amounts payable to
you pursuant to this Award Agreement shall be paid no later than
thirty (30) days after the Accountants shall have completed their
audit on and shall have delivered their signed opinion to the
Company with respect to the audited consolidated financial
statements of the Company for the fiscal year ending December 31,
2000 containing an audited Consolidated Statement of Operations
for each of the three years ending December 31, 2000.
3. Vesting and Issuance of Shares of Common Stock; No
Registration. (a) Shares of Common Stock earned by you under
Section 1 hereof shall vest and be issuable to you over a three-
year period as follows: one-third of the shares of Common Stock
shall vest on and shall be issued to you on April 30, 2001, one-
third of the shares of Common Stock shall vest on and shall be
issued to you on April 30, 2002 and the remainder of the shares
of Common Stock shall vest on and shall be issued to you on April
30, 2003, in each case rounded down to the nearest whole share.
(b) Neither the Award nor the shares of Common Stock
issuable pursuant to the Award and this Award Agreement have been
or will be registered under the Securities Act of 1933, as
amended (the "Securities Act") or any state securities or "blue
sky" laws. Accordingly, you hereby represent and warrant that
the Award is being acquired by you for your own account and not
with a view to the distribution of the Award within the meaning
of the Securities Act. In addition, you hereby represent and
warrant that the shares of Common Stock, when issued, will be
acquired by you for your own account and not with a view to the
distribution of such shares of Common Stock within the meaning of
the Securities Act. You also acknowledge that any pledge, sale,
assignment, transfer or other disposition of such shares by you
may be made only pursuant to a registration statement under the
Securities Act which is effective and current with respect to the
sale of such shares, or a specific exemption from the
registration requirements of the Securities Act, and, in any
event, in accordance with all applicable state securities and
"blue sky" laws. Nothing herein shall be construed as requiring
the Company to register the Shares under the Securities Act or to
qualify or register the Shares under any applicable state
securities or "blue sky" laws. Any attempted pledge, sale,
assignment, transfer or other disposition of any or all of the
Shares in violation of this Award Agreement shall be void and of
no force or effect. The Company may affix legends upon the
certificates for the Shares and may issue such "stop transfer"
instructions to its transfer agent in respect of the Shares as
may be necessary or appropriate to prevent a violation of, or to
perfect an exemption from, the registration requirements of the
Securities Act and any applicable state securities or "blue sky"
laws, or to otherwise effect the intent and purposes of this
Agreement.
(b) If at any time the Company shall determine that
the listing or qualification of the shares of Common Stock
issuable pursuant to this Award Agreement 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 to, or in connection with, the pledge, sale,
assignment, transfer or other disposition of such shares, the
Company may delay or refuse to issue such shares unless and until
same may be effected or obtained free of any conditions not
acceptable to the Company.
4. No Right to Employment. Nothing in the Plan or in
this Award Agreement, nor the grant to you of the Award, shall
confer on you any right to continue in the employ of the Company
or interfere in any way with any right of the Company to
terminate such employment at any time for any reason whatsoever
without liability to the Company.
5. Termination of Employment. Notwithstanding
anything contained in this Award Agreement to the contrary, in
the event your employment with the Company shall cease for any
reason, including upon your death or disability, then (a) if such
termination shall be on or prior to December 31, 2000, this Award
Agreement shall terminate contemporaneously therewith, and no
cash amount shall be payable and no shares of Common Stock shall
vest or be issued under this Award Agreement and (b) if such
termination shall be subsequent to December 31, 2000 and such
termination shall be for any reason other than for "cause", the
cash amount payable hereunder but not theretofore paid shall be
paid to you, or, in the event or your death, your legal
representatives, in accordance with the terms and conditions of
this Award Agreement, but no shares of Common Stock not
theretofore vested and issued to you shall thereafter vest or be
issuable under this Award Agreement; provided, that if such
termination shall be for "cause", then this Award Agreement shall
terminate contemporaneously with the termination of your
employment, and no cash amount shall thereafter be payable and no
shares of Common Stock shall thereafter vest or be issuable under
this Award Agreement.
6. Award Subject to Plan. The Award, including the
shares of Common Stock issuable under this Award Agreement, are
subject to the terms and conditions of the Plan, a copy of which
is attached hereto, incorporated by reference herein and made a
part hereof. In the event of a conflict between the terms of
this Award Agreement and the terms of the Plan, the terms of the
Plan shall govern. Capitalized terms used but not defined herein
shall have the meanings assigned to such terms as set forth in
the Plan.
7. No Rights as a Stockholder. You shall have no
rights as a stockholder with respect to any of the shares of
Common Stock issuable hereunder until such shares have vested and
certificates representing such shares shall have been issued to
you. No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property),
distributions or other rights, or for any other reason, for which
the record date is prior to the date any such stock certificate
shall be issued.
8. Miscellaneous. (a) Neither the Award nor this
Award Agreement shall be assigned, alienated, pledged, attached,
sold or otherwise transferred or encumbered by you otherwise than
by will or by the laws of descent and distribution, and any such
purported assignment, alienation, pledge, attachment, sale,
transfer or encumbrance shall be void and unenforceable against
the Company. Subject to the foregoing, this Award Agreement
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 to your rights
under this Award Agreement.
(b) This Award Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State
of Delaware, without regard to the conflicts of law rules thereof
(or any other law that would make the laws of any state or
jurisdiction other than the State of Delaware applicable hereto).
(c) The invalidity, illegality or unenforceability of
any provision in this Award Agreement shall not affect the
validity, legality or enforceability of any other provision.
(d) This Award Agreement may be executed in any number
of counterparts, each of which shall be an original and all of
which, when taken together, shall constitute one and the same
instrument.
(e) This Award Agreement (together with the Plan)
constitutes the entire agreement between the parties with respect
to the subject matter hereof. No amendment or supplement or
waiver of any provision of this Award Agreement shall be
effective unless the same shall be in writing and signed by each
of parties hereto (in the case of an amendment or supplement) or
by the waiving party (in the case of a waiver).
IN WITNESS WHEREOF, the parties hereto have executed
this Award Agreement as of the day and year first above written.
SWANK, INC.
By: /s/ John Tulin
Title: John Tulin, President
/s/ Lewis A. Valenti
Lewis Valenti
18 Mill Rd. Ext.
Street Address
Woodcliff Lake, NJ 07675
Town or City, State and Zip Code
###-##-####
(Soc. Sec. or Tax ID No.)
EXHIBIT 10.19
<PAGE>
SWANK, INC. 1998 EQUITY INCENTIVE COMPENSATION PLAN
NOTICE OF PERFORMANCE AWARD AND AWARD AGREEMENT
SWANK, INC. (the "Company") is pleased to inform you
that on October 21, 1998 the committee (the "Committee")
administering the 1998 Equity Incentive Compensation Plan (the
"Plan") of the Company granted to you a Performance Award (the
"Award") under the Plan upon the terms and subject to the
conditions of this Award Agreement and the Plan and subject to
your written agreement to such terms and conditions.
Accordingly, please confirm below your agreement with the Company
as follows:
1. Performance Award. (a) Provided that the
Cumulative Pretax Income of the Company (as defined below) is at
least $22,058,000, you shall be entitled to receive (i) an amount
in cash equal to $259,200, which shall be paid to you pursuant to
Section 2 hereof and (ii) the number of shares of the Company's
common stock, $.10 par value per share (the "Common Stock"),
equal to the quotient of (A) $172,800 divided by (B) the Fair
Market Value per share on the Payment Date (rounded down to the
nearest whole share), which shall be issuable to you pursuant to
Section 3 hereof;
(b) Provided that the Cumulative Pretax Income of the
Company is at least $20,765,000 but is less than $22,058,000, you
shall be entitled to receive (i) an amount in cash equal to
$233,280, which shall be paid to you pursuant to Section 2 hereof
and (ii) the number of shares of Common Stock equal to the
quotient of (A) $155,520 divided by (B) the Fair Market Value per
share of Common Stock on the Payment Date (rounded down to the
nearest whole share),which shall be issuable to you pursuant to
Section 3 hereof;
(c) Provided that the Cumulative Pretax Income of the
Company is at least $19,475,000 but is less than $20,765,000, you
shall be entitled to receive (i) an amount in cash equal to
$207,360, which shall be paid to you pursuant to Section 2 hereof
and (ii) the number of shares of Common Stock equal to the
quotient of (A) $138,240 divided by (B) the Fair Market Value per
share of Common Stock on the Payment Date (rounded down to the
nearest whole share),which shall be issuable to you pursuant to
Section 3 hereof; or
(d) Provided that the Cumulative Pretax Income of the
Company is at least $18,180,000 but is less than $19,475,000, you
shall be entitled to receive (i) an amount in cash equal to
$181,440, which shall be paid to you pursuant to Section 2 hereof
and (ii) the number of shares of Common Stock equal to the
quotient of (A) $120,960 divided by (B) the Fair Market Value per
share of Common Stock on the Payment Date (rounded down to the
nearest whole share),which shall be issuable to you pursuant to
Section 3 hereof.
The term "Cumulative Pretax Income of the Company"
means the sum of the income before income taxes of the Company
for each of the fiscal years ending December 31, 1998, 1999 and
2000, in each case as set forth on the Consolidated Statement of
Operations of the Company contained in the audited consolidated
financial statements of the Company for such years as certified
by PricewaterhouseCoopers LLP, or such other independent
certified public accounting firm as shall then be retained by the
Company to audit and report on its financial statements. In
calculating Cumulative Pretax Income of the Company, income
before income taxes of the Company shall be reduced by all
amounts required to be accrued pursuant to generally accepted
accounting principles, as in effect from time to time, in respect
of all compensation heretofore and hereafter granted or awarded
under the Plan for each of the fiscal years ending December 31,
1998, 1999 and 2000. Without limiting the generality of the
foregoing, in no event will the Company have any obligation to
make any payments or distributions pursuant to the Plan unless
the consolidated balance sheet of the Company as of December 31,
2000 contained in the audited consolidated financial statements
of the Company for such year includes an accrued liability of at
least $2,103,360 in respect of such payments and distributions.
The determination by the Company of all amounts required to be
accrued and all other matters herein shall be final and binding
for all purposes.
2. Payment of Cash Amounts. Cash amounts payable to
you pursuant to this Award Agreement shall be paid no later than
thirty (30) days after the Accountants shall have completed their
audit on and shall have delivered their signed opinion to the
Company with respect to the audited consolidated financial
statements of the Company for the fiscal year ending December 31,
2000 containing an audited Consolidated Statement of Operations
for each of the three years ending December 31, 2000.
3. Vesting and Issuance of Shares of Common Stock; No
Registration. (a) Shares of Common Stock earned by you under
Section 1 hereof shall vest and be issuable to you over a three-
year period as follows: one-third of the shares of Common Stock
shall vest on and shall be issued to you on April 30, 2001, one-
third of the shares of Common Stock shall vest on and shall be
issued to you on April 30, 2002 and the remainder of the shares
of Common Stock shall vest on and shall be issued to you on April
30, 2003, in each case rounded down to the nearest whole share.
(b) Neither the Award nor the shares of Common Stock
issuable pursuant to the Award and this Award Agreement have been
or will be registered under the Securities Act of 1933, as
amended (the "Securities Act") or any state securities or "blue
sky" laws. Accordingly, you hereby represent and warrant that
the Award is being acquired by you for your own account and not
with a view to the distribution of the Award within the meaning
of the Securities Act. In addition, you hereby represent and
warrant that the shares of Common Stock, when issued, will be
acquired by you for your own account and not with a view to the
distribution of such shares of Common Stock within the meaning of
the Securities Act. You also acknowledge that any pledge, sale,
assignment, transfer or other disposition of such shares by you
may be made only pursuant to a registration statement under the
Securities Act which is effective and current with respect to the
sale of such shares, or a specific exemption from the
registration requirements of the Securities Act, and, in any
event, in accordance with all applicable state securities and
"blue sky" laws. Nothing herein shall be construed as requiring
the Company to register the Shares under the Securities Act or to
qualify or register the Shares under any applicable state
securities or "blue sky" laws. Any attempted pledge, sale,
assignment, transfer or other disposition of any or all of the
Shares in violation of this Award Agreement shall be void and of
no force or effect. The Company may affix legends upon the
certificates for the Shares and may issue such "stop transfer"
instructions to its transfer agent in respect of the Shares as
may be necessary or appropriate to prevent a violation of, or to
perfect an exemption from, the registration requirements of the
Securities Act and any applicable state securities or "blue sky"
laws, or to otherwise effect the intent and purposes of this
Agreement.
(b) If at any time the Company shall determine that
the listing or qualification of the shares of Common Stock
issuable pursuant to this Award Agreement 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 to, or in connection with, the pledge, sale,
assignment, transfer or other disposition of such shares, the
Company may delay or refuse to issue such shares unless and until
same may be effected or obtained free of any conditions not
acceptable to the Company.
4. No Right to Employment. Nothing in the Plan or in
this Award Agreement, nor the grant to you of the Award, shall
confer on you any right to continue in the employ of the Company
or interfere in any way with any right of the Company to
terminate such employment at any time for any reason whatsoever
without liability to the Company.
5. Termination of Employment. Notwithstanding
anything contained in this Award Agreement to the contrary, in
the event your employment with the Company shall cease for any
reason, including upon your death or disability, then (a) if such
termination shall be on or prior to December 31, 2000, this Award
Agreement shall terminate contemporaneously therewith, and no
cash amount shall be payable and no shares of Common Stock shall
vest or be issued under this Award Agreement and (b) if such
termination shall be subsequent to December 31, 2000 and such
termination shall be for any reason other than for "cause", the
cash amount payable hereunder but not theretofore paid shall be
paid to you, or, in the event or your death, your legal
representatives, in accordance with the terms and conditions of
this Award Agreement, but no shares of Common Stock not
theretofore vested and issued to you shall thereafter vest or be
issuable under this Award Agreement; provided, that if such
termination shall be for "cause", then this Award Agreement shall
terminate contemporaneously with the termination of your
employment, and no cash amount shall thereafter be payable and no
shares of Common Stock shall thereafter vest or be issuable under
this Award Agreement.
6. Award Subject to Plan. The Award, including the
shares of Common Stock issuable under this Award Agreement, are
subject to the terms and conditions of the Plan, a copy of which
is attached hereto, incorporated by reference herein and made a
part hereof. In the event of a conflict between the terms of
this Award Agreement and the terms of the Plan, the terms of the
Plan shall govern. Capitalized terms used but not defined herein
shall have the meanings assigned to such terms as set forth in
the Plan.
7. No Rights as a Stockholder. You shall have no
rights as a stockholder with respect to any of the shares of
Common Stock issuable hereunder until such shares have vested and
certificates representing such shares shall have been issued to
you. No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property),
distributions or other rights, or for any other reason, for which
the record date is prior to the date any such stock certificate
shall be issued.
8. Miscellaneous. (a) Neither the Award nor this
Award Agreement shall be assigned, alienated, pledged, attached,
sold or otherwise transferred or encumbered by you otherwise than
by will or by the laws of descent and distribution, and any such
purported assignment, alienation, pledge, attachment, sale,
transfer or encumbrance shall be void and unenforceable against
the Company. Subject to the foregoing, this Award Agreement
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 to your rights
under this Award Agreement.
(b) This Award Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State
of Delaware, without regard to the conflicts of law rules thereof
(or any other law that would make the laws of any state or
jurisdiction other than the State of Delaware applicable hereto).
(c) The invalidity, illegality or unenforceability of
any provision in this Award Agreement shall not affect the
validity, legality or enforceability of any other provision.
(d) This Award Agreement may be executed in any number
of counterparts, each of which shall be an original and all of
which, when taken together, shall constitute one and the same
instrument.
(e) This Award Agreement (together with the Plan)
constitutes the entire agreement between the parties with respect
to the subject matter hereof. No amendment or supplement or
waiver of any provision of this Award Agreement shall be
effective unless the same shall be in writing and signed by each
of parties hereto (in the case of an amendment or supplement) or
by the waiving party (in the case of a waiver).
IN WITNESS WHEREOF, the parties hereto have executed
this Award Agreement as of the day and year first above written.
SWANK, INC.
By: /s/ John Tulin
Title: John Tulin, President
/s/ James E. Tulin
James E. Tulin
12112 N. 120th Way
Street Address
Scottsdale, AZ 85259
Town or City, State and Zip Code
###-##-####
(Soc. Sec. or Tax ID No.)
EXHIBIT 13.01
<PAGE>
SWANK
ANNUAL REORT
1998
To Our Shareholders and Friends
Chairman's Message
1998 was another year of improved sales and earnings for SWANK.
The Company continued its concentration on expanding its sales by
increasing its share of market. Our goal is to become an ever
more important factor in the Men's and Women's accessories
businesses.
We are encouraged by the Company's profit performance this year
even though we believe that the Company's performance could have
been even better had the general economic environment not
softened so dramatically in the third quarter.
We look forward to 1999 as a year of opportunity for SWANK.
Our task is to consolidate the gains the Company has made over
the past several years, and aggressively pursue increased sales
and earnings for the future.
SWANK can trace its origins to the turn of the 20th century; it
gives us a great sense of pride to enter our second century with
renewed optimism.
Sincerely,
/s/ Marshall Tulin
Marshall Tulin
Chairman
President's Letter
Net sales increased in 1998 by nearly 11%, as compared to 1997,
reaching the second highest level in the Company's history. Pre-
tax earnings increased by 26% over the prior year. This marks
our third consecutive year of increased pre-tax earnings as we
reached our highest level of pre-tax earnings in over a decade.
We believe that these facts underscore the acceptance of SWANK's
products by both consumers and our retail customers. It is
important to note that after tax income declined, compared to
last year, due to the fact that the Company recorded a $2,389,000
income tax credit in 1997 while it accrued taxes at a normal rate
of approximately 40% in 1998.
We further strengthened our product offerings in 1998 with the
addition of Claiborne men's jewelry, belts and small leather
goods, and Kenneth Cole women's jewelry. It is my pleasure to
report that initial over-the-counter sales of both collections
have been encouraging.
While the Company will, of course, continue to pursue its
traditional methods of advertising and distribution, we are also
determined to create a corporate presence on the Internet. It is
our intention to make our first appearance on the Internet as an
Advertising/Corporate public relations site and then, perhaps, as
a location for e-commerce. While many of our licenses prevent us
from selling licensed products on the Internet, we still believe
that it is part of the future in which SWANK must participate.
SWANK, like many other companies in the fashion industry, has
felt increased pressure on its margins. We are making a
concerted effort to deliver high quality product at lower costs.
We believe that our recently announced joint venture in Costa
Rica, together with several domestic initiatives, will help us
increase our profit margins for the future. We are also focusing
on all aspects of Selling and Administrative costs and, in fact,
we reduced these expenses as a percentage of sales for 1998.
Net sales during the first half of 1998 were up almost 19% over
the equivalent period in 1997 raising our expectations for the
important holiday season. Retail activity then softened during
the third quarter, apparently as a result of turbulence in world
financial markets. While net sales recovered somewhat in the
fourth quarter, they never regained their earlier upward
momentum. These events left us with higher than desired
inventories procured in anticipation of the strong Spring sales
increases carrying over into Fall. I am confident that programs
which we began to implement even before the year ended will
result in bringing inventories back into alignment with the
Company's sales.
During 1998, the Company obtained a new five-year $30,000,000
secured revolving credit and letter of credit facility with PNC
Bank through its PNC Business Credit unit. This arrangement
provides the Company with additional capital resources at a lower
cost and on more attractive terms than our prior facility.
I am very grateful for the efforts of our employees who are
responsible for the Company's improving performance. I am also
grateful for the counsel and support of our Chairman and our
Board of Directors. We remain very appreciative of our long-
standing relationships with our customers and our suppliers. We
will continue to make every effort to justify the confidence of
SWANK's stockholders.
Sincerely yours,
/s/ John Tulin
John Tulin
President and Chief Executive Officer
February 16, 1999
Financial Highlights
<TABLE>
<CAPTION>
For each of the Five Years Ended
December 31
(In thousands, except share and per share data) 1998 1997 1996 1995 1994
Operating Data:
<S> <C> <C> <C> <C> <C>
Net sales $151,770 $137,074 $132,642 $140,102 $143,496
Cost of goods sold 87,130 77,547 74,396 85,774 79,122
Gross profit 64,640 59,527 58,246 54,328 64,374
Selling and administrative expenses 56,871 53,195 54,232 60,193 58,212
Income (loss) from operations 7,769 6,332 4,014 (5,865) 6,162
Interest expense, net 1,672 1,484 1,855 2,085 1,632
Income (loss) before income taxes 6,097 4,848 2,159 (7,950) 4,530
Provision (benefit) for income taxes 2,435 1 860 994 (1,042)
Net income (loss) $ 3,662 $ 4,847 $ 1,299 $ (8,944) $ 5,572
Share and per share information:
Weighted average common shares
outstanding 16,535,670 16,378,645 16,053,135 16,135,368 16,234,892
Net income (loss) per common share $ .22 $ .30 $.08 $ (.55) $ .34
Weighted average common shares
outstanding assuming dilution 16,746,946 16,434,541 16,053,135 16,135,368 16,398,008
Net income (loss) per share assuming
dilution $ .22 $ .29 $ .08 $ (.55) $ .34
Additions to property, plant and
equipment $ 1,156 $ 1,155 $ 1,250 $ 2,006 $ 1,000
Depreciation and amortization $ 2,181 $ 2,167 $ 2,027 $ 1,523 $ 1,108
Financial Position (In thousands, except per share data)
Current assets $61,733 $48,840 $37,905 $45,768 $47,258
Current liabilities 32,228 24,485 18,865 29,218 21,877
Net working capital 29,505 24,355 19,040 16,550 25,381
Property, plant and equipment, net 5,574 6,157 6,760 7,457 6,587
Total assets 72,969 59,949 48,787 57,324 57,458
Long-term obligations 9,563 8,603 8,591 7,573 5,364
Stockholders' equity 31,178 26,861 21,331 20,533 30,217
Stockholders' equity per weighted average
common share assuming dilution $ 1.86 $ 1.63 $ 1.33 $ 1.27 $ 1.84
</TABLE>
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Percentage Changes
1998 1997 1996 1998-97 1997-96
Contribution to Net Sales
$ 95,356 $ 86,574 $ 82,830 Men's Accessories 10% 5%
49,972 43,999 41,386 Women's Accessories 14% 6%
6,442 6,501 8,426 Other (1)% (23)%
$151,770 $137,074 $132,642 Total Net Sales 11% 3%
Contribution to Gross Profit
$ 36,986 $34,594 $35,123 Men's Accessories 7% (2)%
24,008 21,276 18,679 Women's Accessories 13% 14%
3,646 3,657 4,444 Other 0% (18)%
$ 64,640 $59,527 $58,246 Total Gross Profit 9% 2%
The table indicates the relative contribution to net sales and
gross profit for each of the Company's reportable segments.
Men's Accessories include belts, wallets and other small leather
goods, suspenders, and jewelry. Women's Accessories consist of
jewelry products. Other includes sales through the Company's
factory outlet stores. The components of Net Sales are gross
sales less cash discounts, allowances and customer returns.
1998 vs. 1997
Net sales
Net sales for the year ended December 31, 1998 increased by
$14,696,000 or 10.7 % compared to 1997 with both the Men's
Accessories and Women's Accessories segments experiencing gains
over the prior year's results. Net Sales increased by $8,782,000
or 10.1% for Men's Accessories and $5,973,000 or 13.6% for
Women's Accessories. The improvement in Men's Accessories sales
in 1998 was primarily due to increased domestic shipments of the
Company's branded merchandise in the Geoffrey Beene, Kenneth Cole
and Yves St. Laurent designer lines which were first introduced
during the second and third quarters of 1997. Sales to certain
mass merchandising customers also increased in 1998 compared to
the prior year. Exports of Men's Accessories declined by
approximately $1,452,000 during 1998 as Asian markets remained
depressed. Sales during the first half of 1997 may have been
adversely affected by a reduction in orders for established lines
by certain retailers, pending the availability of the new
designer lines. Women's Accessories sales rose in 1998 due to
stronger domestic shipments of the Company's Guess? jewelry line
and increased shipments to both new and existing mass
merchandising customers. These increases are attributable, in
part, to an overall strengthening of consumer demand for Women's
jewelry which began in the second half of 1997. Net sales of
Women's Accessories were significantly affected by the events in
Asia as exports declined by approximately $2,025,000 to about 9%
of net sales of Women's Accessories from over 15% in 1997.
Net Sales in 1998 were favorably impacted by the returns
adjustments set forth below. As described in Note B to the
accompanying consolidated financial statements, the Company
reduces net sales and cost of sales by the estimated effect of
future returns of current period shipments. Each spring upon the
completion of processing returns from the preceding fall season,
the Company records adjustments to net sales in the second
quarter to reflect the difference between customer returns of
prior year shipments actually received in the current year and
the estimate used to establish the allowance for customer returns
at the end of the preceding fiscal year. These adjustments were
as follows:
Increase in net sales (in thousands)
1998 1997 Change
Men's Accessories $1,693 $947 $746
Women's Accessories 848 94 754
Gross profit
Gross profit for the year ended December 31, 1998 increased by
$5,113,000 or 8.6% compared to 1997 principally due to higher
sales. Gross profit expressed as a percentage of net sales
decreased to 42.6% from 43.4% in 1997 due to higher product and
inventory control costs.
Gross profit for Men's Accessories rose by $2,392,000 or 6.9% in
1998 primarily due to increased sales of Men's belts. Men's
Accessories gross profit as a percentage of net sales declined to
38.8% from 40.0% in 1997 due to higher inventory control costs
related to the disposition of excess and out of line merchandise
and higher product costs resulting from a less favorable sales
mix. Gross profit for Women's Accessories increased by
$2,732,000 or 12.8% due to higher sales offset partially by
increased product costs. Gross profit as a percentage of net
sales was 48.0% in 1998 compared to 48.4% for the prior year.
Gross profit includes adjustments to record the variance between
customer returns of prior year shipments actually received in the
current year and the estimate used to establish the allowance for
customer returns at the end of the preceding fiscal year. The
effect of these adjustments on gross profit was as follows:
Increase in gross profit (in thousands)
1998 1997 Change
Men's Accessories $1,155 $629 $526
Women's Accessories 633 55 578
Selling and Administrative Expenses
Selling and administrative expenses increased by $3,676,000 or
6.9% for the year and, as a percentage of Net Sales, fell to
37.5% compared to 38.8% in 1997. The increase in selling expenses
was primarily due to higher variable selling costs associated
with increased sales volume and increased advertising and
promotional expenditures incurred in connection with certain new
merchandise programs. Advertising and promotion as a percentage
of Net Sales increased to 7.1% 1998 from 6.6% in 1997 (see table
under "Promotional Expenses" below).
Interest Expense
Net interest expense increased $188,000 or 12.7% for the year
ended December 31, 1998 compared to 1997. Average borrowings
increased in 1998 reflecting additional funding requirements to
support the Company's incremental working capital investment. The
weighted average interest rate for 1998 fell by 190 basis points
compared to 1997 generally reflecting more favorable borrowing
terms (see "Interest Charges" and "Liquidity and Capital
Resources") and the overall low interest rate environment.
Provision for Income Taxes
The Company recorded an income tax provision in 1998 at a
combined federal and state effective tax rate of 39.9% which
approximated the combined statutory rate. An income tax benefit
of $2,389,000 was recorded in 1997 upon the elimination of the
remainder of the valuation allowance against deferred tax assets
which had been established in 1995. Management determined in 1997
that the Company's history of profitable performance and the
actions it has undertaken to enhance future performance enable
the Company to meet the criteria for assuming that it is more
likely than not that deferred tax assets will be realized from
future taxable income. This adjustment offset the income tax
expense associated with 1997's pretax income resulting in a net
provision for income taxes in that year of only $1,000. The
Company recorded an income tax provision in 1996 at a combined
federal and state effective tax rate of 39.8% which approximated
the combined statutory rate.
Net Income Per Share
Net income per share includes shares held by the Company's
employee stock ownership plan and deemed to be allocated to
participants. Net income per share assuming full dilution
includes the effects of options.
1997 vs. 1996
Net Sales
Net sales for the year ended December 31, 1997 increased by
$4,432,000 from 1996, reversing the downward trend experienced
over the preceding two years. Men's Accessories sales increased
$3,744,000 or 4.5% while Women's Accessories sales increased
$2,613,000 or 6.3%, both as compared to the prior year. After
over two years of a lackluster retail environment for fashion
accessories, there were some indications that conditions became
more favorable in 1997. Market reaction to the Company's new
Men's designer lines including Yves Saint Laurent, Geoffrey
Beene, and Kenneth Cole was very encouraging. Net sales for
Men's Accessories in 1997 benefited from the initial distribution
of products in the Company's new designer lines. However, net
sales during the first half of 1997 may have been adversely
affected by a reduction in orders for established products by
certain retailers due to their desire for these new collections.
Management anticipates that the strength of the new brands will
be of ongoing benefit to the Company. The market for women's
jewelry strengthened during the fall 1997 season. In addition,
management believes that net sales gains resulted from improved
merchandising in the Company's Women's lines. Other net sales
decreased $1,925,000 primarily due to a reduction in the number
of factory outlets operating in 1997 as compared to 1996.
As described in Note B to the accompanying consolidated
financial statements, the Company reduces net sales and cost of
sales by the estimated effect of future returns of current period
shipments. Overall returns experience in 1997 was approximately
the same as the previous year, exclusive of the incremental
returns directly associated with transitions to the new Men's
designer brands. As described further below, the 1996 financial
statements included provisions for returns and markdowns (the
latter designed to minimize returns) specifically associated with
retail transitions to the new Men's designer lines. The
difference between these provisions and the actual costs incurred
had no material effect on the Company's 1997 financial
statements. Each spring upon the completion of processing returns
from the preceding fall season, the Company records adjustments
to net sales in the second quarter to reflect the difference
between customer returns of prior year shipments actually
received in the current year and the estimate used to establish
the allowance for customer returns at the end of the preceding
fiscal year. These adjustments were as follows:
Increase in net sales (in thousands)
1997 1996 Change
Men's Accessories $947 $652 $295
Women's Accessories 94 733 (639)
Gross profit
Gross profit for the year ended December 31, 1997 increased
$1,281,000 or 2.2% principally as a result of increased sales.
Gross profit expressed as a percentage of net sales decreased
slightly to 43.4% from 43.9% in 1996, primarily as a result of
increased royalties to licensors which are included in cost of
sales. During 1996, the Company entered into extensions and/or
modifications of its principal existing licenses for designer
names and executed agreements for important new ones.
Men's Accessories gross profit decreased $529,000 or 1.5% and,
as a percentage of net sales, decreased from 42.4% to 40.0%,
primarily due to increased product costs for small leather goods
and also due to the effects of increased royalties as described
above. Women's Accessories gross profit increased $2,597,000 or
13.9% and, expressed as a percentage of net sales, increased from
45.1% to 48.4% principally from increased net sales, favorable
product mix and continued focus on markups.
Gross profit includes adjustments to record the variance between
customer returns of prior year shipments actually received in the
current year and the estimate used to establish the allowance for
customer returns at the end of the preceding fiscal year. The
effect of these adjustments on gross profit was as follows:
Increase in gross profit (in thousands)
1997 1996 Change
Men's Accessories $629 $639 $(10)
Women's Accessories 55 417 (362)
Selling and administrative expenses
Selling and administrative expenses decreased $1,037,000 or 1.9%
for the year and, expressed as a percentage of sales, decreased
from 40.9% to 38.8%. Selling expenses generally grew
proportionately with the increase in net sales. Advertising and
promotion expenditures (see table under "Promotional Expenses"
below) decreased by about $232,000. In-store markdowns in 1996
included a provision of approximately $1,000,000 to minimize
customer returns in connection with the 1997 transition in Men's
designer lines. Administrative expenses benefited in 1997 from a
decrease in the provision for bad debts of approximately $539,000
following favorable bad debts experience. In addition, the
expenses required to reflect the appropriate liabilities for
environmental and other long-term obligations decreased in 1997
by approximately $400,000 and $650,000, respectively, compared
with 1996.
Interest Expense
Interest expense decreased $371,000 or 20% for the year although
the weighted average interest rate was slightly higher than the
prior year. Monthly average borrowing levels were lower than in
1996. The Company entered 1997 with no outstanding balance on
its revolving credit financing and did not commence substantial
borrowings until late in February 1997.
Promotional Expenditures
The Company makes substantial advertising and promotional
expenditures to enhance its business and in support of
advertising and promotion activity required by its licensors.
These expenses increased by $1,778,000 or 19.7% in 1998 primarily
due to the increase in Net Sales and an increase in in-store
markdown expenditures associated with the introduction of certain
new merchandise programs in 1998. Advertising and promotional
expenditures decreased by $232,000 in 1997 compared to 1996
primarily because of an additional provision of approximately
$1,000,000 recorded during the fourth quarter of 1996 for in-
store promotions intended to minimize customer returns associated
with the transition in Men's designer lines during the first half
of 1997. The following table summarizes the various promotional
expenses incurred by the Company:
1998 1997 1996
In-store markdowns $7,059 $5,442 $6,120
Cooperative advertising 1,355 1,106 1,095
Displays 1,227 1,357 932
National advertising and other 1,156 1,114 1,104
Total $10,797 $9,019 $9,251
Percentage of net sales 7.1% 6.6% 7.0%
Interest Charges
Average monthly borrowings and weighted average borrowing
interest rates under the Company's revolving credit facility
were, respectively $16,572,000 and 8.88% in 1998; $8,296,000 and
10.78% in 1997; and $13,218,000 and 10.44% in 1996.
Liquidity and Capital Resources
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 the holiday season. As a result, the Company generally
builds inventory during the first three quarters of the year to
meet the seasonal demand and accounts receivable peak in the
fourth quarter. The required cash is provided by a revolving
credit facility.
In 1998, the Company planned to increase its stocks to meet
growing net sales and to improve customer delivery performance.
Subsequently, the strong demand for the Company's products
experienced during the first half of 1998 triggered an upward
revision in the Company's expectations for the upcoming holiday
season. Orders were placed for additional goods, however,
turmoil in world financial markets apparently produced the
softening in retail activity which took place in the third
quarter. The increase in business which had been expected over
the remainder of the year never materialized. All of these
elements resulted in inventories which were $10,217,000 higher at
December 31, 1998, compared to the prior year. In 1997, the
incremental inventory investment required to support three new
licensed brands coupled with anticipated increases in demand
combined to increase inventories $8,597,000 at year end compared
to the ending 1996 level.
Cash flows. Cash used by operations totaled $3,655,000 and
$5,308,000 in 1998 and 1997, respectively, principally from the
increased inventory investment discussed above and increases in
accounts receivable, partially offset in both years by net income
and depreciation and amortization. Working capital increased
$5,150,000 in 1998 and $5,315,000 in 1997. Cash used in
investing activities for capital expenditures was $1,156,000 and
$1,073,000 in 1998 and 1997, respectively, and $794 and $628,
respectively, was used for life insurance premiums principally to
fund deferred compensation. Financing activities provided
$4,700,000 in 1998 primarily from an increase in net borrowings
under the Company's revolving credit facility, offset by
repayments of long-term debt. In 1997, financing activities
provided $5,567,000 through an increase in revolving credit
borrowings in excess of repayments of long-term debt.
Financing arrangements. In July 1998, the Company signed a new
five year $30 million revolving credit agreement (the "1998
Revolving Credit Agreement") with PNC Bank, National Association
(the "Bank"). The new financing replaced the Company's prior $25
million credit facility and is collateralized by substantially
all of the Company's domestic accounts receivable, inventory and
machinery and equipment. The terms of the 1998 Revolving Credit
Agreement permit the Company to borrow against a percentage of
eligible accounts receivable and eligible inventory at an
interest rate equal to the Bank's prime rate or at a Eurodollar
lending rate plus 1.75%. The 1998 Revolving Credit Agreement
requires a facility fee of 3/8% per annum on the unused portion
of the revolving credit facility. Under the 1998 Revolving
Credit Agreement, the Company must maintain a certain fixed
charge coverage ratio and payment of dividends is prohibited. In
addition, the 1998 Revolving Credit Agreement imposes limits on
capital expenditures and additional indebtedness for borrowed
money. Management believes that this credit facility is adequate
to meet the Company's working capital needs over the foreseeable
future at existing levels of operations.
Environmental Matters
Environmental expenditures that relate to current operations are
expensed or capitalized, as appropriate. Expenditures that relate
to an existing condition caused by past operations and which do
not contribute to current or future revenue generation are
expensed. Liabilities are recorded when environmental assessments
and/or remedial efforts are probable and the costs can be
reasonably estimated. Generally, adjustments to these accruals
coincide with the completion of a feasibility study or the
Company's commitment to a formal plan of action or other
appropriate benchmark.
Capital Expenditures
The Company expects that cash from operations will be sufficient
to fund its ongoing program of replacing aging machinery and
equipment to maintain or enhance operating efficiencies. The
Company also expects to continue to make enhancements and
upgrades to its information and communications systems.
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. The date for substantial completion
of testing has been deferred to the second quarter of 1999.
The process of identifying potential issues associated with
embedded technology or so called non-IT systems has not been
formally 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 and has deferred action until
conclusion of work on key applications software.
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.
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 available is
set forth in quarterly filings for September and October 1998.
These companies' filings reveal that, in general, they are 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 April and 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 December 31, 1998 is
approximately $75,000. In addition, a vendor has estimated that
additional expenditures to make the Company's network Year 2000
compliant will not exceed $25,000. 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 due to various
risks and uncertainties, including sales patterns, overall
economic conditions, competition, pricing, consumer buying trends
and other factors.
Swank, Inc.
Consolidated Balance Sheets as of December 31
(Dollars in thousands)
Assets 1998 1997
Current:
Cash and cash equivalents $757 $ 1,235
Accounts receivable, less allowances of
$9,041 and $9,706 14,756 12,173
Inventories:
Raw materials 7,028 4,341
Work in process 7,337 6,758
Finished goods 26,819 19,868
41,184 30,967
Deferred income taxes 4,069 3,242
Prepaid and other 967 1,223
Total current assets 61,733 48,840
Property, plant and equipment, at cost:
Land and buildings 7,623 7,568
Machinery and equipment 16,849 15,895
Improvements to leased premises 989 868
Capital leases 1,471 1,471
26,932 25,802
Less accumulated depreciation and amortization 21,358 19,645
Net property, plant and equipment 5,574 6,157
Other assets 5,662 4,952
Total Assets $72,969 $59,949
Liabilities
Current:
Notes payable to banks $15,321 $ 7,517
Current portion of long-term debt 242 1,804
Term loan classified as current 1,295
Accounts payable 5,770 4,391
Accrued employee compensation 4,775 5,077
Accrued royalties payable 1,639 1,532
Income taxes payable 1,888 253
Other liabilities 2,593 2,616
Total current liabilities 32,228 24,485
Long-term obligations 9,563 8,603
Total Liabilities $41,791 $33,088
Commitments and contingencies (Note I)
Stockholders' Equity
Preferred stock, par value $1.00:
Authorized 1,000,000 shares
Common stock, par value $.10:
Authorized 43,000,000 shares:
issued 16,887,942 and 16,843,042 shares 1,689 1,684
Capital in excess of par value 913 570
Retained earnings 29,285 25,623
31,887 27,877
Treasury stock at cost, 333,519 and
333,519 shares (709) (709)
Deferred employee benefits (307)
Total stockholders' equity 31,178 26,861
Total Liabilities and Stockholders' Equity $72,969 $59,949
The accompanying notes are an integral part of the consolidated financial
statements.
Swank, Inc.
Consolidated Statements of Operations
<TABLE>
<CAPTION>
For Each of the Three Years Ended
December 31
(In thousands, except share and per share data) 1998 1997 1996
<S> <C> <C> <C>
Net sales $151,770 $137,074 $132,642
Cost of goods sold 87,130 77,547 74,396
Gross profit 64,640 59,527 58,246
Selling and administrative expenses 56,871 53,195 54,232
Income from operations 7,769 6,332 4,014
Interest expense, net 1,672 1,484 1,855
Income before income taxes 6,097 4,848 2,159
Provision for income taxes 2,435 1 860
Net Income $ 3,662 $ 4,847 $ 1,299
Net income per common share $ .22 $ .30 $ .08
Net income per common share assuming dilution $ .22 $ .29 $ .08
Weighted average common shares outstanding 16,535,670 16,378,645 16,053,135
Weighted average common shares outstanding
assuming dilution 16,746,946 16,434,541 16,053,135
</TABLE>
Consolidated Statements of Changes in Stockholders' Equity
<TABLE>
<CAPTION>
For Each of the Three Years Deferred Employee
Ended December 31, Common Capital in Benefits Treasury Stock
1998, 1997 and 1996 Stock, Par Excess of Retained Number Number
(Dollars in thousands) Value $.10 Par Value Earnings of Shares Amount of Shares Amount
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1995 $ 1,684 $ 852 $19,477 664,461 $ (771) 333,519 $ (709)
Advance to retirement plan 610,327 (501)
Net income 1,299
Balance, December 31, 1996 1,684 852 20,776 1,274,788 (1,272) 333,519 (709)
Advance to retirement plan 514,437 (307)
Allocation to plan participants (282) (1,274,788) 1,272
Net income 4,847
Balance, December 31, 1997 1,684 570 25,623 514,437 (307) 333,519 (709)
Exercise of stock options 5 40
Allocation to plan participants 163 (514,437) 307
Equity incentive compensation 140
Net income 3,662
Balance, December 31, 1998 $ 1,689 $ 913 $29,285 0 0 333,519 $ (709)
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
Swank, Inc.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
(Dollars in thousands)
For Each of the Three Years Ended December 31
1998 1997 1996
<S> <C> <C> <C>
Cash flow from operating activities:
Net income $3,662 $ 4,847 $ 1,299
Adjustments to reconcile net income to net cash
(used in) provided by operations:
(Recoveries) provision for bad debts (171) 92 631
Depreciation and amortization 2,181 2,167 2,027
Loss (gain) on sale of equipment and investments 10 (1) 55
Increase in deferred income taxes (827) (321) (632)
Compensation adjustment to capital in excess of par 140
Increase in cash surrender value of life insurance (195)
Change in assets and liabilities:
(Increase) decrease in accounts receivable (2,761) (4,288) 2,096
(Increase) decrease in inventories (10,217) (8,597) 6,800
Decrease in prepaid and other 64 250 223
Decrease in recoverable income taxes 1,665
Increase (decrease) in accounts payable,
accrued and other liabilities 1,429 1,423 (1,138)
Increase (decrease) in income taxes payable 1,635 (1,230) 1,483
Increase in long-term obligations 1,200 350 1,384
Net cash (used in) provided by operations (3,655) (5,503) 15,893
Cash flow from investing activities:
Capital expenditures (1,156) (1,073) (1,188)
Proceeds from sale of equipment 7 1 70
Premiums on life insurance (794) (628) (459)
Proceeds from sale of investments 420
Net cash used in investing activities (1,523) (1,700) (1,577)
Cash flow from financing activities:
Borrowings under revolving credit agreements 86,545 54,304 84,615
Payments of revolving credit obligations (78,741) (46,787) (95,415)
Debt issuance costs (253) (1,001)
Principal payments on long-term debt (2,896) (1,643) (264)
Proceeds from exercise of employees' stock options 45
Advance to retirement plan (307) (501)
Net cash provided by (used in)
financing activities 4,700 5,567 (12,566)
Net (decrease) increase in cash and equivalents (478) (1,636) 1,750
Cash and cash equivalents at beginning of year 1,235 2,871 1,121
Cash and cash equivalents at end of year $757 $ 1,235 $ 2,871
Cash paid during the year for:
Interest $ 1,587 $ 1,384 $ 1,779
Income taxes $ 1,626 $ 1,789
Noncash transactions:
Allocation of shares to ESOP participants $ 470 $ 990
Capital lease obligation incurred $ 67 $ 62
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
Notes to Consolidated Financial Statements
A. The Company
The Company is engaged in the manufacture, sale and distribution
of men's belts, leather accessories, suspenders and jewelry and
women's jewelry. Its products are sold both domestically and
internationally, principally through department stores, and also
through specialty stores and mass merchandisers. The Company
operates a number of factory outlet stores primarily to
distribute excess and out of line merchandise. See Note K.
B. Summary of Significant Accounting Policies
Basis of Presentation
The Consolidated Financial Statements include the accounts of
Swank, Inc. and a wholly-owned foreign sales corporation. All
significant intercompany amounts have been eliminated. Certain
prior years' amounts have been reclassified to conform to the
current year's presentation. Dollar amounts are in thousands
except for per share data.
Use of Estimates
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
periods. Actual results could differ from those estimates.
Revenue Recognition
Net sales are comprised of gross sales less sales allowances,
including cash discounts, and customer returns. Net sales are
recorded upon shipment.
Cash Equivalents
For purposes of the consolidated statements of cash flows, the
Company considers all highly liquid instruments purchased with
original maturities of three months or less to be cash
equivalents.
Allowances for Accounts Receivable
The Company's allowances for receivables are comprised of cash
discounts, doubtful accounts, in-store markdowns, cooperative
advertising and customer returns. Provisions for doubtful
accounts, in-store markdowns and cooperative advertising are
reflected in selling and administrative expenses. The Company
performs ongoing credit evaluations of its customers and
maintains allowances for potential bad debt losses. The allowance
for customer returns results from the reversal of sales for
estimated returns and associated costs. Allowances for in-store
markdowns and cooperative advertising reflect the estimated costs
of the Company's share of certain promotions by its retail
customers. Allowances for accounts receivable are generally at
their seasonal highs on December 31. Reductions of allowances
occur principally in the first and second quarters when the
balances are adjusted to reflect actual charges as processed.
Allowances for accounts receivable are estimates made by
management based on historical experience, adjusted for current
conditions, and may differ from actual results. The provisions
(recoveries) for bad debts in 1998, 1997 and 1996 were $(171),
$92 and $631, respectively.
Concentrations of Credit Risk
The Company sells products primarily to major retailers within
the United States. The Company's two largest customers accounted
for 17% and 12% of consolidated trade receivables (gross of
allowances) in 1998 and 16% and 14% in 1997.
Inventories
Inventories are stated at the lower of cost (principally average
cost which approximates FIFO) or market. The Company's inventory
is fashion oriented and, as a result, is subject to risk of rapid
obsolescence. Management believes that inventory has been
adequately marked down, where appropriate, and that the Company
has adequate channels to dispose of excess and obsolete
inventory.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. The Company
provides for depreciation of plant and equipment by charges
against income which are sufficient to write off the cost of the
assets on a straight-line or double declining-balance basis over
estimated useful lives of 10-45 years for buildings and
improvements and 3-12 years for machinery and equipment.
Improvements to leased premises are amortized on a straight-line
basis over the shorter of the useful life of the improvement or
the term of the lease.
The Company has capitalized lease obligations for computer
hardware and software equal to the lesser of the present value of
the minimum lease payments or the fair market value of the leased
property at the inception of the lease. The cost of the leased
assets is amortized on a straight line basis over the lesser of
the term of the lease obligation or the life of the asset,
generally 3 to 5 years.
Expenditures for maintenance and repairs and minor renewals are
charged to expense; betterments and major renewals are
capitalized. Upon disposition, cost and related accumulated
depreciation are removed from the accounts with any related gain
or loss reflected in results of operations.
Fair Value of Financial Instruments
The carrying value of notes payable to banks approximates fair
value because these financial instruments have variable interest
rates.
Advertising Costs
The Company charges advertising costs to expense as they are
incurred including estimates for cooperative advertising costs.
Environmental Costs
Environmental expenditures that relate to current operations are
expensed or capitalized, as appropriate. Expenditures that
relate to an existing condition caused by past operations, and
which do not contribute to current or future revenue generation,
are expensed. In 1997, the Company adopted Statement of Position
96-1 ("SOP 96-1"), "Environmental Remediation Liabilities,"
issued by the American Institute of Certified Public Accountants.
SOP 96-1 provides guidance on the recognition of expenses related
to environmental remediation activities and the related financial
statement disclosures. Adoption of SOP 96-1 did not have a
material effect on the Company's financial statements.
Liabilities are recorded when environmental assessments and/or
remedial efforts are probable and the costs can be reasonably
estimated. Generally, adjustments to these accruals coincide
with the completion of a feasibility study or the Company's
commitment to a formal plan of action or other appropriate
benchmark.
Income Taxes
The Company utilizes the liability method of accounting for
income taxes. Under the liability method, deferred taxes are
determined based on the difference between the financial
statement and tax bases of assets and liabilities using enacted
tax rates in effect in the years in which the differences are
expected to reverse. Net deferred tax assets are recorded when
it is more likely than not that such tax benefits will be
realized.
Stock-Based Compensation
The Company measures the cost of stock-based compensation
associated with the stock option plans described in Note G using
the "intrinsic value" method. Under this method, the increment
of fair value, if any, at the date of grant over the exercise
price is charged to expense over the period that the employee
provides the associated services. In 1996, the Company adopted
the disclosure provisions of Statement of Financial Accounting
Standards No. 123, which include information with respect to
stock-based compensation determined under the "fair value"
method. The Company uses the Black-Scholes formula to determine
the fair value of options on the grant date for purposes of this
disclosure.
Net Income (loss) per Share
In 1997, the Company adopted Statement of Financial Accounting
Standards No. 128 "Earnings per Share" which replaced primary
and fully diluted earnings per share with "basic" and "diluted"
earnings per share. Net income (loss) per common share or basic
earnings per share amounts are adjusted to include, where
appropriate, shares held by the Company's employee stock
ownership plan and deemed to be allocated to participants. Net
income (loss) per share assuming full dilution includes the
effects of options.
Comprehensive Income
Effective January 1, 1998, the Company adopted Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive
Income." This Statement requires that certain items recognized
under generally accepted accounting standards as separate
components of stockholders' equity should be reported as
comprehensive income in an annual financial statement that is
displayed with the same prominence as the other annual financial
statements. This statement also requires that an entity classify
items of other comprehensive income by their nature in an annual
financial statement and display the accumulated balance of other
comprehensive income separately from retained earnings and
additional capital in excess of par value in the equity section
of the balance sheet. The Company had no reportable comprehensive
income in the years ended December 31, 1998, 1997 or 1996.
Segments and Related Information
The Company adopted Statement of Financial Accounting Standards
No. 131 "Disclosures About Segments of an Enterprise and Related
Information" ("Statement No. 131") in 1998. Statement No. 131
supercedes the prior standards for reporting information about
operating segments and requires a management approach whereby
public disclosures are determined based on the internal
information utilized by the chief operating decision maker in
deciding how to allocate resources and in assessing performance.
Adoption of Statement No. 131 had no effect on the financial
position of the Company or on the results of operations but it
did modify certain disclosures. See Note K.
C. Short-Term Borrowings
1998 1997 1996
At December 31:
Total lines $30,000 $25,000 $25,000
Weighted average
interest rate 7.75% 10.00% 9.75%
For the year:
Monthly average borrowing
outstanding $16,572 $8,296 $13,218
Maximum borrowing outstanding
at any month end $25,460 $16,712 $17,800
Monthly interest rate
(weighted average) 8.88% 10.78% 10.44%
Balance at December 31 $15,321 $7,517 $0
The average amounts outstanding and weighted average interest
rates during each year are based on average monthly balances
outstanding under the Company's revolving credit facility for
seasonal working capital needs.
In July 1998, the Company signed a new five year $30 million
revolving credit agreement with a sublimit of $3 million in
letters of credit (the "1998 Revolving Credit Agreement") with
PNC Bank, National Association (the "Bank"). The new financing
replaced the Company's prior $25 million credit facility and is
collateralized by substantially all of the Company's domestic
accounts receivable, inventory and machinery and equipment. The
terms of the 1998 Revolving Credit Agreement permit the Company
to borrow against a percentage of eligible accounts receivable
and eligible inventory at an interest rate equal to the Lender's
prime rate or at a Eurodollar lending rate plus 1.75%. The 1998
Revolving Credit Agreement requires a facility fee of 3/8% per
annum on the unused portion of the revolving credit facility.
Under the 1998 Revolving Credit Agreement, the Company must
maintain a certain fixed charge coverage ratio and payment of
dividends is prohibited. In addition, the 1998 Revolving Credit
Agreement imposes limits on capital expenditures and on
additional indebtedness for borrowed money. Based upon present
information and the Company's operating plans for fiscal 1999,
the Company expects that it will continue to meet the financial
covenants contained in the 1998 Revolving Credit Agreement and
that this facility is adequate to meet the Company's seasonal
working capital needs over the foreseeable future at existing
levels of operations.
In May, 1996, the Company obtained revolving credit financing
from IBJ Schroder Bank & Trust Company, as agent (the "Lenders"),
for up to $25,000 with a sublimit of $3,000 in letters of credit
(the "1996 Revolving Credit Agreement"). The proceeds of the 1996
Revolving Credit Agreement were used, in part, to repay all but
$4 million of the outstanding balance under the then existing
revolving loan agreement with other banks and under which the
Company was then in default. The 1996 Revolving Credit Agreement
permitted the Company to borrow against a percentage of eligible
accounts receivable and eligible inventory at an interest rate of
1.5% over the Lenders' prime lending rate and included a facility
fee of 1/2%, per annum, on the unused portion of the facility.
The 1996 Revolving Credit Agreement included covenants requiring
the Company to maintain certain financial ratios and included
other provisions limiting capital expenditures, specifying
minimum profitability and prohibiting payment of dividends.
In connection with the May 1996 refinancing, other banks
amended and restated an existing agreement to provide the Company
with a $4,000 term loan (the "Term Loan") in lieu of a like
amount of revolving credit debt then outstanding under the
existing agreement. The Term Loan was payable in $200 quarterly
increments which began in June 1997 with a final payment of the
balance in May 1999, if not prepaid earlier pursuant to annual
prepayments based on excess cash flow, as defined. The Company
prepaid the remaining Term Loan balance in April 1998, utilizing
borrowings under the 1996 Revolving Credit Agreement after having
prepaid $705 in 1997. The Term Loan bore interest at 2.5% over
the other banks' prime lending rate, a total of 11% at December
31, 1997. The Term Loan also required an annual facility fee of
2% of the term loan and a success fee of $300 which the Company
prepaid along with the final principal payment. The 1996
financing agreements included provisions specifying that a
material adverse effect, as determined by the lenders, in the
financial position or results of operations of the Company is an
event of default. As such, the portion of the Term Loan which
would have been otherwise classified as long-term was classified
as current in the accompanying balance sheet at December 31,
1997. The 1996 Revolving Credit Agreement and the Term Loan were
collateralized by all of the Company's assets. As a result of
the prepayment of the Term Loan and the refinancing of the 1996
Revolving Credit Agreement, an after tax gain of approximately
$38 was recorded in the second quarter of 1998 and an after tax
loss of approximately $111 was recorded in the third quarter of
1998, respectively.
D. Income Taxes
Provision (benefit) for income taxes:
1998 1997 1996
Currently payable:
Federal $2,560 $253 $1,422
State 690 51 37
Foreign sales corporation 12 18 33
3,262 322 1,492
Deferred:
Federal (719) (282) (493)
State (108) (39) (139)
(827) (321) (632)
Total provision $2,435 $1 $860
Deferred tax provision (benefit) 1998 1997 1996
Accounts receivable reserves $148 $1,398 $(697)
Deferred compensation (638) 65 (122)
Inventory capitalization (197) (573) 94
Postretirement benefits (122) (152) (112)
Environmental costs 5 (161)
Inventory reserves 157 (119) (212)
Workman's compensation 66 389 (230)
Termination costs 114 (53) (68)
Capital leases 74 92 (253)
Borrowing costs 178 (178)
Corporate owned life insurance (373) 621 3,044
Depreciation (120) (153) 30
AMT credit carryforwards 38 627 345
State NOL carryforwards 50 315
Other items (152) (129) (52)
Valuation allowance (2,389) (2,375)
$(827) $(321) $(632)
Effective income tax rate:
1998 1997 1996
Statutory federal income tax rate 34.0% 34.0% 34.0%
State income taxes, net of
federal tax benefit 5.5 5.5 3.3
Life insurance (1.5) 4.0 115.5
Valuation allowance (49.3) (111.5)
Allocation of ESOP shares 1.1 (4.4)
Other items, net 1.9 4.7 2.9
39.9% 0.0% 39.8%
Components of the net deferred tax asset at December 31:
1998 1997 1996
Deferred tax assets
Accounts receivable reserves $1,410 $1,558 $2,956
Deferred compensation 2,402 1,764 1,829
Inventory capitalization 1,244 1,047 474
Postretirement benefits 790 668 516
Environmental costs 662 662 667
Inventory reserves 195 352 233
Workman's compensation 133 199 588
Termination costs 187 301 248
Capital leases 87 161 253
Borrowing costs 178 178
AMT credit carryforward 38 665
State NOL carryforwards 50
Other 678 526 397
Gross deferred asset 7,788 7,454 9,054
Less valuation allowance (2,389)
Subtotal 7,788 7,454 6,665
Deferred tax liabilities
Depreciation (427) (547) (700)
Corporate owned life insurance ( 3,292) (3,665) (3,044)
Net deferred tax asset $4,069 $ 3,242 $2,921
The Health Insurance and Accountability Act of 1996 (the "Act")
phased out the deduction of interest on policy loans on a
significant portion of the Company's corporate owned life
insurance and, therefore, substantially increased the after tax
cost of maintaining these policies. As a result, in 1996 the
Company announced its intention to surrender the affected
policies and recorded a deferred tax liability for the estimated
income taxes that will become due over a four year period, 1998
through 2001. The surrender of these policies was completed in
November 1998. See Note F.
Because realization of deferred tax assets was dependent upon
future taxable income, exclusive of reversing temporary
differences and carrybacks, a valuation allowance was provided in
1995 to reduce deferred tax assets to a level which management
believed more likely than not to be realized. In 1997,
management determined that the valuation allowance was no longer
required because the pretax earnings achieved in 1996 and 1997,
when considered along with the Company's history of
profitability, made it appropriate to consider future taxable
income in assessing the realization of deferred tax assets.
E. Long-Term Obligations
Long-term obligations, excluding the current portion, at
December 31, were as follows:
1998 1997
Benefits under 1987 Deferred Compensation Plan
and Postretirement benefits (See Note F) $4,031 $3,219
1993 Deferred Compensation Plan (See Note F) 2,786 1,909
1998 Equity Incentive Plan (See Note G) 210
Environmental liabilities (See Note I) 1,588 1,588
Supplemental death benefits 150 162
Other 528 1,215
Long-term portion of capital leases 270 510
$9,563 $8,603
The Company's lease agreements for certain computer hardware and
software and have been classified as capital leases for financial
reporting purposes. Accumulated amortization of assets under
capital leases was $1,395 and $1,106 as of December 31, 1998 and
1997, respectively. Office equipment and computer hardware with
aggregate fair values of approximately $0, $67 and $62 were added
to capitalized leases in 1998, 1997 and 1996, respectively.
Future minimum lease payments and the present value of the
minimum lease payments as of December 31, 1998 were:
1999 $ 283
2000 210
2001 64
2002 18
Subtotal 575
Imputed interest at 11.0% ( 63)
Present value of minimum
lease payments $512
F. Employee Benefits
Effective January 1, 1994, the Company amended and restated the
Swank, Inc. Employees' Stock Ownership Plan in a merger with the
Swank, Inc. Employees' Stock Ownership Plan No. 2 and the Swank,
Inc. Savings Plan. The combined plans became The New Swank, Inc.
Retirement Plan (the "Plan"). The Plan incorporates the
characteristics of the three predecessor plans, covers
substantially all full time employees and reflects the Company's
continued desire to provide added incentives and to enable
employees to acquire shares of the Company's Common Stock. The
cost of the Plan has been borne by the Company.
The savings (401(k)) component of the Plan provides employees an
election to reduce taxable compensation through contributions to
the Plan. Matching cash contributions from the Company are
determined annually at the Board's discretion. Shares of Common
Stock acquired by the stock ownership component of the Plan are
allocated to participating employees to the extent of
contributions to the Plan, as determined annually at the
discretion of the Board of Directors, and are vested on a
prescribed schedule. Expenses for the Company's contributions to
the Plan were $1,200, $1,256, and $1,238 in 1998, 1997 and 1996,
respectively. The 1997 and 1996 contributions include $470 and
$990, respectively, determined at average fair value, upon the
commitment to allocate 514,437 and 1,274,788 shares,
respectively, to participants in the stock ownership component of
the Plan. The fair value of these shares at December 31, 1997 and
1996 was $579 and $803, respectively. The allocations of these
shares were made in February of 1998 and 1997, respectively, to
individual employees' accounts as of the preceding December 31
and are reflected in the consolidated statements of changes in
stockholders' equity and as a noncash transaction for purposes of
the consolidated statements of cash flows in the year allocated.
At December 31, 1998 and 1997, the Plan held a total of
10,001,506 and 10,046,402 shares, respectively, of the Company's
outstanding stock, of which 10,001,506 and 9,531,965,
respectively, were allocated to participants. The Company from
time to time makes loans to the Plan at 8% per annum to provide
the Plan with liquidity, primarily to enable the Plan to make
distributions of cash rather than shares to former employees.
Outstanding balances due from the Plan to the Company were $0 and
$307 at December 31, 1998 and 1997, respectively. These amounts
are classified in the balance sheet as deferred employee
benefits, a reduction in stockholders' equity.
In 1998, the Company adopted Statement of Financial Accounting
Standards No. 132 which modified and standardized disclosure
requirements for postretirement benefits. In this connection,
the Company determined that the new disclosure requirements are
applicable to defined benefits provided under the 1987 Deferred
Compensation Plan.
The Company provides postretirement life insurance, supplemental
pension and medical benefits for certain groups of active and
retired employees. The postretirement medical plan is
contributory, with contributions adjusted annually; the death
benefit is noncontributory. The Company recognizes the cost of
postretirement benefits over the period in which they are earned
and amortizes the transition obligation for all plan participants
on a straight-line basis over a 20 year period which began in
1993.
The following table sets forth reconciliations of the beginning
and ending balances of the postretirement benefits and defined
benefits under the 1987 Deferred Compensation Plan described
below:
Postretirement Defined
Benefits Benefits
Change in Benefit Obligation 1998 1997 1998 1997
Benefit obligation
at beginning of year: $5,467 $5,256 $2,583 $2,974
Service cost 34 45 110 217
Interest cost 349 379 177 181
Participants' contributions 19 22 0 0
Amendments (40) 0 (216)
Actuarial (gain) loss (254) (59) 24 (13)
Benefits paid (176) (176) (349) (776)
Benefit obligation
at end of year: $5,399 $5,467 $2,329 $2,583
Change in Plan Assets
Plan assets at beginning
of year at fair value 0 0 0 0
Employer contributions 157 154 349 776
Participants' contributions 19 22
Benefits paid (176) (176) (349) ( 776)
Plan assets at
end of year at fair value 0 0 0 0
Funded status $(5,399) $(5,467) $(2,329) $(2,583)
Unrecognized
actuarial (gain) loss 1,205 1,510 (10) 100
Unrecognized
transition obligation 2,193 2,393 (158) (178)
Unrecognized
prior service (credit) cost 0 0 (215) 0
Accrued benefit cost (1) $(2,001) $(1,564) $(2,712) $(2,661)
(1)Amounts totaling $682 and $1,006 have been included in accrued
employee compensation as of December 31, 1998 and 1997,
respectively. The remaining balance has been included in long-
term obligations as set forth in Note E.
The weighted-average discount rate used in determining the
accumulated benefit obligations was 6.5%, 7.0% and 7.5% at
December 31, 1998, 1997 and 1996, respectively. For measurement
purposes, a 5.5% annual rate of increase in the per capita cost
of covered health care benefits was assumed for 1999 and all
years thereafter.
Net periodic postretirement benefit cost for 1998, 1997 and 1996
included the following components:
Postretirement Defined
Benefits Benefits
1998 1997 1996 1998 1997 1996
Service cost $34 $45 $42 $110 $217 $184
Interest cost 349 379 369 177 181 198
Expected return on
plan assets 0 0 0 0 0 0
Recognized actuarial
(gain) loss 51 73 96 134 22 38
Amortization of
transition obligation 160 160 160 (20) (20) (20)
Net periodic benefit costs
included in selling and
administrative expenses $594 $657 $667 $401 $400 $400
The Company has multiple health care and life insurance
postretirement benefit programs which are generally available to
executives. The health care plans are contributory (except for
certain AARP and Medicare Part B coverage) and the life insurance
plans are noncontributory. A portion of the life benefits is
fully insured through group life coverage and the remaining life
benefits are self insured. Life insurance contracts have been
purchased on the lives of certain employees in order to fund
postretirement death benefits to beneficiaries of salaried
employees who reach age sixty with ten years of service.
Proceeds from these contracts are expected to be adequate to fund
the Company's obligations although there are likely to be
differences in the timing of cash flows over the life of the
program. The cost of these contracts is included in the annual
postretirement cost shown above. On December 31, 1998, the health
plan was changed from an indemnity coverage program to a
preferred provider arrangement.
Assumed health care cost trend rates have a significant effect
on the amounts reported for the health care plans. A one-
percentage point decrease in assumed health care cost trend rates
would decrease the total of service and interest cost by $4 and
the postretirement benefit obligation by $48, respectively, while
a one-percentage point increase would increase the total of
service and interest cost by $5 and the postretirement benefit
obligation by $48.
In 1987, the Company adopted a deferred compensation plan (the
"1987 Plan") available to certain key executives for the purpose
of providing retirement benefits. Interest credited to
participants' accounts is paid at retirement in the form of a
monthly annuity over a period of ten years. All compensation that
was deferred under the 1987 Plan has been returned to
participants following seven years after the year of original
deferral. The 1987 Plan was amended at the end of 1998 to change
the method of determining future interest credits on
participants' accounts. Life insurance contracts intended to
fund 1987 Plan benefits through future death proceeds were
purchased on the lives of the participants and on certain other
employees with annual net carrying cost of approximately $300 per
year. However, as described in Note D, these contracts were
surrendered in November, 1998 with a corresponding reduction in
gross cash surrender value and policy loans as set forth below.
In 1993, the Company established a deferred compensation plan
for certain key executives (the "1993 Plan") that provides for
payments of the amounts deferred and the earnings thereon upon
retirement, death or other termination of employment. Amounts
payable to participants in the 1993 Plan aggregated $3,021 and
$2,022 at December 31, 1998 and 1997, respectively, of which $235
and $113, respectively, have been classified in accrued employee
compensation. The remaining balances of $2,786 and $1,909,
respectively, have been included in long-term obligations (See
Note E). Variable life insurance contracts have been purchased on
the lives of participants and on certain other employees. These
contracts are held in a grantor trust and the contract values are
expected to be adequate to fund the benefit obligations under the
1993 Plan. The net costs related to the 1993 deferred
compensation plans are included in selling and administrative
expense and aggregated approximately $271, $171 and $221, in
1998, 1997 and 1996, respectively.
The Company uses loans against the policy cash values to pay
part or all of annual life insurance premiums, except for the
variable life policies. The aggregate gross cash surrender value
of all policies was approximately $9,298 and $31,604, at December
31, 1998 and 1997, respectively, which is included in other
assets, net of policy loans aggregating approximately $3,552 and
$26,744, respectively. The Company has no intention of repaying
any policy loans and expects that they will be liquidated from
future death benefits or by surrender of the policies. Interest
on policy loans amounted to approximately $1,997, $2,041 and
$2,207 in 1998, 1997 and 1996, respectively, and is included in
the net costs of the various plans described above. The weighted
average interest rate on policy loans was 7.7%, 7.8% and 8.6% at
December 31, 1998, 1997 and 1996, respectively.
G. Stock Options
Under the Company's 1987 and 1981 employee stock option plans,
options were granted to key employees to purchase shares of
Common Stock at the market value on the date of grant. These
options are generally exercisable during a period beginning one
year after the date of grant and continuing for an additional
nine years. No additional options may be granted under the 1987
and 1981 plans.
In 1994, the Company established a directors' stock option
plan pursuant to which options may be granted to non-employee
directors to purchase 150,000 shares of Common Stock at market
value on the date of grant. Options granted under this plan are
for a period of five years and are immediately exercisable.
Options to purchase 15,000 shares of Common Stock were granted
under this plan in each of 1998, 1997 and 1996. At December 31,
1998, a total of 70,000 shares of Common Stock were reserved for
future grants under the directors' plan.
The following table summarizes stock option activity for the
years 1996 through 1998:
Weighted Average
Option Shares Exercise Price
Outstanding at
December 31, 1995 2,203,160 $1.07
Exercised
Forfeited (291,772) 1.06
Expired
Granted 200,000 .70
Outstanding at
December 31, 1996 2,111,388 1.03
Exercised
Forfeited (80,600) .97
Expired (1,074,988) 1.16
Granted 15,000 .78
Outstanding at
December 31, 1997 970,800 .89
Exercised (44,900) .94
Forfeited (10,400) .94
Expired
Granted 15,000 1.28
Outstanding at
December 31, 1998 930,500 $.90
The estimated weighted average fair value of options granted in
1996 was approximately $.63 per share on the grant dates
determined using a 6.5% interest rate, an expected life of 10
years, expected volatility of .99 and assuming no dividends. The
weighted average fair value per share of options granted in 1997
and 1998 was approximately $.67 and $1.18, respectively. Pro
forma net income and pro forma net income per share for options
granted using the fair value method was $3,627 and $.22 per share
in 1998, $4,819 and $.29 per share in 1997, and $1,279 and $.08
per share in 1996.
Options outstanding as of December 31,1998 were as follows:
Weighted Weighted Number Weighted
Exercise Shares Average Average Exer- Average
Price Outstanding Life (Years) Price cisable Price
$.78-$1.28 70,000 2.61 $1.04 70,000 $1.04
$.94 675,500 2.75 .94 675,500 .94
$.69 185,000 7.75 .69 123,333 .69
Total 930,500 3.73 $.90 868,833 $.91
At December 31, 1997 and 1996 there were 898,114 and 1,926,388
exercisable options, respectively, and the weighted-average
exercise prices were ($.92) and ($1.07), respectively.
In April 1998, the Company's stockholders approved the Swank,
Inc. 1998 Equity Incentive Compensation Plan (the "1998 Plan")
which replaced the Company's prior incentive stock plans, all of
which had expired by their terms. The 1998 Plan permits the
Company's Board to grant a maximum of 3,000,000 shares to key
employees through stock options, stock appreciation rights,
restricted stock units, performance awards and other stock-based
awards. Long-term performance awards were granted under the 1998
Plan in October 1998 to certain key employees. Awards are based
upon a formula which incorporates a minimum and maximum range of
cumulative earnings, determined before incentive compensation
pursuant to the awards and before income taxes, for the three
year period ending December 31, 2000. If earned, the awards will
be payable partially in cash and partially in restricted shares
of the Company's common stock. Each award is entirely denominated
in dollars. The number of restricted shares to be issued to
participants will be the aggregate dollar amount of the equity
portion of the awards divided by the fair value of the Company's
shares at the date of distribution. Based on a market value of
$1.08625 per share for the Company's common stock when the awards
were granted, a maximum of approximately 1,383,100 shares have
been awarded. Restrictions on any shares actually issued will
lapse over a three year period from the date of issuance.
Compensation expense of $350 has been recorded as of December 31,
1998 in connection with the 1998 Plan.
H. Net Income Per Share
The following table sets forth the computation of net income per
share:
Year Ended December 31,
1998 1997 1996
Numerator:
Net Income $3,662 $4,847 $1,299
Denominator:
Weighted average common
shares outstanding 16,535,670 16,509,523 16,509,523
Effect of excluding unallocated
shares held in ESOP (0) (130,878) (456,388)
Shares used in computing net
income per common share 16,535,670 16,378,645 16,053,135
Effect of dilutive options 211,276 55,896 0
Shares used in computing
net income per
common share
assuming dilution 16,746,946 16,434,541 16,053,135
Net income per
common share $ .22 $ .30 $ .08
Net income per
common share
assuming dilution $ .22 $ .29 $ .08
Unallocated shares maintained in the Company's Employee Stock
Ownership Plan ("ESOP"), described in Note F, are reflected as a
reduction of outstanding shares for earnings per share purposes
until such shares are committed to be allocated. There were no
shares at December 31, 1998, 1997 and 1996, remaining in the ESOP
which were not committed to be allocated.
I. Commitments and Contingencies
The Company leases certain of its warehousing, sales and office
facilities, automobiles and equipment under noncancelable long-
term operating leases. Certain of the leases provide renewal
options ranging from one to ten years and escalation clauses
covering increases in various costs. Total rental expenses
amounted to $3,298, $3,373 and $3,811, in 1998, 1997 and 1996,
respectively.
Future minimum lease payments under noncancelable operating
leases as of December 31, 1998 are as follows:
1999 $ 2,425
2000 1,652
2001 561
2002 347
2003 142
Total minimum payments $ 5,127
The Company owns the rights to various patents, trademarks,
trade names and copyrights and has exclusive licenses to market
certain products in specified territories, principally in the
United States. The Company's licenses for "Yves Saint Laurent",
"Geoffrey Beene", "Kenneth Cole" and "Pierre Cardin" (men's),
and "Anne Klein", "Anne Klein II', and "Guess?" (women's) may be
considered material to the Company's business. The Company is
obligated to pay minimum royalties under certain license
agreements as follows: 1999- $3,716; 2000- $3,357; 2001- $1,988;
and 2002- $105. Generally, the license agreements require the
Company to provide various forms of advertising and promotion
support determined as a percentage of annual net sales of
licensed merchandise and licensors generally retain audit rights
for a specified period. The Company also pays a percentage of net
sales of products to a consulting firm controlled by one of the
Company's directors in connection with certain license agreements
which that firm introduced to the Company. Management believes
that the Company's license obligations have been adequately
reflected in the accompanying financial statements.
On June 7, 1990 the Company received notice from the United
States Environmental Protection Agency ("EPA") that it, along
with fifteen others, had been identified as a Potentially
Responsible Party ("PRP") in connection with the release of
hazardous substances at a Superfund Site located in
Massachusetts. This notice does not constitute the commencement
of a proceeding against the Company or necessarily indicate that
a proceeding against the Company is contemplated. The Company,
along with six other PRP's, has voluntarily entered into an
Administrative Order pursuant to which, inter alia, they have
undertaken to conduct a remedial investigation/feasibility study
("RI/FS") with respect to the alleged contamination at the site.
It is reasonably possible that the Company's potential obligation
may change in the near term. The Company's share of costs for
the RI/FS is being allocated on an interim basis at approximately
12.5%. This Superfund site is adjacent to a municipal landfill
that is in the process of being closed under Massachusetts law.
The Company believes that the issues regarding the site are under
discussion among state and federal agencies due to the proximity
of the site to the landfill and the composition of waste at the
site. At December 31, 1998 and 1997 the company had accrued
approximately $1,223 and $1,223 in connection with this site
based on the assumption that the issues relating to the
availability of federal funding and the allocation of costs of
remediation, among others, will not be resolved for many years
and that significant legal and technical fees and expenses will
be incurred prior to such resolution.
The Company signed a judicial consent decree relating to the
Western Sand and Gravel site located in Burrillville and North
Smithfield, Rhode Island which was entered on August 28, 1992 by
the U.S. District Court for the District of Rhode Island. The
most likely scenario for remediation of ground water at this site
is through natural attenuation which will be monitored over a
period of up to 24 years. Estimates of the costs of remediation
range from approximately $2.8 million for natural attenuation to
approximately $7.8 million for other remediation. The Company's
share is approximately 8% of approximately 75% of the costs. At
December 31, 1998 and 1997 the Company had accrued approximately
$453 and $453 in connection with this site based on the results
of tests conducted in 1998 and 1997. Management believes that
this site will not have a material adverse effect on the
Company's operating results or financial condition based on the
results of periodic tests conducted at the site. In 1988, the
Company received notice that it had been identified as a PRP,
together with numerous other companies, in connection with an
unrelated site in Diaz, Arkansas. The Company has appropriately
responded but has received no further communications on this
matter. The Company has recorded no liability with respect to
this site as it has no basis on which to estimate potential
costs, if any.
The estimated liability for costs associated with environmental
sites is included in Long-term obligations in the accompanying
balance sheets (See Note E), exclusive of additional currently
payable amounts of approximately $87 and $88 included in Other
liabilities in 1998 and 1997, respectively. These amounts have
not been discounted. Management believes that the accompanying
financial statements include adequate provision for environmental
exposures.
J. Promotional Expenses
Substantial expenditures for advertising and promotion are
considered necessary to maintain and enhance the Company's
business and, as described in Note I, certain license agreements
require specified levels of spending. These expenditures are
included in selling and administrative expenses in the year
incurred. The following table summarizes the various promotional
expenses incurred by the Company.
1998 1997 1996
In-store markdowns $7,059 $5,442 $6,120
Cooperative advertising 1,355 1,106 1,095
Displays 1,227 1,357 932
National advertising and other 1,156 1,114 1,104
Total $10,797 $9,019 $9,251
Percentage of net sales 7.1% 6.6% 7.0%
K. Disclosures About Segments of an Enterprise and Related Information
The men's and women's accessories businesses have pronounced
differences including the frequency of markets, the degree of
fashion orientation in the products and, at the retail level,
separate departments with separate buying structures. Management
considers meeting the specific demands of each of these
marketplaces as the most important factor in managing the
Company's business and in developing appropriate reporting of
results. The Company's products are sold principally
domestically through department stores and, to a lesser extent,
through specialty stores and mass merchandisers. The Company and
its corresponding customer relationships are organized along
men's and women's lines. As a result, the Company has two
reportable segments, Men's Accessories consisting of belts,
wallets and other small leather goods, suspenders and jewelry and
Women's Accessories consisting of jewelry products. Management
measures segment profit or loss for each segment based on income
or loss before income taxes utilizing the accounting policies
consistent in all material respects with those described in Note
B. Reportable segment assets consist of inventory. No
intersegment revenue is recorded. Reportable segment assets are
transferred to Other, which includes the Company's outlet stores,
at carrying cost.
Consol-
idated
1998 Men's Women's Other Total
Revenue from
external customers $95,356 $49,972 $6,442 $151,770
Interest Expense, net 1,005 592 75 1,672
Depreciation Expense 1,129 547 60 1,736
Segment Profit 4,746 948 403 6,097
Other noncash item:
(Recoveries) provision
for bad debts (183) 12 (171)
Segment Assets 26,279 13,242 1,663 41,184
Consol-
idated
1997 Men's Women's Other Total
Revenue from
external customers $86,574 $43,999 $6,501 $137,074
Interest Expense, net 928 462 94 1,484
Depreciation Expense 1,162 523 73 1,758
Segment Profit 4,199 286 363 4,848
Other noncash item:
Provision for bad debts 56 36 92
Segment Assets 18,064 11,457 1,446 30,967
Consol-
idated
1996 Men's Women's Other Total
Revenue from
external customers $82,830 $41,386 $8,426 $132,642
Interest Expense, net 1,156 579 120 1,855
Depreciation Expense 1,075 515 90 1,680
Segment Profit (loss) 4,880 (2,351) (370) 2,159
Other noncash item:
Provision for bad debts 402 229 631
Segment Assets 12,157 8,386 1,827 22,370
Reconciliation of Assets 1998 1997 1996
Reportable segment assets $39,521 $29,521 $20,543
All other assets 33,448 30,428 28,244
Total consolidated assets $72,969 $59,949 $48,787
Sales to the Company's two largest customers accounted for
approximately 16% and 15% of consolidated net sales in 1998, 17%
and 13% of consolidated net sales in 1997 and 17% and 13% of
consolidated net sales in 1996, respectively. Each of these
customers accounted for in excess of 10% of net sales in each of
the Company's reportable segments in 1998. In addition, another
customer accounted for approximately 10% of consolidated
net sales in 1998. Exports to foreign countries accounted
for approximately 5%, 8% and 9% of consolidated net sales in
1998, 1997 and 1996, respectively.
L. Quarterly Financial Data (unaudited)
The Company believes that the results of operations are more
meaningful on a seasonal basis (approximately January-June and
July-December) 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
and related earnings between quarters within a season differently
in one year than in another.
First Second Third Fourth
1998
Net Sales $33,630 $32,177 $39,041 $46,922
Gross Profit 14,145 13,259 16,189 21,047
Net Income (loss) $ 809 $ (503) $ 906 $ 2,450
Per Share $ .05 $ (.03) $ .05 $ .15
Per Share assuming dilution $ .05 $ (.03) $ .05 $ .15
1997
Net Sales $27,567 $27,580 $36,165 $45,762
Gross Profit 12,838 11,560 15,195 19,934
Net Income (loss) $ 46 $ (687) $ 1,108 $ 4,380
Per Share $ .00 $ (.04) $ .07 $ .27
Per Share assuming dilution $ .00 $ (.04) $ .07 $ .26
An income tax benefit of $2,389 ($.15 per share) was recorded
in the fourth quarter of 1997 upon the elimination of the
remainder of the valuation allowance against deferred tax assets
which had been established in 1995. This adjustment offset the
income tax expense associated with 1997 pretax income and
resulted in a tax provision of only $1 for the full year.
Appropriate provision for income tax expense has been made in
1998.
M. Subsequent event
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 expected to commence the manufacture of belts in
1999. Substantially all of Joyas' revenue is derived from
products manufactured for the Company and the results of Joyas'
operations will be included in the Company's consolidated
financial statements from the transaction's effective date.
Report of Independent Accountants
To the Stockholders of Swank, Inc.
In our opinion, the accompanying consolidated balance sheets
and the related consolidated statements of operations, of changes
in stockholders' equity and of cash flows present fairly, in all
material respects, the financial position of Swank, Inc. at
December 31, 1998 and 1997 and the results of its operations and
its cash flows for each of the three years in the period ended
December 31, 1998 in conformity with generally accepted
accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is
to express an opinion on these financial statements based on our
audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used
and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed
above.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 16, 1999
About the Company
Swank, Inc. is a leading U.S. manufacturer and distributor of
men's belts, leather accessories, suspenders and jewelry and
women's jewelry. The Company is dedicated to maintaining style
and quality leadership in the broad diversity of products it
markets.
The Company's customers are primarily major retailers within the
United States. Sales have become more concentrated as a result
of consolidations within the retail industry. The Company's ten
largest customers represented approximately 66% of consolidated
net sales in 1998 compared to 65% in 1997.
In order to appeal to a large economic cross-section of the
buying public, most of Swank's collections are offered in a wide
variety of styles and price ranges.
The Company takes great pride in the strength of its consumer
franchise and the brand name recognition of its products such as
"Yves Saint Laurent", "Pierre Cardin", "Kenneth Cole",
"Claiborne", "Geoffrey Beene", "Colours by Alexander Julian",
"Anne Klein", "Anne Klein II", "Guess?" and "Swank".
Approximately 97 sales people and regional managers are engaged
in the sale of Company products, working out of offices located
in 4 major cities in the United States. The Company employs
approximately 1,300 people in the United States and approximately
265 in Costa Rica.
Swank operates a production facility in each of Massachusetts
and Connecticut, two production facilities in Costa Rica, a
distribution facility in Massachusetts and 15 factory outlet
stores in 10 states.
Market for the Company's Common Stock and Related Stockholder Matters
The Company's common stock trades on The Nasdaq Stock Market
under the symbol SNKI. The following table sets forth in 1998 and
1997 the range of high and low sales prices of the Company's
Common Stock as reported by The Nasdaq Stock Market for the
calender quarters indicated.
1998 1997
Quarter High Low High Low
First $1.56 $1.00 $.94 $ .53
Second 2.19 1.09 .88 .63
Third 2.00 1.13 1.00 .66
Fourth 2.75 .94 1.28 .81
For the Year $2.75 $ .94 $1.28 $ .53
Number of Record Holders at February 26, 1999 - 1,622
Estimated number of stockholders - 3,343
Form 10-K
The Company's Annual Report on Form 10-K will be furnished
without charge to stockholders. Written requests for this report
should be forwarded to Mr. Christopher F. Wolf, Corporate
Secretary, Swank, Inc., P.O. Box 2962, Attleboro, Massachusetts
02703-0962.
Corporate Information
Board of Directors
Mark Abramowitz
Parker Chapin Flattau & Klimpl, LLP
John J. Macht
The Macht Group, Retail and
Marketing Consultants
James E. Tulin
Senior Vice President-Merchandising
John Tulin
President and Chief Executive Officer
Marshall Tulin
Chairman of the Board
Raymond H. Vise
Retired Senior Vice President
Corporate Data
Executive and
Administrative Office
6 Hazel Street
Attleboro, Massachusetts 02703
Executive and
National Sales Offices
90 Park Avenue
New York, New York 10016
International Division
Sales Office
90 Park Avenue
New York, New York 10016
Regional Sales Offices
Atlanta, Chicago,
Beverly Hills, New York
Production and
Distribution Facilities
Attleboro, Massachusetts
South Norwalk, Connecticut
Taunton, Massachusetts
Cartago, Costa Rica
General Counsel
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036
Independent Accountants
PricewaterhouseCoopers LLP
One Post Office Square
Boston, Massachusetts 02109
Transfer Agent and
Registrar
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
Corporate Officers
Marshall Tulin
Chairman of the Board
John Tulin
President and
Chief Executive Officer
Richard V. Byrnes, Jr.
Senior Vice President-
Operations
Paul Duckett
Senior Vice President-
Distribution and
Retail Store Operations
Arthur T. Gately, Jr.
Senior Vice President-
Administration
Melvin Goldfeder
Senior Vice President-
Special Markets
Eric P. Luft
Senior Vice President-
Men's Division
William F. Rubin
Senior Vice President-
Regional Sales
Bruce Shopoff
Senior Vice President-
Regional Sales
James E. Tulin
Senior Vice President-
Merchandising
Lewis Valenti
Senior Vice President-
Women's Division
Christopher F. Wolf
Senior Vice President-
Chief Financial Officer,
Secretary and Treasurer
Barry Heuser
Vice President-
Merchandising
Belt Division
Jennifer Cowan Heuser
Vice President-
Merchandising
Belt Division
Jerold R. Kassner
Vice President-
Controller
Frederick M. Moehle
Vice President-
Merchandising
Women's Division
Kimberly Renk
Vice President-
Merchandising
Women's Division
Robert Rosenberg
Vice President-
Regional Sales
EXHIBIT 21.01
<PAGE>
Exhibit 21.01
SUBSIDIARIES OF THE REGISTRANT
Percent
Jurisdiction Owned By
Name of Incorporation Registrant
Swank Sales International United States 100%
(V.I.), Inc. Virgin Islands
Joyas y Cueros de Costa Republic of 65%
Rica, S.A. Costa Rica
EXHIBIT 23.01
<PAGE>
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the
Registration Statement on Form S-8 (No. 33-23913) of Swank, Inc.
of our report dated February 16, 1999 appearing on page 16 of the
Annual Report to Stockholders, which is incorporated by reference
in this Annual Report on Form 10-K. We also consent to the
incorporation by reference of our report on the Financial
Statement Schedule, which appears on page 18 of this Form 10-K.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
March 25, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000095779
<NAME> SWANK, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 757
<SECURITIES> 0
<RECEIVABLES> 23,797
<ALLOWANCES> 9,041
<INVENTORY> 41,184
<CURRENT-ASSETS> 61,733
<PP&E> 26,932
<DEPRECIATION> 21,358
<TOTAL-ASSETS> 72,969
<CURRENT-LIABILITIES> 32,228
<BONDS> 0
0
0
<COMMON> 1,689
<OTHER-SE> 29,489
<TOTAL-LIABILITY-AND-EQUITY> 72,969
<SALES> 151,770
<TOTAL-REVENUES> 151,770
<CGS> 87,130
<TOTAL-COSTS> 87,130
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (171)
<INTEREST-EXPENSE> 1,672
<INCOME-PRETAX> 6,097
<INCOME-TAX> 2,435
<INCOME-CONTINUING> 3,662
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,662
<EPS-PRIMARY> 0.22
<EPS-DILUTED> 0.22
</TABLE>
