UNITED STATES
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 28, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-6666
SALANT CORPORATION
(Exact name of registrant as specified in its charter)
1114 Avenue of the Americas, New York, New York 10036
Telephone: (212) 221-7500
Incorporated in the State of Delaware
Employer Identification No. 13-3402444
Securities registered pursuant to Section 12(b) of the Act: Common Stock, par
value $1 per share, registered on the New York Stock Exchange.
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (l) 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 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.
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes X No __
As of March 24, 1997, there were outstanding 14,780,082 shares of the
Common Stock of the registrant. Based on the closing price of the Common Stock
on the New York Stock Exchange on such date, the aggregate market value of the
voting stock held by non-affiliates of the registrant on such date was
$33,930,555. For purposes of this computation, shares held by affiliates and by
directors and executive officers of the registrant have been excluded. Such
exclusion of shares held by directors and executive officers is not intended,
nor shall it be deemed, to be an admission that such persons are affiliates of
the registrant.
Documents incorporated by reference: The definitive Proxy Statement of Salant
Corporation relating to the 1997 Annual Meeting of Stockholders is incorporated
by reference in Part III hereof.
TABLE OF CONTENTS
PART I
Item 1.Business
Item 2.Properties
Item 3.Legal Proceedings
Item 4.Submission of Matters to a Vote of Security Holders
PART II
Item 5.Market for Registrant's Common Equity and Related Stockholder
Matters
Item 6.Selected Consolidated Financial Data
Item 7.Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 8.Consolidated Financial Statements and Supplementary Data
Item 9.Disagreements on Accounting and Financial Disclosure
PART III
Item 10.Directors and Executive Officers of the Registrant
Item 11.Executive Compensation
Item 12.Security Ownership of Certain Beneficial Owners and Management
Item 13.Certain Relationships and Related Transactions
PART IV
Item 14.Exhibits, Financial Statement Schedule and Reports on Form 8-K
SIGNATURES
PART I
ITEM 1. BUSINESS
Introduction. Salant Corporation ("Salant"), which was incorporated in Delaware
in 1987, is the successor to a business founded in 1893 and incorporated in New
York in 1919. Salant designs, manufactures, imports and markets to retailers
throughout the United States brand name and private label apparel products
primarily in three product categories: (i) menswear; (ii) children's sleepwear
and underwear; and (iii) other products, as described below. Salant sells its
products to department and specialty stores, national chains, major discounters
and mass volume retailers throughout the United States. (As used herein, the
"Company" includes Salant and its subsidiaries, but excludes Salant's Vera Scarf
division.)
Men's Apparel. In 1996, Salant substantially restructured its men's apparel
business to focus on those businesses that the Company believes offer the
opportunity for greater profitability by either (i) providing its customer and
the retail consumer with products under well-known brands or designer labels, or
(ii) developing private label programs that capitalize on the Company's
sourcing, merchandising and marketing expertise. As a result of this
restructuring, the men's apparel business is comprised of the Perry Ellis
division and Salant Menswear Group. The Perry Ellis division markets dress
shirts, slacks and sportswear under the PERRY ELLIS, PORTFOLIO BY PERRY ELLIS
and PERRY ELLIS AMERICA trademarks. Salant Menswear Group is comprised of the
Accessories division, the Texas Apparel division and all pant and dress shirt
businesses other than those selling products bearing the PERRY ELLIS trademarks.
The Accessories division markets neckwear, belts and suspenders under a number
of different trademarks, including PORTFOLIO BY PERRY ELLIS, JOHN HENRY, SAVE
THE CHILDREN and PEANUTS. The Texas Apparel division manufactures men's and
boys' jeans, principally under the Sears, Roebuck & Co. ("Sears") CANYON RIVER
BLUES trademark. The Salant Menswear Group also markets dress shirts, primarily
under the JOHN HENRY and MANHATTAN trademarks, and pants under the THOMSON
trademark. Commencing in 1997, the Salant Menswear Group will manufacture men's
casual slacks under Sears' CANYON RIVER BLUES KHAKIS trademark. Prior to the
restructuring, the Company marketed sportswear under the JJ. FARMER and
MANHATTAN trademarks. As a result of the restructuring, the Company (i) ceased
marketing sportswear under the JJ. FARMER label and determined to sell or
license the trademark and (ii) discontinued marketing sportswear under the
MANHATTAN trademark.
Children's Sleepwear and Underwear. The children's sleepwear and underwear
business is conducted by the Company's Children's Apparel Group (the "Children's
Group"). The Children's Group markets blanket sleepers primarily using a number
of well-known licensed cartoon characters created by DISNEY and WARNER BROS.,
among others. The Children's Group also markets pajamas under the OSHKOSH B'GOSH
trademark, and sleepwear and underwear under the JOE BOXER trademark. Commencing
in the fall of 1997, the Children's Group will begin marketing boys' sportswear
under the JOE BOXER trademark.
Other Businesses. The other businesses of the Company consist of (i) the women's
junior apparel business, conducted by the Company's Made in The Shade division
("Made In the Shade"), and (ii) a chain of factory outlet stores (the "Stores
division"), through which the Company sells its own products and those of other
apparel manufacturers.
Principal Product Lines. The following table sets forth, for fiscal years 1994
through 1996, the percentage of the Company's total net sales contributed by
each category of product:
Fiscal Year
1994 1995 1996
Men's Apparel 82% 85% 81%
Children's Sleepwear and Underwear 8% 8% 10%
Other Businesses 10% 7% 9%
For more detailed information regarding the Company's product categories, see
Note 10 to the Consolidated Financial Statements.
In 1996, approximately 13% of the Company's net sales were made to Sears.
Approximately 11% of the Company's net sales in 1996 were made to Federated
Department Stores, Inc. ("Federated"), which includes all 1996 net sales to
Macy's Department Stores ("Macy's"), which was acquired by Federated in 1994,
and the Broadway Stores, Inc. ("Broadway"), which was acquired by Federated in
February 1996. In 1995 and 1994, net sales to a combined
Federated/Macy's/Broadway would have represented approximately 12% and 15% of
the Company's net sales, respectively. In each of 1995 and 1994, approximately
11% of the Company's net sales were made to TJX Corporation ("TJX"), which
includes all 1995 and 1994 net sales to Marshall's Corporation, which was
acquired by TJX in February 1996.
In 1995, approximately 13% of the Children's Group's net sales were made to
Dayton Hudson Corporation. In 1996, approximately 27% and 22% of the net sales
of Other Businesses were made to K-Mart Corporation and JC Penney Company,
respectively. In 1995, net sales to JC Penney represented 19% of the net sales
of the other businesses segment.
No other customer accounted for more than 10% of the net sales of the Company or
any of its business segments during 1994, 1995 or 1996.
The markets in which the Company operates are highly competitive. The Company
competes primarily on the basis of brand recognition, quality, fashion, price,
customer service and merchandising expertise.
A significant factor in the marketing of the Company's products is the consumer
perception of the trademark or brand name under which those products are
marketed. Approximately 71% of the Company's net sales for 1996 was attributable
to products sold under Company owned or licensed designer trademarks and other
internationally recognized brand names and the balance was attributable to
products sold under retailers' private labels, including Sears' CANYON RIVER
BLUES. The following table lists the principal owned or licensed trademarks
under which the Company's products were sold in 1996 and the product lines
associated with those trademarks. Trademarks used under license are indicated
with an asterisk; all other listed trademarks are owned by the Company.
Trademark Product Lines
101 DALMATIANS *................................................. Children's sleepwear
BATMAN *......................................................... Children's sleepwear
DISNEY Characters *.............................................. Children's sleepwear and underwear
DR. DENTON....................................................... Children's sleepwear and underwear
GANT *........................................................... Men's dress shirts, neckwear, belts and suspenders
JJ. FARMER....................................................... Men's and women's sportswear
JOE BOXER *...................................................... Children's sleepwear and underwear
JOHN HENRY....................................................... Men's dress shirts, neckwear, belts and suspenders; men's jeans
MADE IN THE SHADE................................................ Women's junior sportswear
MANHATTAN........................................................ Men's dress shirts and sportswear
OSH KOSH B'GOSH *................................................ Children's sleepwear
PEANUTS *........................................................ Men's dress shirts and neckwear
PERRY ELLIS *.................................................... Men's sportswear, dress shirts, neckwear, belts and suspenders
PERRY ELLIS AMERICA *............................................ Men's casual sportswear and jeans
PORTFOLIO BY PERRY ELLIS *....................................... Men's dress slacks, dress shirts, neckwear, belts and suspenders
SAVE THE CHILDREN *.............................................. Men's neckwear and suspenders
SPACE JAM *...................................................... Children's sleepwear
THOMSON.......................................................... Men's casual and dress slacks
UNICEF *......................................................... Men's neckwear
During 1996, approximately 35% of the Company's net sales was attributable to
products sold under the PERRY ELLIS, PORTFOLIO BY PERRY ELLIS and PERRY ELLIS
AMERICA trademarks; these products are sold through leading department and
specialty stores. Products sold to Sears under its exclusive brand CANYON RIVER
BLUES accounted for 11% of the Company's net sales during 1996. No other line of
products accounted for more than 10% of the Company's net sales during 1996.
Trademarks Owned by the Company and Related Licensing Income. The Company
owns the DR. DENTON, JJ. FARMER, JOHN HENRY, LADY MANHATTAN, MADE IN THE SHADE,
MANHATTAN and THOMSON trademarks, among others. All of the significant brand
names owned by the Company have been registered or are pending registration with
the United States Patent and Trademark Office.
The Company has sought to capitalize on consumer recognition of and interest in
its trademarks by licensing various of those trademarks to others. As of the end
of 1996, licenses were outstanding to approximately 21 licensees to make or sell
apparel products and accessories in the United States and to 34 licensees in 31
other countries under the MANHATTAN, LADY MANHATTAN, JOHN HENRY, THOMSON and
VERA trademarks, which produced royalty income of approximately $6.2 million in
1996. Products under license include men's belts, dress shirts, gloves,
handkerchiefs, leather accessories, neckwear, optical frames, outerwear,
pajamas, robes, scarves, shorts, slacks, socks, sportcoats, sunglasses,
suspenders and underwear, and women's blouses and tops, gloves, intimate
apparel, lingerie, optical frames, scarves and shirts.
Trademarks Licensed to the Company. The name Perry Ellis and related trademarks
are licensed to the Company under a series of license agreements with Perry
Ellis International, Inc. ("PEI"). The license agreements contain renewal
options which, subject to compliance with certain conditions contained therein,
permit the Company to extend the terms of such license agreements. Assuming the
exercise by the Company of all available renewal options, the license agreements
covering men's apparel and accessories will expire on December 31, 2015. The
Company also has rights of first refusal worldwide for certain new licenses
granted by PEI for men's apparel and accessories.
The Company is also a licensee of various trademarks, including certain DISNEY
characters (including 101 DALMATIANS), GANT, JOE BOXER, OSH KOSH B'GOSH,
PEANUTS, SAVE THE CHILDREN, UNICEF and certain WARNER BROS. characters
(including BATMAN and SPACE JAM), for various categories of products under
license agreements expiring between 1997 and 2002.
The agreements under which the Company is licensed to use trademarks owned by
others typically provide for royalties at varying percentages of net sales under
the licensed trademark, subject to a minimum annual royalty payable irrespective
of the level of net sales. The Company anticipates that it should be able to
extend, if it so desires, the term of any material licenses when they expire.
Design and Manufacturing. Products sold by the Company's various divisions are
manufactured to the designs and specifications (including fabric selections) of
designers employed by those divisions. In limited cases, the Company's designers
may receive input from one or more of the Company's licensors on general themes
or color palettes.
During 1996, approximately 17% of the products produced by the Company (measured
in units) were manufactured in the United States, with the balance manufactured
in foreign countries. Facilities operated by the Company accounted for
approximately 81% of its domestic-made products and 30% of its foreign-made
products; the balance in each case was attributable to unaffiliated contract
manufacturers. In 1996, approximately 44% of the Company's foreign production
was manufactured in Mexico, approximately 12% was manufactured in Guatemala and
approximately 10% was manufactured in the Dominican Republic .
The Company's foreign sourcing operations are subject to various risks of doing
business abroad, including currency fluctuations (although the predominant
currency used is the U. S. dollar), quotas and, in certain parts of the world,
political instability. Although the Company's operations have not been
materially adversely affected by any of such factors to date, any substantial
disruption of its relationships with its foreign suppliers could adversely
affect its operations. Some of the Company's imported merchandise is subject to
United States Customs duties. In addition, bilateral agreements between the
major exporting countries and the United States impose quotas, which limit the
amounts of certain categories of merchandise that may be imported into the
United States. Any material increase in duty levels, material decrease in quota
levels or material decrease in available quota allocations could adversely
affect the Company's operations.
Raw Materials. The raw materials used in the Company's manufacturing operations
consist principally of finished fabrics made from natural, synthetic and blended
fibers. These fabrics and other materials, such as leathers used in the
manufacture of various accessories, are purchased from a variety of sources both
within and outside the United States. The Company believes that adequate sources
of supply at acceptable price levels are available for all such materials.
Substantially all of the Company's foreign purchases are denominated in U.S.
currency. No single supplier accounted for more than 10% of Salant's raw
material purchases during 1996. The Company has not engaged in financial
activities through the use of derivatives or otherwise to hedge or diminish
currency risks or fluctuations.
Employees. As of the end of 1996, the Company employed approximately 3,800
persons, of whom 3,200 were engaged in manufacturing and distribution operations
and the remainder were employed in executive, marketing and sales, product
design, engineering and purchasing activities and in the operation of the
Company's factory outlet stores. Substantially all of the manufacturing
employees are covered by collective bargaining agreements with various unions,
which expire between 1997 and 2000. The Company believes that its relations with
its employees are satisfactory.
Management. On March 7, 1997, the Company announced that Nicholas P. DiPaolo,
Chairman and Chief Executive Officer, had notified the Board of Directors of his
intent to leave the Company in 1997. On April 1, 1997, Jerald S. Politzer will
join the Company as Chief Executive Officer and a member of the Board of
Directors.
Competition. The apparel industry in the United States is highly competitive and
characterized by a relatively small number of multi-line manufacturers (such as
the Company) and a larger number of specialty manufacturers. The Company faces
substantial competition in its markets from manufacturers in both categories.
Many of the Company's competitors have greater financial resources than the
Company. The Company seeks to maintain its competitive position in the markets
for its branded products on the basis of the strong brand recognition associated
with those products and, with respect to all of its products, on the basis of
styling, quality, fashion, price and customer service.
Environmental Regulations. Current environmental regulations have not had, and
in the opinion of the Company, assuming the continuation of present conditions,
are not expected to have a material effect on the business, capital
expenditures, earnings or competitive position of the Company.
Bankruptcy Court Cases. On June 27, 1990 (the "Filing Date"), Salant and its
wholly owned subsidiary, Denton Mills, Inc. ("Denton Mills"), each filed with
the United States Bankruptcy Court for the Southern District of New York (the
"Bankruptcy Court") a separate voluntary petition for relief under chapter 11 of
title 11 of the United States Code (the "Bankruptcy Code") (Case Nos. 90-B-12037
(CB) and 90-B-12038 (CB)) (the "Chapter 11 Cases"). The Company's other United
States subsidiaries on the Filing Date did not seek relief under the Bankruptcy
Code. On July 30, 1993, the Bankruptcy Court issued an order confirming the
Third Amended Joint Plan of Reorganization of Salant and Denton Mills (the
"Reorganization Plan"). The Reorganization Plan was consummated on September 20,
1993 (the "Consummation Date"), as further described in Item 3. Legal
Proceedings and in Note 18 to the financial statements.
Vera Scarf Division - Discontinued Operation. In February 1995, the Company
discontinued its Vera Scarf division, which imported and marketed women's
scarves under (i) the Company-owned trademarks VERA and ACUTE, (ii) trademarks
licensed to the Company, including PERRY ELLIS, and (iii) retailers' private
labels. The Company closed the Vera Scarf division in 1995. The financial
statements of the Company included in this report treat the Vera Scarf division
as a discontinued operation.
Seasonality of Business and Backlog of Orders. This information is included
under Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
ITEM 2. PROPERTIES
The Company's principal executive offices are located at 1114 Avenue of the
Americas, New York, New York 10036. The Company's principal properties consist
of six domestic manufacturing facilities located in Alabama, Georgia (2), New
York, Tennessee and Texas, four manufacturing facilities located in Mexico, and
six distribution centers located in Georgia, New York, South Carolina (2) and
Texas (2). At the end of 1996, the Company was in the process of closing the two
manufacturing facilities and one distribution facility in Georgia. The Company
owns approximately 1,279,000 square feet of space devoted to manufacturing and
distribution and leases approximately 554,000 square feet of such space. The
Company owns approximately 34,000 square feet of combined office, design and
showroom space and leases approximately 163,000 square feet of such space. The
Children's Group has exclusive use of the Tennessee manufacturing facility,
shares one of the Mexican manufacturing facilities with the Texas Apparel
division and has its distribution center in a building in Texas which it shares
with the Texas Apparel division. As of the end of 1996, the Company's Stores
division operated 65 factory outlet stores, comprising approximately 204,000
square feet of selling space, all of which are leased. Except as noted above,
substantially all of the owned and leased property of the Company is used in
connection with its men's apparel business or general corporate administrative
functions.
The Company believes that its plant and equipment are adequately maintained, in
good operating condition, and are adequate for the Company's present needs.
ITEM 3. LEGAL PROCEEDINGS
(a) Chapter 11 Cases. On June 27, 1990, Salant and Denton Mills each filed with
the Bankruptcy Court a separate voluntary petition for relief under chapter 11
of the Bankruptcy Code. On July 30, 1993, the Bankruptcy Court issued an order
confirming the Reorganization Plan.
The Reorganization Plan was consummated on September 20, 1993. From that date
through December 28, 1996 (approximately 39 months), the Company made cash
payments of $9.4 million, issued $111.9 million of new 10-1/2% senior secured
notes, and issued 11.0 million shares of common stock in settlement of certain
undisputed and disputed claims in the chapter 11 proceedings. Salant anticipates
that an additional $4.2 million in cash and an additional 325 thousand shares of
common stock will ultimately be distributed in connection with the resolution of
all remaining claims. Provisions for such distributions were made in the
consolidated financial statements at the time of emergence from the bankruptcy
during the year ended January 1, 1994. The process of resolving claims is
continuing and, pursuant to the Reorganization Plan, remains under the
jurisdiction of the Bankruptcy Court.
(b) Other. The Company is a defendant in several other legal actions. In the
opinion of the Company's management, based upon the advice of the respective
attorneys handling such cases, such actions are not expected to have a material
adverse effect on the Company's consolidated financial position or results of
operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The annual meeting of the Company's shareholders was held on May 14,
1996 (the "Annual Meeting"). Subsequent to that date, there have been no other
matters submitted to a vote of the Company's shareholders.
(b) At the Annual Meeting, the shareholders approved the election of
four Directors for a three-year term expiring at the 1999 Annual Meeting of the
Company's shareholders, with the votes for such election as follows:
Director For Withheld
Mr. Robert H. Falk 13,566,487 91,524
Ms. Ann Dibble Jordan 13,565,186 92,825
Mr. Robert Katz 13,567,186 90,825
Mr. John S. Rodgers 13,566,793 91,218
(c) At the Annual Meeting, the shareholders approved the 1996 Stock
Plan, which provides for 600,000 shares of Common Stock for the granting of
options, stock appreciation rights and restricted stock to employees of the
Company and the granting of options to non-employee directors of the Company.
The shares voting for the 1996 Stock Plan were 12,262,974, the shares voting
against were 1,333,543 and the shares abstaining were 61,484.
(d) At the Annual Meeting, the shareholders ratified the reappointment of
Deloitte & Touche LLP as the Company's independent auditors for the 1996 fiscal
year. The shares voting for the ratification were 13,616,171, the shares voting
against the ratification were 20,258 and the shares abstaining were 21,580.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Salant's Common Stock is traded on the New York Stock Exchange (the "NYSE")
under the trading symbol SLT.
The high and low sale prices per share of Common Stock (based upon the NYSE
composite tape as reported in published financial sources) for each quarter of
1995 and 1996 are set forth below. The Company did not declare or pay any
dividends during such years. The indenture governing Salant's 10-1/2% Senior
Secured Notes due December 31, 1998, and the revolving credit, factoring and
security agreement, dated September 20, 1993, as amended, with the CIT
Group/Commercial Services, Inc. require the satisfaction of certain net worth
tests prior to the payment of any cash dividends by Salant. As of December 28,
1996, Salant was prohibited from paying cash dividends under the most
restrictive of these provisions.
High and Low Sale Prices Per Share of the Common Stock
Quarter High Low
1996
Fourth $3 7/8 $3 1/8
Third 4 2 3/4
Second 4 7/8 3 1/2
First 5 3/4 3 1/8
1995
Fourth $ 5 7/8 $ 3 3/8
Third 6 3 1/4
Second 4 1/4 2 3/4
First 5 7/8 3 1/4
On March 11, 1997, there were 1,098 holders of record of shares of Common Stock,
and the closing market price was $5.00.
All of the outstanding voting securities of the Company's subsidiaries are owned
beneficially and (except for shares of certain foreign subsidiaries of the
Company owned of record by others to satisfy local laws) of record by the
Company.
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
(Amounts in thousands except share, per share and ratio data)
The following selected consolidated financial data presented for fiscal years
1994 through 1996 has been derived from the Consolidated Financial Statements of
the Company, which has been audited by Deloitte & Touche LLP, whose report
thereon appears under Item 8, "Financial Statements and Supplementary Data". The
selected consolidated financial data for fiscal years 1992 and 1993 has been
derived from audited consolidated financial data which are not included herein.
Such consolidated financial data should be read in conjunction with Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and with the Consolidated Financial Statements, including the
related notes thereto, included elsewhere herein.
Dec. 28, Dec. 30, Dec. 31, Jan. 1, Jan. 2,
1996 1995 1994 1994 1993
(52 Weeks) (52 Weeks) (52 Weeks) (52 Weeks) (53 Weeks)
For The Year Ended:
Continuing Operations:
Net sales $438,119 $501,522 $419,285 $402,098 $411,021
Restructuring costs (a) (11,730) (3,550) - (5,500) (4,824)
Income/(loss) from
continuing operations (9,323) (498) 3,507 7,816 (4,687)
Discontinued Operations:
Loss from operations, net
of income taxes - - (9,639) (589) (1,299)
Estimated loss on disposal,
net of income taxes - - (1,796) - (11,772)
Reversal of estimated loss on disposal,
net of income taxes - - - 11,772 -
Extraordinary gain (b) - 1,000 63 24,707 -
Net income/(loss)(a) (9,323) 502 (7,865) 43,706 (17,758)
Income/(loss) per share from continuing
operations before
extraordinary gain $(0.62) $(0.03) $0.23 $1.10 $(1.35)
Income/(loss) per share from discontinued
operations - - (0.76) 1.57 (3.78)
Income per share from
extraordinary gain - 0.06 - 3.48 -
Net income/(loss) per share (a) (0.62) 0.03 (0.53) 6.15 (5.13)
Cash dividends per share - - - - -
At Year End:
Current assets $147,203 $160,826 $168,411 $157,622 $160,146
Total assets 236,038 255,720 267,216 253,232 259,466
Current liabilities 60,353 63,454 72,163 45,713 55,093
Long-term debt 106,231 110,040 109,908 111,851 -
Deferred liabilities 8,863 11,373 13,479 16,766 2,462
Liabilities deferred pursuant
to chapter 11 cases - - - - 266,420
Working capital 86,850 97,372 96,248 111,909 105,053
Current ratio 2.4:1 2.5:1 2.3:1 3.4:1 2.9:1
Shareholders' equity/(deficiency) $60,591 $70,853 $71,666 $78,902 $(64,509)
Book value per share $4.01 $4.71 $4.78 $5.34 $(18.62)
Number of shares outstanding 15,094 15,041 15,008 14,781 3,463
(a) Includes, for the year ended December 28, 1996, a provision of $11,730
(78 cents per share; tax benefit not available) for restructuring costs
principally related to (i) the write-off of goodwill and the write-down of other
assets for a product line which has been put up for sale, (ii) the write-off of
certain assets and accrual for future royalties for a licensed product line and
(iii) employee costs related to closing certain facilities; for the year ended
December 30, 1995, a provision of $3,550 (24 cents per share; tax benefit not
available) for restructuring costs principally related to (i) fixed asset
write-downs at locations to be closed and (ii) inventory markdowns for
discontinued product lines; for the year ended January 1, 1994, a provision of
$5,500 (77 cents per share; tax benefit not available) for restructuring costs
principally related to the costs incurred in connection with the closure of
certain unprofitable operations, including (i) inventory markdowns associated
with those product lines and (ii) fixed asset write-downs at closed locations;
and for the year ended January 2, 1993, (a) a provision of $4,824 ($1.39 per
share; tax benefit not available) for restructuring costs principally related to
(i) the estimated costs to be incurred in connection with the closure of certain
unprofitable operations, (ii) the rejection, pursuant to the Bankruptcy Code, of
certain lease obligations, and (iii) the write-off of leasehold improvements,
and buildings and equipment at closed locations, and (b) the write-off of
certain intangible assets of $6,759 ($1.95 per share; tax benefit not
available).
(b) Includes, for the year ended December 30, 1995, a gain of $1,000 (6 cents
per share) related to the reversal of excess liabilities previously
provided for the anticipated settlement of claims arising from the Chapter
11 proceeding; for the year ended December 31, 1994, a gain of $63 (no per
share effect) related to the purchase and retirement of a portion of the
Company's 10 1/2% Senior Secured Notes at a price below the principal
amount thereof; and for the year ended January 1, 1994, a gain of $24,707
($3.48 per share) related to the settlement and anticipated settlement of
claims arising from the Chapter 11 proceeding.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Overview
In the second half of 1995, the Company formulated a strategic business plan to
enhance the profitability of its men's apparel operations and to further improve
its overall liquidity. At the core of the plan was a decision to concentrate the
Company's resources on a limited number of key menswear brand names (including
continuing to emphasize and cohesively market the Company's leading Perry Ellis
brand) to further expand the Company's private label business, and to
selectively target the sale of the Company's products to those channels of
distribution deemed most likely to generate higher profit margins.
Implementation of this plan, which began in the fourth quarter of 1995 and will
have been substantially completed by the end of the first quarter of 1997,
included (i) the discontinuation of unprofitable or marginally profitable brands
and product lines (including the Company's JJ. Farmer and Manhattan sportswear
lines and its Nino Cerruti, Liberty of London, Thomson, Ron Chereskin, and AXXA
dress shirt lines), (ii) the liquidation of remaining inventories within those
discontinued brands and product lines, (iii) the closure of two of the Company's
six domestic manufacturing facilities and one of its domestic distribution
centers, and (iv) the consolidation of the Company's sourcing, manufacturing,
and distribution functions under a central corporate operations group in order
to eliminate duplicate sourcing functions and to maximize the impact of its
corporate buying power.
As more fully discussed under "Results of Operations" below, these actions
significantly affected the Company's operating results in 1996. The
discontinuation of various product lines and the redirection of other product
lines to different channels of distribution in accordance with the strategic
plan resulted in a $58.8 million reduction in net sales compared to 1995. The
implementation of the strategic plan also involved the incurrence of significant
charges during 1996, including the write-down of goodwill and other assets
associated with discontinued product lines, expenses related to the shut-down of
manufacturing and distribution facilities, markdowns related to the liquidation
of inventories of product lines being discontinued or redirected, and severance
costs related to terminated employees. In connection therewith, during 1996, the
Company recorded a restructuring charge of $11.7 million and incurred other
charges related to the implementation of the strategic plan of approximately
$5.2 million to cost of goods sold and $1.1 million to selling, general and
administrative expenses. As a result of these actions, however, gross profits as
a percentage of sales increased in the men's apparel business segment and on a
Company-wide basis compared to 1995, and the Company significantly reduced its
inventory levels through the liquidation of excess inventories and the
manufacture of fewer stock keeping units. The cash savings associated with the
elimination of unprofitable product lines and business units and lower
investment in inventory enabled the Company to significantly reduce its average
outstanding revolving credit borrowings and associated interest expense.
Results of Operations
Fiscal 1996 Compared with Fiscal 1995
Net Sales
The following table sets forth the net sales of each of the Company's
three principal business segments for the fiscal years ended December 28, 1996
("Fiscal 1996") and December 30, 1995 ("Fiscal 1995") and the percentage
contribution of each of those segments to total net sales:
Percentage
Increase/
Fiscal 1996 Fiscal 1995 (Decrease)
(dollars in millions)
Men's Apparel $354.7 81% $423.9 85% (16.3%)
Children's Sleepwear
and Underwear 45.8 10% 39.9 8% 14.8%
Other Businesses (a) 37.6 9% 37.7 7% (0.3%)
Total $438.1 100% $501.5 100% (12.6%)
(a) Represents the Made in the Shade division (a women's junior sportswear
business) and the retail outlet stores division (the "Stores division").
As noted under "Overview," $58.8 million (85.0%) of the $69.2 million decline in
net sales in the men's apparel segment was attributable to the discontinuation
of various product lines and the redirection of other product lines to different
channels of distribution pursuant to the Company's strategic business plan. Of
the balance, $7.4 million resulted from a decision by Sears, Roebuck & Co.
("Sears") to source its knit and woven Canyon River Blues tops through its own
internal sourcing operations and $3.6 million was due to reduced sales of Perry
Ellis sportswear as a result of a reduction of $12.3 million in sales to
off-price retailers, partially offset by an increase of $8.7 million in sales to
department stores.
Sales of children's sleepwear and underwear increased by $5.9 million, or 14.8%,
in Fiscal 1996. This increase was primarily a result of the continuing expansion
of the Joe Boxer children's product lines.
Gross Profit
The following table sets forth the gross profit and gross profit margin (gross
profit as a percentage of net sales) for each of the Company's business segments
for each of Fiscal 1996 and Fiscal 1995:
Fiscal 1996 Fiscal 1995
(dollars in millions)
Men's Apparel $74.4 21.0% $79.1 18.7%
Children's Sleepwear
and Underwear 11.5 25.1% 10.8 26.9%
Other Businesses 12.0 31.9% 14.0 37.1%
Total $ 97.9 22.3% $103.9 20.7%
The decline in gross profit in the men's apparel segment and for the Company as
a whole was primarily attributable to the reduction in net sales discussed
above. The gross profit margin for the men's apparel segment and the Company as
a whole, however, improved significantly, primarily as a result of (i) a greater
percentage of sales of the Company's higher margin Perry Ellis product lines as
a percentage of net sales, (ii) planned reductions in sales of lower-margin
brands and products, (iii) increased efficiencies at the Company's manufacturing
facilities in Mexico, and (iv) reduced markdowns of accessories due to improved
consumer acceptance of the Company's neckwear product lines. The gross profit
margin for the men's apparel segment was adversely affected, however, by charges
of (i) $3.0 million (0.8% of men's apparel net sales) for markdowns related to
the discontinuation of the JJ. Farmer and Manhattan sportswear product lines and
a change in the primary channel of distribution for products sold under the John
Henry label and (ii) $1.9 million (0.5% of men's apparel net sales) related to
the closing of manufacturing and distribution facilities in Americus and
Thomson, Georgia.
The gross profit margin of the children's sleepwear and underwear segment
declined as a result of an increased percentage of off-price sales of licensed
character products in that segment's total sales mix. The gross profit margin of
the Company's other businesses declined primarily as a result of margin
pressures in both the Company's juniors' sportswear business and the Company's
outlet store business as well as charges of $0.3 million (0.8% of other
businesses net sales) due to markdowns of discontinued product lines at the
Company's outlet stores.
Selling, General and Administrative Expenses
Selling, general and administrative ("S,G&A") expenses for Fiscal 1996 were
$85.9 million (19.6% of net sales) compared with $85.4 million (17.0% of net
sales) for Fiscal 1995. While implementation of the Company's strategic plan
resulted in the elimination of certain S,G&A expenses in Fiscal 1996, such
eliminations were partially offset by higher amortization costs attributable to
the installation of new store fixtures for Perry Ellis sportswear shops in
department stores and Canyon River Blues shops in Sears stores, which
installations commenced in 1995. The amortization of these store fixtures
accounted for approximately $1.6 million of the total S,G&A expenses in Fiscal
1996 as compared with $0.4 million in Fiscal 1995. The Company's merchandise
coordinator and retail specialist programs, which provide support for the
presentation and coordination of the Company's products in retail stores was
also enlarged in 1996, primarily to support the expansion of the Perry Ellis
sportswear shop program; this increase accounted for a further $1.2 million of
the S,G&A expense increase in Fiscal 1996. Total expenses related to these
programs were $3.3 million in Fiscal 1996, as compared with $2.1 million in
Fiscal 1995. As indicated in the "Overview", S,G&A expenses for Fiscal 1996 also
included charges of $1.1 million principally associated with the reorganization
of the men's apparel segment.
Other Income
Other income for Fiscal 1996 included a gain of $2.7 million related to the sale
of a leasehold interest in a facility located in Glen Rock, New Jersey.
Provision for Restructuring
As noted under "Overview," the Company recorded a restructuring charge of $11.7
million in Fiscal 1996 as a consequence of the implementation of its strategic
business plan. Of this amount, (i) $5.7 million was primarily related to the
write-off of goodwill and the write-down of other assets of the JJ. Farmer
product line, (ii) $2.9 million was attributable to the write-off of certain
assets related to the licensing of the Gant brand name for certain of the
Company's dress shirt and accessories product lines and the accrual of a portion
of future royalties payable under the Gant licenses that are not expected to be
covered by future sales, (iii) $1.8 million was primarily related to employee
costs associated with the closing of a manufacturing and distribution facility
in Thomson, Georgia, (iv) $0.7 million was primarily related to employee costs
associated with the closing of a manufacturing facility in Americus, Georgia and
(v) $0.6 million related to other severance costs.
The restructuring charge was comprised of $5.1 million of non-cash charges and
$6.6 million requiring cash payments over a period of time. Of the cash portion,
$2.5 million was expended during 1996 and the balance is expected to be expended
in the following manner: $2.1 million in 1997, $1.2 million in 1998 and $0.8
million in 1999.
Income from Continuing Operations Before Interest, Income
Taxes and Extraordinary Gain
The following table sets forth income from continuing operations before
interest, income taxes and extraordinary gain for each of the Company's three
business segments, expressed both in dollars and as a percentage of net sales,
for each of Fiscal 1996 and Fiscal 199
Fiscal 1996 Fiscal 1995
(dollars in millions)
Men's Apparel (a) $ 6.4 1.8% $ 19.8 4.7%
Children's Sleepwear
and Underwear 5.4 11.8% 5.2 13.0%
Other Businesses (3.9) (10.4%) (2.2) (5.9%)
7.9 1.8% 22.8 4.5%
Corporate expenses (b) (6.2) (9.2)
Licensing division income 5.0 5.6
Income from continuing
operations before interest, income
taxes and extraordinary gain $ 6.7 1.5% $ 19.2 3.8%
(a) Includes restructuring charges of $11.7 million in Fiscal 1996 and $3.6
million in Fiscal 1995. (b) Includes other income of $2.7 million in Fiscal 1996
related to the sale of a leasehold interest.
The $12.5 million reduction in income from continuing operations before
interest, income taxes and extraordinary gain in Fiscal 1996 was primarily a
result of the $11.7 million restructuring charge (compared with $3.6 million in
Fiscal 1995) and $6.3 million of other charges associated with the
implementation of the strategic business plan, which was partially offset by a
$2.7 million gain on the sale of a leasehold interest, as previously discussed.
Interest Expense, Net
Net interest expense was $16.0 million for Fiscal 1996 compared with $19.4
million for Fiscal 1995. The $3.4 million decrease is a result of lower average
borrowings during Fiscal 1996 primarily due to reduced average levels of
inventory.
Loss from Continuing Operations
In Fiscal 1996, the Company reported a loss from continuing operations of $9.3
million, or $0.62 per share, as compared with a loss from continuing operations
before extraordinary gain of $0.5 million, or $0.03 per share, in Fiscal 1995.
Extraordinary Gain
The extraordinary gain of $1.0 million recorded in the fourth quarter of Fiscal
1995 related to the reversal of excess liabilities previously provided for the
anticipated settlement of claims arising from the Company's prior chapter 11
cases.
Earnings Before Interest, Taxes, Depreciation, Amortization,
Restructuring Charges and Extraordinary Gain
Earnings before interest, taxes, depreciation, amortization, restructuring
charges and extraordinary gain was $26.8 million (6.1% of net sales) in Fiscal
1996, compared to $30.9 million (6.2% of net sales) in Fiscal 1995, a decrease
of $4.1 million, or 13.2%. The Fiscal 1996 amount was negatively affected by
$6.3 million of charges primarily associated with the implementation of the
Company's strategic business plan. The Company believes this information is
helpful in understanding cash flow from operations that is available for debt
service and capital expenditures. This measure is not contained in Generally
Accepted Accounting Principles and is not a substitute for operating income, net
income or net cash flows from operating activities.
Fiscal 1995 Compared with Fiscal 1994
Net Sales
The following table sets forth the net sales (and relative contributions to
total sales) of each of the Company's business segments for Fiscal 1995 and the
fiscal year ended December 31, 1994 ("Fiscal 1994")
Percentage
Increase/
Fiscal 1995 Fiscal 1994 (Decrease)
(dollars in millions)
Men's Apparel $423.9 85% $343.5 82% 23.4%
Children's Sleepwear
and Underwear 39.9 8% 35.5 8% 12.5%
Other Businesses 37.7 7% 40.3 10% (6.5%)
Total $501.5 100% $419.3 100% 19.6%
Of the total increase in net sales of men's apparel, $41.7 million (51.9%) was
attributable to the introduction of the Company's Canyon River Blues jeans
product line at Sears, $18.2 million (22.6%) was attributable to the growth of
the Company's Perry Ellis sportswear business, $11.2 million (13.9%) was a
result of increased dress shirt sales and $6.0 million (7.5%) was attributable
to higher sales of sportswear under the Manhattan brand. Excluding net sales of
dress shirts under the Gant label, for which the Company obtained a license in
June 1994, net sales of dress shirts increased by 7.4% in Fiscal 1995.
The increase in net sales of children's sleepwear and underwear was primarily a
result of the expansion of the Joe Boxer children's product lines, which were
introduced in Fiscal 1994. The decrease in net sales of other businesses was
attributable primarily to lower shipments by the Made in the Shade division in
response to declining margins.
Gross Profit
The following table sets forth the gross profit and gross profit margin of each
of the Company's business segments for each of Fiscal 1995 and Fiscal 1994:
Fiscal 1995 Fiscal 1994
(dollars in millions)
Men's Apparel $79.1 18.7% $70.9 20.6%
Children's Sleepwear
and Underwear 10.8 26.9% 7.9 22.2%
Other Businesses 14.0 37.1% 14.4 35.7%
Total $103.9 20.7% $93.2 22.2%
The reduction in gross profit as a percentage of net sales in the men's apparel
segment was primarily a result of continuing pressure on selling prices in all
product categories and at all levels of distribution, which were, in large part,
a result of the slow retail economy. In addition, certain product lines
introduced or expanded in Fiscal 1995 (Canyon River Blues and Manhattan
sportswear) yielded a lower gross profit margin than traditionally earned by the
Company's merchandise. The Company's gross profit margin was also negatively
affected by costs associated with the start-up of the Canyon River Blues
program.
Selling, General and Administrative Expenses
S,G&A expenses increased by $6.1 million (7.7%) in Fiscal 1995. However, as a
percentage of net sales S,G&A expenses declined to 17.0% from 18.9% in Fiscal
1994 due, in part, to the introduction or expansion of certain businesses in
Fiscal 1995 (as indicated above) that required minimal incremental expenses.
Provision for Restructuring
The restructuring charge of $3.6 million related primarily to the planned
closing in Fiscal 1996 of a manufacturing facility in Thomson, Georgia, as well
as certain expenses related to the planned discontinuation of several dress
shirt lines, including Liberty of London, Nino Cerruti and Ron Chereskin.
Income From Continuing Operations Before Interest,
Income Taxes and Extraordinary Gain
The following table sets forth income from continuing operations before
interest, income taxes and extraordinary gain for each of the Company's business
segments, expressed both in dollars and as a percentage of net sales, for each
of Fiscal 1995 and Fiscal 1994:
Fiscal 1995 Fiscal 1994
(dollars in millions)
Men's Apparel (a) $ 19.8 4.7% $ 17.4 5.1%
Children's Sleepwear
and Underwear 5.2 13.0% 3.1 8.8%
Other Businesses (2.2) (5.9%) (0.5) (1.3%)
22.8 4.5% 20.0 4.8%
Corporate expenses (9.2) (6.2)
Licensing division income 5.6 5.7
Income from continuing
operations before interest, income
taxes and extraordinary gain $ 19.2 3.8% $ 19.5 4.6%
(a) Includes a restructuring charge of $3.6 million in Fiscal 1995
Income from continuing operations before interest, income taxes and
extraordinary gain as a percentage of net sales decreased to 3.8% in Fiscal 1995
from 4.6% in Fiscal 1994 primarily as a result of the decreases in gross
margins, S,G&A expense changes and the provision for restructuring discussed
above.
Interest Expense, Net
Net interest expense for Fiscal 1995 increased by $3.8 million compared with
Fiscal 1994. Of this amount, $2.7 million was attributable to a higher average
outstanding loan balance in Fiscal 1995. The remainder was attributable to an
increase in the weighted average interest rate on borrowings from 7.8% in Fiscal
1994 to 9.9% in Fiscal 1995, due primarily to an increase in the average prime
rate.
Loss From Continuing Operations
The loss from continuing operations before extraordinary gain was $0.5 million,
or $0.03 per share, in Fiscal 1995 compared with income from continuing
operations before extraordinary gain of $3.5 million, or $0.23 per share, in
Fiscal 1994, primarily as a result of the $3.6 million restructuring charge in
Fiscal 1995.
Loss From Discontinued Operations
In Fiscal 1994, the Company recorded a charge of $11.4 million, or $0.76 per
share, for the discontinuance of the Vera Scarf division. The Vera Scarf
division had net sales of $5.1 million in 1994
Extraordinary Gain
In the fourth quarter of Fiscal 1995, the Company recorded an extraordinary gain
of $1.0 million related to the reversal of excess liabilities previously
provided for the anticipated settlement of claims arising from its prior chapter
11 cases.
Earnings Before Interest, Taxes, Depreciation, Amortization,
Restructuring Charges, Discontinued Operations and Extraordinary Gain
Earnings before interest, taxes, depreciation, amortization, restructuring
charges, discontinued operations and extraordinary gain was $30.9 million (6.2%
of net sales) in Fiscal 1995, compared with $27.0 million (6.4% of net sales) in
Fiscal 1994, an increase of $3.9 million, or 14.4%. The Company believes this
information is helpful in understanding cash flow from operations that is
available for debt service, taxes and capital expenditures. This measure is not
contained in Generally Accepted Accounting Principles and is not a substitute
for operating income, net income or net cash flows from operating activities.
Liquidity and Capital Resources
The Company is a party to a revolving credit, factoring and security agreement,
as amended (the "Credit Agreement"), with The CIT Group/Commercial Services,
Inc. ("CIT"). The Credit Agreement provides the Company with working capital
financing, in the form of direct borrowings and letters of credit, up to an
aggregate of $135 million (the "Maximum Credit"), subject to an asset-based
borrowing formula. As collateral for borrowings under the Credit Agreement,
Salant has granted to CIT a security interest in substantially all of the assets
of the Company.
On February 20, 1997, the Company and CIT executed the Tenth Amendment to the
Credit Agreement (the "Amendment"). The Amendment extended the term of the
Credit Agreement from March 31, 1997 until September 30, 1998. The Amendment
provided for a reduction in the interest rate charged on direct borrowings from
one percent in excess of the base rate of the Chase Manhattan Bank, N.A. (the
"Prime Rate", which was 8.25% at December 28, 1996) to one-half of one percent
in excess of the Prime Rate. The Amendment also provided the Company with the
option to borrow funds at 2.75% above the London Late Eurodollar rate (the
"Eurodollar Rate", which was 5.625% at December 28, 1996). Based upon Eurodollar
Rates currently in effect, the Company's effective rate of interest under the
Eurodollar option is approximately 100 basis points below its borrowing rate in
effect prior to the Amendment. The Amendment also modified or eliminated certain
financial covenants. As a result of the Amendment, the Company will only be
required to maintain certain minimum levels of stockholders' equity and to
comply with one other financial covenant limiting the maximum loss the Company
may incur over any four or eight consecutive calendar quarters.
At the end of Fiscal 1996, direct borrowings and letters of credit outstanding
under the Credit Agreement were $7.7 million and $32.3 million, respectively,
and the Company had unused availability of $28.1 million. At the end of Fiscal
1995, direct borrowings and letters of credit outstanding under the Credit
Agreement were $14.4 million and $31.4 million, respectively, and the Company
had unused availability of $27.5 million. During Fiscal 1996, the maximum
aggregate amount of direct borrowings and letters of credit outstanding under
the Credit Agreement was $101.0 million at which time the Company had unused
availability of $19.6 million. During Fiscal 1995, the maximum aggregate amount
of direct borrowings and letters of credit outstanding under the Credit
Agreement was $134.2 million at which time the Company had unused availability
of $828,000.
On October 28, 1996, the Company completed the sale of a leasehold interest in a
facility located in Glen Rock, New Jersey. Pursuant to the indenture governing
the Company's outstanding 10 1/2% Senior Secured Notes due 1998 (the "Senior
Secured Notes"), the $3,372,000 net cash proceeds of that sale were applied to
the repurchase of a like principal amount of the Senior Secured Notes
immediately following the end of the 1996 fiscal year.
The instruments governing the Company's outstanding debt contain numerous
financial and operating covenants, including restrictions on incurring
indebtedness and liens, making investments in or purchasing the stock, or all or
a substantial part of the assets of another person, selling property and paying
cash dividends. In addition, under the Credit Agreement, the Company is required
during the year, to maintain a minimum level of stockholders' equity and to
satisfy a maximum cumulative net loss test. The Company was at December 28,
1996, and currently is, in compliance with all of its covenants. The following
table indicates the Company's compliance with the two remaining financial
covenants contained in the Credit Agreement:
December 28, 1996
Credit Agreement Covenants Covenant Level
Actual Level
Stockholders' Equity no less than $52.0 million
$ 60.6 million
Maximum Loss (a) no more than $(10.0) million
positive income
(a) Maximum loss excludes write-offs for goodwill, restructuring expenses or
other unusual or non-recurring expenses during the first two quarters of 1996,
up to a maximum of $13.0 million.
The indenture governing the Company's outstanding Senior Secured Notes requires
the Company to reduce its outstanding indebtedness (excluding outstanding
letters of credit) to $20 million or less for fifteen consecutive days during
each twelve month period commencing on the first day of February. This covenant
has been satisfied for the balance of the term of the Senior Secured Notes.
The Company's cash flow from operating activities for Fiscal 1996 was $16.9
million, which reflects a $17.5 million reduction in inventories due to improved
inventory management, and the effects of the implementation of its strategic
business plan for the men's apparel group. The lower inventory balance was
partially offset by an increase in accounts receivable, due to changes in the
Company's factoring arrangements with CIT, which reduced the amount of accounts
receivable sold to CIT and the related factoring costs.
Cash used in Fiscal 1996 for investing activities was $9.8 million and primarily
related to capital expenditures of $7.1 million and the installation of store
fixtures in department stores of $3.9 million, partially offset by the sale of
assets of $1.9 million. During Fiscal 1997, the Company plans to make capital
expenditures of approximately $10.7 million and to spend an additional $4.2
million for the installation of store fixtures in department stores.
Cash used in financing activities in Fiscal 1996 was $6.7 million, which
represented repayments of short-term borrowings under the Credit Agreement using
cash generated from operations.
The Company's principal sources of liquidity, both on a short-term and a
long-term basis, are cash flow from operations and borrowings under the Credit
Agreement. Based upon its analysis of its consolidated financial position, its
cash flow during the past twelve months, and the cash flow anticipated from its
future operations, the Company believes that its future cash flows together with
funds available under the Credit Agreement will be adequate to meet the
financing requirements it anticipates during the next twelve months. There can
be no assurance, however, that future developments and general economic trends
will not adversely affect the Company's operations and, hence, its anticipated
cash flow.
The Company's Senior Secured Notes, of which $104.9 million principal amount was
outstanding at March 24, 1997, mature December 31, 1998. The Company does not
expect to generate sufficient cash flow from operations to repay those notes at
maturity and will seek to refinance the notes prior to maturity. There can be no
assurance that the Company will obtain such refinancing or that the terms of
such refinancing, if obtained, will not be less favorable to the Company than
those of the Senior Secured Notes.
Seasonality
Although the Company typically introduces and withdraws various individual
products throughout the year, its principal products are organized into the
customary retail seasonal lines: for the Spring, Fall and Christmas. The
Company's products are designed as much as one year in advance and manufactured
approximately one season in advance of the related retail selling season.
Backlog
The Company does not consider the amount of its backlog of orders to be
significant to an understanding of its business primarily due to increased
utilization of EDI technology, which provides for the electronic transmission of
orders from customers' computers to the Company's computers. As a result, orders
are placed closer to the required delivery date than had been the case prior to
EDI technology. At March 1, 1997, the Company's backlog of orders was
approximately $99.0 million, 13% less than the backlog of orders of
approximately $114.0 million that existed at March 2, 1996.
Factors that May Affect Future Results and Financial Condition.
This report contains or incorporates by reference forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Where any such forward-looking statement includes a statement of the assumptions
or bases underlying such forward-looking statement, the Company cautions that
assumed facts or bases almost always vary from the actual results, and the
differences between assumed facts or bases and actual results can be material,
depending on the circumstances. Where, in any forward-looking statement, the
Company or its management expresses an expectation or belief as to future
results, there can be no assurance that the statement of the expectation or
belief will result or be achieved or accomplished. The words "believe",
"expect", "estimate", "project", "seek", "anticipate" and similar expressions
may identify forward-looking statements. The Company's future operating results
and financial condition are dependent upon the Company's ability to successfully
design, manufacture, import and market apparel. Taking into account the
foregoing, the following are identified as important factors that could cause
results to differ materially from those expressed in any forward-looking
statement made by, or on behalf of, the Company:
Competition. The apparel industry in the United States is highly competitive and
characterized by a relatively small number of multi-line manufacturers (such as
the Company) and a large number of specialty manufacturers. The Company faces
substantial competition in its markets from manufacturers in both categories.
Many of the Company's competitors have greater financial resources than the
Company. The Company also competes for private label programs with the internal
sourcing organizations of many of its own customers.
Apparel Industry Cycles and other Economic Factors. The apparel industry
historically has been subject to substantial cyclical variation, with consumer
spending on apparel tending to decline during recessionary periods. A decline in
the general economy or uncertainties regarding future economic prospects may
affect consumer spending habits, which, in turn, could have a material adverse
effect on the Company's results of operations and its financial condition.
Retail Environment. Various retailers, including some of the Company's
customers, have experienced declines in revenue and profits in recent periods
and some have been forced to file for bankruptcy protection. To the extent that
these financial difficulties continue, there can be no assurance that the
Company's financial condition and results of operations would not be adversely
affected.
Seasonality of Business and Fashion Risk. The Company's principal products are
organized into seasonal lines for resale at the retail level during the Spring,
Fall and Christmas Seasons. Typically, the Company's products are designed as
much as one year in advance and manufactured approximately one season in advance
of the related retail selling season. Accordingly, the success of the Company's
products is often dependent on the ability of the Company to successfully
anticipate the needs of the Company's retail customers and the tastes of the
ultimate consumer up to a year prior to the relevant selling season.
Substantial Level of Indebtedness. The Company had indebtedness of $117.3
million as of December 28, 1996. This level of indebtedness could adversely
affect the Company's operations because a substantial portion of the Company's
cash flow from operations must be dedicated to the payment of interest and
would, therefore, not be available for other purposes. Further, this level of
indebtedness might inhibit the Company's ability to obtain financing in the
future for working capital needs, capital expenditures, acquisitions,
investments, general corporate purposes or other purposes.
Foreign Operations. The Company's foreign sourcing operations are subject to
various risks of doing business abroad, including currency fluctuations
(although the predominant currency used is the U.S. dollar), quotas and, in
certain parts of the world, political instability. Any substantial disruption of
its relationship with its foreign suppliers could adversely affect the Company's
operations. Some of the Company's imported merchandise is subject to United
States Customs duties. In addition, bilateral agreements between the major
exporting countries and the United States impose quotas which limit the amount
of certain categories of merchandise that may be imported into the United
States. Any material increase in duty levels, material decrease in quota levels
or material decrease in available quota allocation could adversely affect the
Company's operations.
Dependence on Contract Manufacturing. The Company currently produces 61% of all
of its products (in units) through arrangements with independent contract
manufacturers. The use of such contractors and the resulting lack of direct
control could subject the Company to difficulty in obtaining timely delivery of
products of acceptable quality. In addition, as is customary in the industry,
the Company does not have any long-term contracts with its fabric suppliers or
product manufacturers. While the Company is not dependent on one particular
product manufacturer or raw material supplier, the loss of several such product
manufacturers and/or raw material suppliers in a given season could have a
material adverse effect on the Company's performance.
Because of the foregoing factors, as well as other factors affecting the
Company's operating results and financial condition, past financial performance
should not be considered to be a reliable indicator of future performance, and
investors are cautioned not to use historical trends to anticipate results or
trends in the future. In addition, the Company's participation in the highly
competitive apparel industry often results in significant volatility in the
Company's common stock price.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Independent Auditors' Report
To the Board of Directors and Stockholders of Salant Corporation:
We have audited the accompanying consolidated balance sheets of Salant
Corporation and subsidiaries as of December 28, 1996 and December 30, 1995, and
the related consolidated statements of operations, shareholders' equity and cash
flows for the years ended December 28, 1996, December 30, 1995 and December 31,
1994. Our audits also included the financial statement schedule listed in the
index at Item 14. These financial statements and financial statement schedule
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Salant Corporation and subsidiaries as of
December 28, 1996 and December 30, 1995, and the results of their operations and
their cash flows for the years ended December 28, 1996, December 30, 1995 and
December 31, 1994 in conformity with generally accepted accounting principles.
Also, in our opinion, the financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
/s/ Deloitte & Touche LLP
March 4, 1997
New York, New York
SALANT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
Year Ended
December 28, December 30, December 31,
1996 1995 1994
Net sales $ 438,119 $ 501,522 $ 419,285
Cost of goods sold 340,203 397,630 326,059
Gross profit 97,916 103,892 93,226
Selling, general and administrative expenses (85,867) (85,372) (79,273)
Royalty income 6,154 6,606 6,699
Goodwill amortization (2,372) (2,575) (2,376)
Other income/(expense) 2,642 244 1,196
Division restructuring costs (Note 2) (11,730) (3,550) --
Income from continuing operations before interest,
income taxes and extraordinary gain 6,743 19,245 19,472
Interest expense, net (Notes 8 and 9) 15,963 19,425 15,617
Income/(loss) from continuing operations
before income taxes and extraordinary gain (9,220) (180) 3,855
Income taxes (Note 11) 103 318 348
Income/(loss) from continuing operations
before extraordinary gain (9,323) (498) 3,507
Discontinued operations (Note 17):
Loss from operations -- -- (9,639)
Estimated loss on disposal -- -- (1,796)
Extraordinary gain (Notes 3 and 9) -- 1,000 63
Net income/(loss) $ (9,323) $ 502 $ (7,865)
Income/(loss) per share:
Income/(loss) per share from continuing
operations before extraordinary gain $ (0.62) $ (0.03) $ 0.23
Loss per share from discontinued operations -- -- (0.76)
Extraordinary gain -- 0.06 --
Net income/(loss) per share $ (0.62) $ 0.03 $ (0.53)
Weighted average common stock outstanding 15,078 15,102 14,954
See Notes to Consolidated Financial Statements
SALANT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except per share data)
December 28, December 30,
1996 1995
ASSETS
Current assets:
Cash and cash equivalents $ 1,501 $ 1,400
Accounts receivable - net of allowance for doubtful accounts
of $2,806 in 1996 and $3,007 in 1995 (Notes 8 and 9) 40,214 35,290
Inventories (Notes 4 and 8) 101,619 119,120
Prepaid expenses and other current assets 3,869 5,016
Total current assets 147,203 160,826
Property, plant and equipment, net (Notes 5 and 8) 25,185 24,526
Other assets (Notes 6, 9 and 11) 63,650 70,368
$ 236,038 $ 255,720
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Loans payable (Note 8) $ 7,677 $ 14,422
Accounts payable 28,327 26,755
Reserve for business restructuring (Note 2) 2,969 1,569
Accrued salaries, wages and other liabilities (Note 7) 18,008 20,708
Current portion of long term debt (Note 9) 3,372 --
Total current liabilities 60,353 63,454
Long term debt (Notes 9 and 16) 106,231 110,040
Deferred liabilities (Note 14) 8,863 11,373
Commitments and contingencies (Notes 8, 9, 12, 13 and 15)
Shareholders' equity (Note 13): Preferred stock, par value $2 per share:
Authorized 5,000 shares; none issued -- --
Common stock, par value $1 per share:
Authorized 30,000 shares; 15,328 15,275
issued and issuable - 15,328 shares in 1996;
issued and issuable - 15,275 shares in 1995
Additional paid-in capital 107,130 107,071
Deficit (57,147) (47,824)
Excess of additional pension liability over
unrecognized prior service cost adjustment (Note 12) (3,182) (2,185)
Accumulated foreign currency translation adjustment 76 130
Less - treasury stock, at cost - 234 shares (1,614) (1,614)
Total shareholders' equity 60,591 70,853
$ 236,038 $ 255,720
See Notes to Consolidated Financial Statements
SALANT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Amounts in thousands)
Excess of
Additional
Pension
Liability
Over
Unrecog- Cumulative
nized Foreign Total
Common Stock Add'l Prior Currency Treasury Stock Share-
Number Paid-In Service Translation Number of holders'
of Shares Amount Capital Deficit Cost Adjustment Shares Amount Equity
Balance at January 1, 1994 15,016 $15,016 $106,726$(40,461) $ (986) $ 221 234 $(1,614) $78,902
Stock options exercised 226 226 291 517
Net loss (7,865) (7,865)
Excess of additional pension
liability over unrecognized
prior service cost adjustment 213 213
Foreign currency translation
adjustments (101) (101)
Balance at December 31, 1994 15,242 15,242 107,017 (48,326) (773) 120 234 (1,614) 71,666
Stock options exercised 33 33 54 87
Net income 502 502
Excess of additional pension
liability over unrecognized
prior service cost adjustment (1,412) (1,412)
Foreign currency translation
adjustments 10 10
Balance at December 30, 1995 15,275 15,275 107,071 (47,824) (2,185) 130 234 (1,614) 70,853
Stock options exercised 53 53 59 112
Net loss (9,323) (9,323)
Excess of additional pension
liability over unrecognized
prior service cost adjustment (997) (997)
Foreign currency translation
adjustments (54) (54)
Balance at December 28, 1996 15,328 $15,328 $107,130$(57,147) $ (3,182) $ 76 234 $(1,614) $60,591
See Notes to Consolidated Financial Statements
SALANT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
Year Ended
December 28, December 30, December 31,
1996 1995 1994
Cash Flows from Operating Activities
Income/(loss) from continuing operations $ (9,323) $ (498) $ 3,507
Adjustments to reconcile income from continuing operations to net cash provided
by/(used in) operating activities:
Depreciation 5,986 5,542 5,113
Amortization of intangibles 2,372 2,575 2,376
Write-down of fixed assets 263 1,850 --
Write-down of other assets 6,264 -- --
Loss on sale of fixed assets 17 132 --
Changes in operating assets and liabilities:
Accounts receivable (4,924) 1,293 (11,965)
Inventories 17,501 5,479 (19,262)
Prepaid expenses and other current assets 1,066 248 (947)
Other assets (760) 916 (1,302)
Accounts payable 1,572 (1,838) 6,869
Accrued salaries, wages and other liabilities (2,410) (191) (5,786)
Reserve for business restructuring 1,400 1,569 (2,038)
Deferred liabilities (2,148) (598) 330
Net cash provided by/(used in) operating activities 16,876 16,479 (23,105)
Cash Flows from Investing Activities
Capital expenditures, net (7,103) (4,286) (4,926)
Store fixture expenditures (3,855) (2,988) --
Acquisition (694) -- (5,720)
Proceeds from sale of assets 1,854 122 294
Net cash used in investing activities (9,798) (7,152) (10,352)
Cash Flows from Financing Activities
Net short-term borrowings/(repayments) (6,745) (9,484) 36,516
Retirement of long-term debt -- -- (3,537)
Exercise of stock options 112 87 517
Other, net (54) 10 (101)
Net cash (used in)/provided by financing activities (6,687) (9,387) 33,395
Net cash provided by/(used in) continuing operations 391 (60) (62)
Cash used in discontinued operations (290) (505) (119)
Net increase/(decrease) in cash and cash equivalents 101 (565) (181)
Cash and cash equivalents - beginning of year 1,400 1,965 2,146
Cash and cash equivalents - end of year $ 1,501 $ 1,400 $ 1,965
Supplemental disclosures of cash flow information: Cash paid during the year
for:
Interest $ 16,307 $ 20,280 $ 16,150
Income taxes $ 189 $ 331 $ 674
See Notes to Consolidated Financial Statements
SALANT CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Amounts in Thousands of Dollars, Except Share and Per Share Data)
Note 1. Summary of Significant Accounting Policies
Basis of Presentation and Consolidation
The Consolidated Financial Statements include the accounts of Salant Corporation
("Salant") and subsidiaries. (As used herein, the "Company" includes Salant and
its subsidiaries but excludes Salant's Vera Scarf division.) In February 1995,
Salant discontinued its Vera Scarf division. As further described in Note 17,
the Consolidated Financial Statements and the Notes thereto reflect the Vera
Scarf division as a discontinued operation, and the financial results of the
Vera Scarf division are not included in the presentation of income/(loss) from
continuing operations. Significant intercompany balances and transactions are
eliminated in consolidation.
The Company's principal business is the designing, manufacturing, importing and
marketing of apparel. The Company sells its products to retailers, including
department and specialty stores, national chains, major discounters and mass
volume retailers, throughout the United States.
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 (such as accounts
receivable, inventories, restructuring reserves and valuation allowances for
income taxes), disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
On June 27, 1990 (the "Filing Date"), Salant and one of its subsidiaries, Denton
Mills, Inc. ("Denton Mills"), filed separate voluntary petitions for relief
under chapter 11 of title 11 of the United States Code (the "Bankruptcy Code")
with the United States Bankruptcy Court for the Southern District of New York
(the "Bankruptcy Court"). On July 30, 1993, the Bankruptcy Court issued an order
confirming the Third Amended Joint Plan of Reorganization of Salant and Denton
Mills, Inc. (the "Reorganization Plan"). The Reorganization Plan was consummated
on September 20, 1993 (the "Consummation Date"), as further described in Note
18.
Fiscal Year
The Company's fiscal year ends on the Saturday closest to December 31. The 1994,
1995 and 1996 fiscal years were each comprised of
52 weeks.
Reclassifications
Certain reclassifications were made to the 1994 and 1995 Consolidated Financial
Statements to conform with the 1996 presentation.
Cash and Cash Equivalents
The Company treats cash on hand and deposits in banks as cash and cash
equivalents for the purposes of the statements of cash flows.
Accounts Receivable
The Company is a party to an agreement with a factor, as further described in
Note 8, whereby it sells, without recourse, certain eligible accounts
receivable. The credit risk for such accounts is thereby transferred to the
factor. The amounts due from the factor have been offset against advances from
the factor in the accompanying balance sheets. The amounts which have been
offset were $16,355 at December 28, 1996 and $33,792 at December 30, 1995. The
decrease in the amounts which have been offset resulted from a change in the
agreement with the factor.
Inventories
Inventories are stated at the lower of cost (principally determined on a
first-in, first-out basis for apparel operations and the retail inventory method
on a first-in, first-out basis for outlet store operations) or market.
Property, Plant and Equipment
Property, plant and equipment are stated at cost and are depreciated or
amortized over their estimated useful lives, or for leasehold improvements, the
lease term, if shorter. Depreciation and amortization are computed principally
by the straight-line method for financial reporting purposes and by accelerated
methods for income tax purposes.
The annual depreciation rates used are as follows:
Buildings and improvements 2.5% - 10.0%
Machinery, equipment and autos 6.7% - 33.3%
Furniture and fixtures 10.0% - 50.0%
Leasehold improvements Over the life of the asset or the term of the lease, whichever is
shorter
Other Assets
Intangible assets are being amortized on a straight-line basis over their
respective useful lives, ranging from 7 1/2 to 40 years. Costs in excess of fair
value of net assets acquired, which relate to the acquisition of the net assets
of Manhattan Industries, Inc. ("Manhattan") are assessed for recoverability on a
periodic basis. In evaluating the value and future benefits of these intangible
assets, their carrying value would be reduced by the excess, if any, of the
intangibles over management's best estimate of undiscounted future operating
income of the acquired businesses before amortization of the related intangible
assets over the remaining amortization period.
Long-Lived Assets
In 1996, the Company adopted Statement of Financial Accounting Standard No. 121,
which requires that long-lived assets and certain identifiable intangibles be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may no longer be recoverable. Adoption of
this statement did not have a material impact on the Company.
Income Taxes
Deferred income taxes are provided to reflect the tax effect of temporary
differences between financial statement income and taxable income in accordance
with the provisions of Statement of Financial Accounting Standard No. 109,
"Accounting for Income Taxes".
Fair Value of Financial Instruments
For financial instruments, including cash and cash equivalents, accounts
receivable and payable, and accruals, the carrying amounts approximated fair
value because of their short maturity. Long-term debt, which was issued at a
market rate of interest, currently trades at approximately 93% of principal
amount. In addition, deferred liabilities have carrying amounts approximating
fair value.
Income/(Loss) Per Share
Income/(loss) per share is based on the weighted average number of common shares
(including, as of December 28, 1996 and December 30, 1995, 324,810 and 375,889
shares, respectively, anticipated to be issued pursuant to the Reorganization
Plan) and common stock equivalents outstanding, if applicable. Loss per share
for 1994 and 1996 did not include common stock equivalents, inasmuch as their
effect would have been anti-dilutive.
Revenue Recognition
Revenue is recognized at the time the merchandise is shipped. Retail factory
outlet store revenues are recognized at the time of sale.
Note 2. Restructuring Costs
In 1996, the Company recorded a provision for restructuring of $11,730,
consisting of (i) $5,718 in connection with the decision to sell or license the
JJ. Farmer sportswear product line, which charge is primarily related to the
write-off of goodwill and write-down of other assets, (ii) $2,858 related to the
write-off of certain assets related to the licensing of the Gant dress shirt and
accessories product lines, and the accrual of a portion of the future minimum
royalties under the Gant licenses, which are not expected to be covered by
future sales, (iii) $1,837 primarily related to employee costs in connection
with the closing of a manufacturing and distribution facility in Thomson,
Georgia, (iv) $714 primarily related to employee costs in connection with the
closing of a manufacturing facility in Americus, Georgia and (v) $603 related
primarily to other severance costs.
In the fourth quarter of 1995, the Company recorded a $3,550 restructuring
provision, which included (i) fixed asset write-downs at locations to be closed
and (ii) inventory markdowns for discontinued product lines.
Note 3. Extraordinary Gain
In the fourth quarter of 1995, the Company recorded an extraordinary gain of
$1,000 related to the reversal of excess liabilities previously provided for the
anticipated settlement of claims arising from the chapter 11 proceeding.
Note 4. Inventories
December 28, December 30,
1996 1995
Finished goods $ 58,663 $ 72,850
Work-in-process 16,011 15,829
Raw materials and supplies 26,945 30,441
$101,619 $119,120
Finished goods inventory includes in transit merchandise of $5,400 and $6,500 at
December 28, 1996 and December 30, 1995, respectively.
Note 5. Property, Plant and Equipment
December 28, December 30,
1996 1995
Land and buildings $14,975 $14,779
Machinery, equipment, furniture
and fixtures 30,815 40,347
Leasehold improvements 6,895 8,315
Property held under capital leases 117 1,345
52,802 64,786
Less accumulated depreciation and amortization 27,617 40,260
$25,185 $24,526
Note 6. Other Assets
December 28, December 30,
1996 1995
Excess of cost over net assets acquired,
net of accumulated amortization of
$13,058 in 1996 and $12,014 in 1995 $45,008 $50,641
Trademarks and license agreements,
net of accumulated amortization of
$3,619 in 1996 and $3,274 in 1995 13,943 14,588
Leasehold interests, net of accumulated
amortization of $965 in 1995 -- 1,478
Other 4,699 3,661
$63,650 $70,368
In June 1996, the company wrote-off other assets of $4,325 which consisted of
$4,075 for the unamortized portion of the excess of cost over net assets
acquired related to the JJ. Farmer division and $250 related to the license
agreements for the Gant product lines.
In November 1996, the Company sold its leasehold interest in a closed facility
in Glen Rock, New Jersey, resulting in a gain of $2,712, which is included in
other income.
Note 7. Accrued Salaries, Wages and Other Liabilities
December 28, December 30,
1996 1995
Accrued salaries and wages $ 1,765 $ 3,268
Accrued pension and retirement benefits 4,080 3,737
Accrued royalties 1,959 1,716
Accrued interest 3,716 3,716
Other accrued liabilities 6,488 8,271
$18,008 $20,708
Note 8. Financing and Factoring Agreements
The Company is a party to a revolving credit, factoring and security agreement,
as amended (the "Credit Agreement"), with The CIT Group/Commercial Services,
Inc. ("CIT") which provides the Company with seasonal working capital financing,
consisting of direct borrowings and letters of credit, of up to $135,000 (the
"Maximum Credit"), subject to an asset based borrowing formula. As collateral
for borrowings under the Credit Agreement, the Company has granted to CIT a
security interest in substantially all of the assets of the Company.
On February 20, 1997, the Company and CIT executed the Tenth Amendment to the
Credit Agreement (the "Amendment"). The Amendment extended the term of the
Credit Agreement from March 31, 1997 until September 30, 1998. The Amendment
provided for a reduction in the interest rate charged on direct borrowings from
one percent in excess of the base rate of the Chase Manhattan Bank, N.A. (the
"Prime Rate", which was 8.25% at December 28, 1996) to one-half of one percent
in excess of the Prime Rate. The Amendment also provided the Company with the
option to borrow funds at 2.75% above the London Late Eurodollar rate (the
"Eurodollar Rate", which was 5.625% at December 28, 1996). Based upon Eurodollar
Rates currently in effect, the Company's effective rate of interest under the
Eurodollar option is approximately 100 basis points below its borrowing rate in
effect prior to the Amendment. The Amendment also modified or eliminated certain
financial covenants. As a result of the Amendment, the Company will only be
required to maintain certain minimum levels of stockholders' equity and to
comply with one other financial covenant limiting the maximum loss the Company
may incur over any four or eight consecutive calendar quarters.
As of December 28, 1996 and December 30, 1995, direct borrowings were $7,677 and
$14,422, respectively. As of December 28, 1996 and December 30, 1995, letters of
credit outstanding under the Credit Agreement were $32,337 and $31,415,
respectively. The weighted average interest rate on borrowings under the Credit
Agreement for the years ended December 28, 1996 and December 30, 1995 was 9.4%
and 9.9%, respectively.
In addition to the two financial covenants discussed above, the Credit Agreement
contains a number of other covenants, including restrictions on incurring
indebtedness and liens, making investments in or purchasing the stock, or all or
a substantial part of the assets of another person, selling property and paying
cash dividends.
Note 9. Long-Term Debt
On September 20, 1993, Salant issued $111,851 principal amount of 10 1/2% Senior
Secured Notes due December 31, 1998 (the "Secured Notes"). The Secured Notes may
be redeemed at any time prior to maturity, in whole or in part, at the option of
the Company, at a premium to the principal amount thereof plus accrued interest.
The premium on redemption declines annually from 2.1% in 1997 to 0% in 1998. The
Secured Notes are secured by a first lien (subordinated to the lien securing
borrowings under the Credit Agreement to the extent of $15,000) on certain
accounts receivable, certain intangible assets, the capital stock of Salant's
subsidiaries and certain real property of the Company, and by a second lien on
substantially all of the other assets of the Company.
The indenture governing the Secured Notes (the "Indenture") contains various
restrictions pertaining to the incurrence of indebtedness, the purchase of
capital stock and the payment of dividends. Under the most restrictive of these
provisions, the Company currently may not purchase or redeem any shares of its
capital stock, or declare or pay cash dividends.
On October 28, 1996, the Company completed the sale of a leasehold interest in a
facility located in Glen Rock, New Jersey. The Net Cash Proceeds (as defined in
the Indenture) of such sale were $3,372. Such amount was included in current
liabilities at December 28, 1996. Pursuant to the Indenture, on December 30,
1996, the Company repurchased Secured Notes in a principal amount equal to the
Net Cash Proceeds at 100% of the principal amount thereof.
In May 1994, the Company purchased and retired $3,600 of the Secured Notes in an
open market transaction at a price below the principal amount thereof. As a
result of this transaction, the Company recorded an extraordinary gain of $63 in
1994.
Note 10. Segment Information and Significant Customers
The Company's principal business is the designing, manufacturing, importing and
marketing of apparel. The Company sells its products to retailers, including
department and specialty stores, national chains, major discounters and mass
volume retailers, throughout the United States. As an adjunct to its apparel
manufacturing operations, the Company operates 65 factory outlet stores in
various parts of the United States. Foreign operations, other than sourcing, are
not significant. The Company's products have been classified in the following
industry segments: (i) men's apparel, (ii) children's sleepwear and underwear
and (iii) other products, consisting of women's junior apparel and retail
factory outlet store operations. Information concerning the Company's business
segments in 1996, 1995 and 1994 is as follows:
1996 1995 1994
NET SALES
Men's Apparel $354,723 $423,894 $343,455
Children's Sleepwear
and Underwear 45,754 39,936 35,513
Other Businesses 37,642 37,692 40,317
Total net sales $438,119 $501,522 $419,285
OPERATING INCOME
Men's Apparel $ 6,400 $ 19,819 $ 17,366
Children's Sleepwear
and Underwear 5,401 5,184 3,119
Other Businesses (3,912) (2,205) (522)
7,889 22,798 19,963
Corporate expenses (6,137) (9,176) (6,171)
Licensing division income 4,991 5,623 5,680
Interest expense, net (15,963) (19,425) (15,617)
Income/(loss) from continuing
operations before income taxes
and extraordinary gain $ (9,220) $ (180) $ 3,855
IDENTIFIABLE ASSETS
Men's Apparel $138,024 $170,203 $161,751
Children's Sleepwear
and Underwear 20,709 16,349 14,273
Other Businesses 18,846 20,179 18,092
Corporate 58,459 48,989 73,100
Total identifiable assets $236,038 $255,720 $267,216
CAPITAL EXPENDITURES
Men's Apparel $ 4,046 $ 1,389 $ 2,629
Children's Sleepwear
and Underwear 546 492 435
Other Businesses 439 584 1,140
Corporate 2,072 1,821 722
Total capital expenditures $ 7,103 $ 4,286 $ 4,926
DEPRECIATION AND AMORTIZATION
Men's Apparel $ 3,672 $ 2,960 $ 2,549
Children's Sleepwear
and Underwear 399 345 311
Other Businesses 526 514 473
Corporate 3,761 4,298 4,156
Total depreciation and
amortization $ 8,358 $ 8,117 $ 7,489
In 1996, approximately 13% of the Company's net sales were made to Sears,
Roebuck & Co. ("Sears"). Approximately 11% of the Company's net sales in 1996
were made to Federated Department Stores, Inc. ("Federated"), which includes all
1996 net sales to Macy's Department Stores ("Macy's"), which was acquired by
Federated in 1994, and the Broadway Stores, Inc. ("Broadway"), which was
acquired by Federated in February 1996. In 1995 and 1994, net sales to a
combined Federated/Macy's/Broadway would have represented approximately 12% and
15% of the Company's net sales, respectively. In each of 1995 and 1994,
approximately 11% of the Company's net sales were made to TJX Corporation
("TJX"), which includes all 1995 and 1994 net sales to Marshall's Corporation,
which was acquired by TJX in February 1996.
In 1995, approximately 13% of the Children's Group's net sales were made to
Dayton Hudson Corporation. In 1996, approximately 27% and 22% of the net sales
of Other Businesses were made to K-Mart Corporation and JC Penney Company,
respectively. In 1995, net sales to JC Penney represented 19% of the net sales
of the Other Businesses.
No other customer accounted for more than 10% of the net sales of the Company or
any of its business segments during 1996, 1995 or 1994.
Note 11. Income Taxes
The provision for income taxes consists of the following:
December 28, December 30, December 31,
1996 1995 1994
Current:
Federal $(106) $100 $100
State -- -- 20
Foreign 209 218 228
$ 103 $318 $348
The following is a reconciliation of the tax provision/(benefit) at the
statutory Federal income tax rate to the actual income tax provision:
1996 1995 1994
Income tax provision/
(benefit), at 34% $(3,135) $ (61) $1,097
Loss producing no current
tax benefit 3,135 61
Utilization of net operating loss
carryforward (1,097)
Alternative minimum tax 100 100
Tax refunds from prior years (106)
State, local and foreign taxes 209 218 248
Income tax provision $ 103 $ 318 $ 348
The following are the tax effects of significant items comprising the Company's
net deferred tax asset:
December 28, December 30,
1996 1995
Deferred tax liabilities:
Differences between book and tax
basis of property $(3,659) $ (6,253)
Deferred tax assets:
Reserves not currently deductible 13,983 17,155
Operating loss carryforwards 45,041 43,182
Tax credit carryforwards 2,958 3,055
Expenses capitalized into inventory 4,657 4,959
66,639 68,351
Net deferred asset 62,980 62,098
Valuation allowance (62,980) (62,098)
Net deferred tax asset $ -- $ --
At December 28, 1996, the Company had net operating loss carryforwards ("NOLs")
for income tax purposes of approximately $115,000, expiring from 1999 to the
year 2011, which can be used to offset future taxable income. Approximately
$51,000, which arose from the acquisition of Manhattan in April 1988, will
offset goodwill when utilized. The implementation of the Reorganization Plan and
transactions that have occurred within the three-year period preceding the
Consummation Date have caused an "ownership change" for federal income tax
purposes as of the Consummation Date. As a result of such ownership change, the
use of the NOLs to offset future taxable income has been limited by the
requirements of section 382 of the Internal Revenue Code of 1986, as amended.
The annual limit under section 382 is approximately $7,200. Upon consummation of
the Reorganization Plan, the Company realized cancellation of indebtedness
income for tax purposes of approximately $917 and the NOLs have been reduced or
limited accordingly.
In addition, at December 28, 1996, the Company had available tax credit
carryforwards of $2,798 which expire between 1997 and 1999. Of these tax
credits, $1,986 will reduce goodwill and the balance will reduce income tax
expense when utilized. Utilization of these credits may be limited in the same
manner as the NOLs, as described above.
Note 12. Employee Benefit Plans
Pension and Retirement Plans
The Company has several defined benefit plans for virtually all full-time
salaried employees and certain nonunion hourly employees. The Company's funding
policy for its plans is to fund the minimum annual contribution required by
applicable regulations.
The Company also has a nonqualified supplemental retirement and death benefit
plan covering certain employees. The funding for this plan is based on premium
costs of related insurance contracts.
Pension expense includes the following components:
1996 1995 1994
Service cost-benefit earned
during the period $1,270 $1,029 $1,125
Interest cost on projected
benefit obligation 2,912 2,714 2,626
Loss/(return) on assets (4,126) (4,697) 1,331
Net amortization 1,564 2,286 (3,437)
Net periodic pension cost $1,620 $1,332 $1,645
The reconciliation of the funded status of the plans at December 28, 1996 and
December 30, 1995 is as follows:
December 28, December 30,
1996 1995
Accumulated Accumulated
Plan Plan
Benefits Benefits
Exceed Exceed
Plan Assets Plan Assets
Actuarial present value of benefit obligation
Vested benefit obligation $(41,578) $(36,211)
Nonvested benefit obligation (661) (597)
Accumulated benefit obligation $(42,239) $(36,808)
Projected benefit obligation (46,811) $(40,833)
Plan assets at fair value 35,980 30,900
Projected benefit obligation in
excess of plan assets (10,831) (9,933)
Unrecognized net obligation at date of
initial application, amortized over 15 years 624 810
Unrecognized net loss 7,188 4,616
Unrecognized prior service cost (1,222) (1,176)
Recognition of minimum liability
under SFAS No. 87 (3,332) (2,524)
Accrued pension cost $ (7,573) $ (8,207)
Assumptions used in accounting for defined benefit pension plans are as follows:
1996 1996 1995 1995 1994 1994
Non- Qualified Non- Qualified Non- Qualified
Qualified Plans Qualified Plans Qualified Plans
Plan Plan Plan
Discount rate 7.25% 7.25% 7.0% 7.0% 8.5% 8.5%
Rate of increase in
compensation levels N/A 5.0% N/A 5.0% N/A 5.5%
Expected long-term rate of
return on assets 8.0% 8.5% 8.0% 8.5% 8.0% 8.0%
Assets of the Company's qualified plans are invested in directed trusts. Assets
in the directed trusts are invested in common and preferred stocks, corporate
bonds, money market funds and U.S. government obligations. The nonqualified
supplemental plan assets consist of the cash surrender value of certain
insurance contracts.
The Company also contributes to certain union retirement and insurance funds
established to provide retirement benefits and group life, health and accident
insurance for eligible employees. The total cost of these contributions was
$4,095, $4,263 and $4,693 in 1996, 1995 and 1994, respectively. The actuarial
present value of accumulated plan benefits and net assets available for benefits
for employees in the union administered plans are not determinable from
information available to the Company.
Long Term Savings and Investment Plan
Salant sponsors the Long Term Savings and Investment Plan, under which eligible
salaried employees may contribute up to 15% of their annual compensation,
subject to certain limitations, to a money market fund, a fixed income fund
and/or an equity fund. Salant contributes a minimum matching amount of 20% of
the first 6% of a participant's annual compensation and may contribute an
additional discretionary amount in cash or in the Company's common stock. In
1996, 1995 and 1994 Salant's aggregate contributions to the Long Term Savings
and Investment Plan amounted to $229, $239 and $239, respectively.
Note 13. Stock Options, Warrants and Shareholder Rights
On May 14, 1996, the stockholders of the Company approved the 1996 Stock Plan.
Pursuant to the 1996 Stock Plan, directors receive an automatic grant of stock
options pursuant to a formula contained in such plan, and options or awards may
be granted to key employees of the Company for the purchase of an aggregate of
600,000 shares of the Company's common stock.
The 1993, 1988 and 1987 Stock Plans authorized the Company to grant stock
options or stock awards aggregating 1,800,000 shares of Salant common stock to
officers, key employees and, in the case of the 1993 and 1988 Stock Plans,
directors.
The 1996, 1993, 1988 and 1987 Stock Plans authorized such grants (subject to
certain restrictions applicable to 1996 and 1993 Stock Plan stock options
granted to directors) at such prices and pursuant to such other terms and
conditions as the Stock Plan Committee may determine. Options may be
nonqualified stock options or incentive stock options and may include stock
appreciation rights. Exercise prices of options are ordinarily equal to 100% of
the fair market value of the Company's shares on the date of grant of the
options. Options expire no later than ten years from the date of grant and
become exercisable in varying amounts over periods ranging from the date of
grant to five years from the date of grant.
The following table summarizes stock option transactions during 1994, 1995 and
1996:
Weighted
Average
Exercise
Shares Price Range Price
Options outstanding at
January 1, 1994 1,362,774 $1.00-15.125
Options granted during 1994 61,050 $4.94-6.69
Options exercised during 1994 (226,666) $2.00-2.63
Options surrendered or canceled
during 1994 (39,950) $5.125-12.00
Options outstanding at
December 31, 1994 1,157,208 $1.00-15.125
Options granted during 1995 205,300 $3.3125-5.1875
Options exercised during 1995 (33,334) $2.625
Options surrendered or canceled
during 1995 (65,601) $3.00-12.00
Options outstanding at
December 30, 1995 1,263,573 $1.00-15.125 $6.50
Options granted during 1996 51,600 $3.32-3.94 $3.62
Options exercised during 1996 (53,000) $1.00-2.00 $1.94
Options surrendered or canceled
during 1996 (228,433) $2.75-12.00 $6.63
Options outstanding at
December 28, 1996 1,033,740 $1.625-15.125 $6.56
Options exercisable at
December 28, 1996 910,028 $1.625-15.125 $6.88
Options exercisable at
December 30, 1995 904,209 $1.00-15.125
The Company has a shareholder rights plan (the "Rights Plan"), which provides
for a dividend distribution of one right for each share of Salant common stock
to holders of record of the Company's common stock at the close of business on
December 23, 1987. The rights will expire on December 23, 1997. With certain
exceptions, the rights will become exercisable only in the event that an
acquiring party accumulates 20 percent or more of the Company's voting stock, or
if a party announces an offer to acquire 30 percent or more of such voting
stock. Each right, when exercisable, will entitle the holder to buy one
one-hundredth of a share of a new series of cumulative preferred stock at a
price of $30 per right or, upon the occurrence of certain events, to purchase
either Salant common stock or shares in an "acquiring entity" at half the market
value thereof. The Company will generally be entitled to redeem the rights at
three cents per right at any time until the 10th day following the acquisition
of a 20 percent position in its voting stock. In July 1993, the Rights Plan was
amended to provide that an acquisition or offer by Apollo Apparel Partners,
L.P., or any of its subsidiaries, will not cause the rights to become
exercisable.
In summary, as of December 28, 1996, there were 1,033,740 shares of Common Stock
reserved for the exercise of stock options and 953,175 shares of Common Stock
reserved for future grants of stock options or awards.
All stock options are granted at fair market value of the Common Stock at the
grant date. The weighted average fair value of the stock options granted during
1996 and 1995 was $3.42 and $4.52, respectively. The fair value of each stock
option grant is estimated on the date of grant using the Black-Scholes option
pricing model with the following weighted average assumptions used for grants in
1996: risk-free interest rate of 6.18%; expected dividend yield of 0%; expected
life of 4.44 years; and expected volatility of 220%. The outstanding stock
options at December 28, 1996 have a weighted average contractual life of 5.65
years. The number of stock options exercisable at December 28, 1996 was 910,028.
These stock options have a weighted average exercise price of $6.88 per share.
The Company accounts for the 1987, 1988, 1993 and 1996 Stock Plans in accordance
with Accounting Principles Board Opinion No. 25, under which no compensation
cost is recognized for stock option awards. Had compensation cost been
determined consistent with Statement of Financial Accounting Standard No. 123,
"Accounting for Stock-Based Compensation" (SFAS 123), the Company's pro forma
net income/(loss) for 1996 and 1995 would have been $(9,692) and $192,
respectively. The Company's pro forma net income/(loss) per share for 1996 and
1995 would have been ($0.64) and $0.01, respectively. Because the SFAS 123
method of accounting has not been applied to options granted prior to 1995, the
resulting pro forma compensation cost may not be representative of that to be
expected in future years.
Note 14. Deferred Liabilities
December 28, December 30,
1996 1995
Lease obligations $ 93 $ 1,206
Deferred pension obligations 4,865 5,087
Liability for settlement of chapter 11 claims 3,905 4,600
Other -- 480
$ 8,863 $11,373
Note 15. Commitments and Contingencies
(a) Lease Commitments
The Company conducts a portion of its operations in premises occupied under
leases expiring at various dates through 2012. Certain of the leases contain
renewal options. Rental payments under certain leases may be adjusted for
increases in taxes and operating expenses above specified amounts. In addition,
certain of the leases for outlet stores contain provisions for additional rent
based upon sales.
In 1996, 1995 and 1994, rental expense was $7,563, $7,265 and $5,914,
respectively. As of December 28, 1996, future minimum rental payments under
noncancelable operating leases (exclusive of renewal options, percentage
rentals, and adjustments for property taxes and operating expenses) were as
follows:
Fiscal Year
1997 $ 6,907
1998 6,004
1999 4,739
2000 3,015
2001 2,566
Thereafter 15,709
Total $38,940
(b) Employment Agreements
The Company has employment agreements with certain executives, which provide for
the payment of compensation aggregating approximately $2,108 in 1997 and $490 in
1998 . In addition, such employment agreements provide for incentive
compensation based on various performance criteria.
Note 16. Acquisition
On June 10, 1994, the Company acquired all the capital stock of JJ. Farmer
Clothing Inc. (a Canadian corporation) and the assets of JJ. Farmer
International Limited (a Hong Kong corporation) (collectively "JJ. Farmer") for
approximately $5,311 in cash. The purchase price is subject to adjustment based
on a number of items, including the future profitability of JJ. Farmer. As part
of the acquisition, the Company agreed to pay to the former owners of JJ.
Farmer, certain minimum amounts in the years 1996 through 1999. The present
value of such future payments is $1,352, which is included in long-term debt.
Through December 28, 1996, the Company had made additional payments of $1,157 in
accordance with the acquisition agreement. The acquisition has been accounted
for as a purchase, and accordingly, JJ. Farmer's operating results have been
included in the Company's consolidated results of operations commencing June 11,
1994. Pro forma results of operations have not been presented as the effect
would not be significant. JJ. Farmer's net sales for the five months ended May
31, 1994 were $3,392. The excess of cost over the book value of net assets
acquired ($4,589 subject to adjustment) was being amortized over a period of not
more than 15 years on a straight-line basis, prior to the write-off in the
second quarter of 1996.
Note 17. Discontinued Operations
In February 1995, the Company discontinued the operations of the Vera Scarf
division, which imported and marketed women's scarves. The loss from operations
of the division in 1994 was $9,639, which included a fourth quarter charge of
$9,004 for the write-off of goodwill and other intangible assets. Net sales of
the division were $1,673 and $5,087 in 1995 and 1994, respectively.
Additionally, in 1994 the Company recorded a fourth quarter charge of $1,796 to
accrue for expected operating losses during the phase-out period through June
1995. No income tax benefits have been allocated to the division's 1994 loss.
Note 18. Consummation of the Plan of Reorganization
From the Consummation Date through December 28, 1996, pursuant to the
Reorganization Plan, the Company made cash payments of $9,400, issued $111,851
of new 10-1/2% senior secured notes and issued 11.0 million shares of common
stock to creditors in settlement of certain claims in the chapter 11
proceedings. Salant anticipates that an additional $4,161 in cash and an
additional 325 thousand shares of common stock ultimately will have been
distributed to creditors upon the final resolution of all remaining claims.
Provisions for such distributions had previously been made in the consolidated
financial statements.
Note 19. Quarterly Financial Information (Unaudited)
Fiscal year ended December 28, 1996
Total 4th Qtr.3rd Qtr. 2nd Qtr. 1st Qtr.
Net sales $438,119 $119,317 $122,599 $97,010 $99,193
Gross profit 97,916 27,371 29,935 18,030 22,580
Net income/(loss) (9,323) 6,116 6,335 (18,862) (2,912)
Net income/(loss) per share (a) $ (0.62) $ 0.40 $ 0.42 $ (1.25) $ (0.19)
Fiscal year ended December 30, 1995
Total 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
Net sales $501,522 $127,347 $148,313 $122,061 $103,801
Gross profit 103,892 23,152 33,752 24,521 22,467
Income/(loss) from
continuing operations (498) (5,509) 6,318 392 (1,699)
Extraordinary gain
(See note 3) 1,000 1,000 -- -- --
Net income/(loss) 502 (4,509) 6,318 392 (1,699)
Income/(loss) per share from
continuing operations (a) $ (0.03) $ (0.36) $ 0.42 $ 0.03 $ (0.11)
Income per share from
extraordinary gain 0.06 0.06 -- -- --
Net income/(loss) per share (a) 0.03 (0.30) 0.42 0.03 (0.11)
Reference is made to Notes 2, 3 and 6 concerning fourth quarter adjustments
during the years ended December 28, 1996 and December 30, 1995.
(a) Income/(loss) per share of common stock is computed separately for each
period. The sum of the amounts of income/(loss) per share reported in
each period differs from the total for the year due to the issuance of
shares and, when appropriate, the inclusion of common stock equivalents.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10 is incorporated by reference from the Proxy
Statement of Salant Corporation.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is incorporated by reference from the Proxy
Statement of Salant Corporation.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 is incorporated by reference from the Proxy
Statement of Salant Corporation.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 is incorporated by reference from the Proxy
Statement of Salant Corporation.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
Financial Statements
The following financial statements are included in Item 8 of this Annual Report:
Independent Auditors' Report
Consolidated Statements of Operations
Consolidated Balance Sheets
Consolidated Statements of Shareholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Financial Statement Schedule
The following Financial Statement Schedule for the years ended December 28,
1996, December 30, 1995 and December 31, 1994 is filed as part of this Annual
Report:
Schedule II - Valuation and Qualifying Accounts and Reserves
All other schedules have been omitted because they are inapplicable or not
required, or the information is included elsewhere in the financial statements
or notes thereto.
SALANT CORPORATION AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
(1) (2)
Balance at Charged to Charged to Balance
Beginning Costs and Other Accounts Deductions at End
Description of Period Expenses -- Describe -- Describe of Period
YEAR ENDED DECEMBER 28, 1996:
Accounts receivable allowance
for doubtful accounts $3,007 $(112) $ -- $89 (A) $2,806
Reserve for business
restructuring $1,569 $11,730 $ -- $10,330 (B) $2,969
YEAR ENDED DECEMBER 30, 1995:
Accounts receivable - allowance
for doubtful accounts $2,565 $1,510 $ -- $1,068 (A) $3,007
Reserve for business
restructuring $ -- $3,550 $ -- $1,981 (B) $1,569
YEAR ENDED DECEMBER 31, 1994:
Accounts receivable - allowance
for doubtful accounts $2,261 $1,068 $ -- $ 764 (A) $2,565
Reserve for business
restructuring $2,038 $2,038 $ -- $ -- $ --
NOTES:
(A) Uncollectible accounts written off, less recoveries. (B) Costs incurred in
plant closings and business restructuring.
Reports on Form 8-K
The Company did not file any reports on Form 8-K during the quarter ended
December 28, 1996.
Exhibits
Incorporation
Number Description By Reference To
2.1 Third Amended Disclosure Exhibit 1 to
Statement of Salant Form 8-A dated
Corporation, and Denton July 28, 1993.
Mills, Inc., dated
May 12,1993.
2.2 Third Amended Joint Included as
Chapter 11 Plan of Exhibit D-1
Reorganization of to Exhibit 1
Salant Corporation to Form 8-A
and Denton Mills, Inc. dated July 28, 1993.
3.1 Form of Amended and Included as Exhibit
Restated Certificate of D-1 to Exhibit 2
Incorporation of Salant to Form 8-A dated
Corporation. July 28, 1993.
3.2 Form of Bylaws, as amended, of
Salant Corporation, effective September 21, 1994.
4.1 Rights Agreement dated as of Exhibit 1 to Current Report
December 8, 1987 between Salant on Form 8-K dated December 8, 1987.
Corporation and The Chase
Manhattan Bank, N.A.,
as Rights Agent. The Rights
Agreement includes as Exhibit B the
form of Right Certificate.
4.2 Form of First Amendment Exhibit 3 to
to the Rights Agreement Amendment No. 1 to
between Salant Corporation Form 8-A dated
and Mellon Securities. July 29, 1993.
4.3 Indenture, dated as of Exhibit 10.34 to
September 20, 1993, between Salant Quarterly Report
Corporation and Bankers on Form 10-Q for
Trust Company, as trustee, the quarter ended
for the 10-1/2% Senior October 2, 1993.
Secured Notes due
December 31, 1998.
10.1 Revolving Credit, Exhibit 10.33 to
Factoring and Security Quarterly Report
Agreement dated September 29, 1993, on Form 10-Q for
between Salant Corporation the quarter ended
and The CIT Group/Commercial October 2, 1993.
Services, Inc.
10.2 Salant Corporation 1987 Stock Plan. Exhibit 19.2 to Annual Report on Form 10-K for fiscal year 1987.
10.3 Salant Corporation 1987 Stock Plan Exhibit 10.12 to Form S-2
Agreement, dated as of June 13, Registration Statement filed
1988, between Nicholas P. DiPaolo June 17, 1988.
and Salant Corporation.
10.4 Salant Corporation 1988 Stock Plan. Exhibit 19.3 to Annual Report on
Form 10-K for fiscal year 1988.
10.5 First Amendment, effective Exhibit 19.1 to Quarterly Report
as of July 25, 1989, to the Salant on Form 10-Q for the quarter
Corporation 1988 Stock Plan. ended September 30, 1989.
10.6 Form of Salant Corporation 1988 Exhibit 19.7 to Annual Report on
Stock Plan Employee Agreement. Form 10-K for fiscal year 1988.
10.7 Form of Salant Corporation Exhibit 19.8 to
1988 Stock Plan Director Annual Report on
Agreement. Form 10-K for fiscal
year 1988.
10.8 Employment Agreement, dated as of Exhibit 19.4 to
December 31, 1990, between Herbert Annual Report on
R. Aronson and Salant Corporation. * Form 10-K for fiscal
year 1990.
10.9 Letter Agreement, dated Exhibit 19.1 to Quarterly
June 20, 1992, amending the Report on Form 10-Q for
Employment Agreement, dated as of the quarter ended October 3, 1992.
December 31, 1990, between Herbert
R. Aronson and Salant Corporation. *
10.10 License Agreement, dated Exhibit 19.1 to Annual Report
January 1, 1991, by and between on Form 10-K for fiscal year 1992.
Perry Ellis International Inc.
and Salant Corporation regarding
men's sportswear.
10.11 License Agreement, dated Exhibit 19.2 to Annual Report
January 1, 1991, by and between on Form 10-K for
Perry Ellis International Inc. fiscal year 1992.
and Salant Corporation regarding
men's dress shirts.
10.12 Employment Agreement, Exhibit 10.32 to
dated as of June 1, 1993, Quarterly Report on
between Todd Kahn Form 10-Q for the
and Salant Corporation. * quarter ended July 8, 1993.
10.13 Employment Agreement, dated Exhibit 10.36 to
as of September 20, 1993, between Quarterly Report on
Nicholas P. DiPaolo and Form 10-Q for the
Salant Corporation. * quarter ended October 2, 1993.
10.14 Employment Agreement, dated Exhibit 10.38 to
as of July 30, 1993, between Quarterly Report on
Richard P. Randall and Form 10-Q for the
Salant Corporation. * quarter ended October 2, 1993.
10.15 Employment Agreement, dated Exhibit 10.32 to Annual Report on
as of December 21, 1993, between Form 10-K for Fiscal Year 1993.
Elliot M. Lavigne and Salant
Corporation. *
10.16 Agreement, dated as of Exhibit 10.33 to Annual Report on
September 22, 1993, between Nicholas Form 10-K for Fiscal Year 1993.
P. DiPaolo and Salant Corporation. *
10.17 Forms of Salant Corporation 1993 Exhibit 10.34 to Annual
Stock Plan Directors' Option Report on Form
Agreement. * 10-K for Fiscal Year 1993.
10.18 Letter Agreement, dated as of Exhibit 10.45 to
August 24, 1994, amending the Quarterly Report on
Revolving Credit, Factoring and Form 10-Q for the
Security Agreement, dated quarter ended October 1, 1994.
September 20, 1993,
between The CIT Group/Commercial
Services, Inc. and Salant Corporation.
10.19 Letter Agreement, dated Exhibit 10.46 to
October 18, 1994, amending the Quarterly Report on
Employment Agreement, dated Form 10-Q for the
December 31, 1990, between Herbert quarter ended October 1, 1994.
R. Aronson and Salant Corporation. *
10.20 Letter Agreement, dated Exhibit 10.47 to
October 25, 1994, amending the Quarterly Report on
Employment Agreement, dated Form 10-Q for the
July 30, 1993, between Richard quarter ended October 1, 1994.
Randall and Salant Corporation. *
10.21 Third Amendment to Credit Agreement, Exhibit 10.48 to Current Report on
dated February 28, 1995, to the Form 8-K, dated March 2, 1995.
Revolving Credit, Factoring and
Security Agreement, dated
September 20, 1993, as amended,
between The CIT Group/Commercial
Services, Inc. and Salant Corporation.
10.22 Salant Corporation Retirement Plan, Exhibit 10.23 to Annual Report on
as amended and restated. * Form 10-K for Fiscal Year 1994.
10.23 Salant Corporation Pension Plan, Exhibit 10.24 to Annual Report on
as amended and restated. * Form 10-K for Fiscal Year 1994.
10.24 Salant Corporation Long Term Savings Exhibit 10.25 to Annual Report on
and Investment Plan as amended Form 10-K for Fiscal Year 1994.
and restated. *
10.25 Letter Agreement, dated Exhibit 10.26 to Annual Report on
February 15, 1995, amending the Form 10-K for Fiscal Year 1994.
Employment Agreement, dated
July 30, 1993, between Richard
Randall and Salant Corporation. *
10.26 Fourth Amendment to Credit Exhibit 10.27 to
Agreement, dated as of March 1, Quarterly Report
1995, to the Revolving Credit, on Form 10-Q for
Factoring and Security Agreement, the quarter
dated as of September 20, 1993, ended April 1,
as amended, between Salant 1995.
Corporation and The CIT Group/
Commercial Services, Inc.
10.27 Letter Agreement, dated April 12, Exhibit 10.28 to
1995, amending the Employment Quarterly Report
Agreement, dated June 1, 1993, on Form l0-Q for
between Todd Kahn and Salant the quarter
Corporation. * ended April 1,
1995.
10.28 Fifth Amendment to Credit Exhibit 10.29
Agreement, dated as of to Quarterly
June 28, 1995, to the Report on
Revolving Credit, Factoring Form l0-Q for
and Security Agreement, the quarter
dated as of September 20, ended July 1,
1993, as amended, between 1995.
Salant Corporation and The
CIT Group/Commercial Services, Inc.
10.29 Sixth Amendment to Credit Exhibit 10.30
Agreement, dated as of to Quarterly
August 15, 1995, to the Report on
Revolving Credit, Factoring Form l0-Q for
and Security Agreement, the quarter
dated as of September 20, ended July 1,
1993, as amended, between 1995.
Salant Corporation and The
CIT Group/Commercial Services, Inc.
10.30 Letter from The CIT Group/ Exhibit 10.31
Commercial Services, Inc., to Quarterly
dated as of July 11, 1995, Report on
regarding the waiver of a Form l0-Q for
default. the quarter
ended July 1,
1995.
10.31 Letter Agreement between Exhibit 10.31
Salant Corporation and The to Quarterly
CIT Group/Commercial Services, Report on
Inc. dated as of July 11, 1995, Form l0-Q for
regarding the Seasonal Overadvance the quarter
Subfacility. ended July 1,
1995.
10.32 Letter Agreement, dated as of Exhibit 10.33 to
August 31, 1995, amending the Quarterly Report
Employment Agreement, dated on Form l0-Q for
September 20, 1993, between the quarter
Nicholas P. DiPaolo and ended September
Salant Corporation. * 30, 1995.
10.33 Letter Agreement, dated Exhibit 10.33 to
December 1, 1995, between Annual Report on
Lubin, Delano & Company and Form 10-K for
Salant Corporation. fiscal year 1995.
10.34 Seventh Amendment to Credit Exhibit 10.34 to
Agreement, dated as of Annual Report on
March 27, 1996, to the Form 10-K for
Revolving Credit, Factoring fiscal year 1995.
and Security Agreement,
dated as of September 20,
1993, as amended, between
Salant Corporation and The
CIT Group/Commercial Services,
Inc.
10.35 First Amendment to the Salant Exhibit 10.35 to
Corporation Retirement Plan, dated Quarterly Report on
as of January 31, 1996. Form 10-Q for the
quarter ended
March 30, 1996.
10.36 First Amendment to the Salant Exhibit 10.36 to
Corporation Long Term Savings and Quarterly Report on
Investment Plan, effective as of Form 10-Q for the
January 1, 1994. quarter ended
March 30, 1996.
10.37 Eighth Amendment to Credit Agreement, Exhibit 10.37 to
dated as of June 1, 1996, to the Quarterly Report on
Revolving Credit, Factoring and Form 10-Q for the
Security Agreement, dated as of quarter ended
September 20, 1993, as amended, June 29, 1996.
between Salant Corporation and
The CIT Group/Commerical Services,
Inc.
10.38 Ninth Amendment to Credit Agreement, Exhibit 10.38 to
dated as of August 16,1996, to the Quarterly Report on
Revolving Credit, Factoring and Form 10-Q for the
Security Agreement, dated as of quarter ended
September 20, 1993, as amended, June 29, 1996.
between Salant Corporation and
The CIT Group/Commerical Services,
Inc.
10.39 Employment Agreement, dated as
of January 1, 1997, between
Nicholas P. DiPaolo and
Salant Corporation. *
10.40 Salant Corporation 1996 Stock Plan
10.41 Tenth Amendment to Credit Agreement,
dated as of February 20, 1997, to the
Revolving Credit, Factoring and
Security Agreement, dated as of
September 20, 1993, as amended,
between Salant Corporation and
The CIT Group/Commerical Services,
Inc.
10.42 Employment Agreement, dated as
of February 11, 1997, between
Michael A. Lubin and
Salant Corporation. *
10.43 Employment Agreement, dated as
of March 24, 1997, between
Jerald S. Politzer and
Salant Corporation. *
21 List of Subsidiaries of the Company
27 Financial Data Schedule
* constitutes a management contract or compensatory plan or arrangement.
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.
SALANT CORPORATION
Date: March 28, 1997 By: /s/ Richard P. Randall
Senior Vice President and
Chief Financial Officer
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 indicated and on March 28, 1997.
Signature Title
/s/ Nicholas P. DiPaolo Chairman of the Board,
Nicholas P. DiPaolo President and Chief Executive Officer
(Principal Executive Officer); Director
/s/ Michael A. Lubin Executive Vice President and
Michael A. Lubin Chief Operating Officer
/s/ Richard P. Randall Senior Vice President
Richard P. Randall and Chief Financial Officer
(Principal Financial and Accounting Officer)
/s/ Craig M. Cogut /s/ Jerald S. Politzer
Craig M. Cogut Director Jerald S. Politzer
Director
/s/ Robert Falk /s/ Bruce F. Roberts
Robert Falk Director Bruce F. Roberts
Director
/s/ Ann Dibble Jordan /s/ John S. Rodgers
Ann Dibble Jordan Director John S. Rodgers
/s/ Robert Katz /s/ Marvin Schiller
Robert Katz Director Marvin Schiller Director
/s/ Harold Leppo /s/ Edward M. Yorke
Harold Leppo Director Edward M. Yorke Director
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
to
FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 28, 1996
SALANT CORPORATION
EXHIBIT INDEX
Incorporation
Number Description By Reference To
2.1 Third Amended Disclosure Exhibit 1 to
Statement of Salant Form 8-A dated
Corporation, and Denton July 28, 1993.
Mills, Inc., dated
May 12,1993.
2.2 Third Amended Joint Included as
Chapter 11 Plan of Exhibit D-1
Reorganization of to Exhibit 1
Salant Corporation to Form 8-A
and Denton Mills, Inc. dated July 28, 1993.
3.1 Form of Amended and Included as Exhibit
Restated Certificate of D-1 to Exhibit 2
Incorporation of Salant to Form 8-A dated
Corporation. July 28, 1993.
3.2 Form of Bylaws, as amended, of
Salant Corporation, effective September 21, 1994.
4.1 Rights Agreement dated as of Exhibit 1 to Current Report
December 8, 1987 between Salant on Form 8-K dated December 8, 1987.
Corporation and The Chase
Manhattan Bank, N.A.,
as Rights Agent. The Rights
Agreement includes as Exhibit B the
form of Right Certificate.
4.2 Form of First Amendment Exhibit 3 to
to the Rights Agreement Amendment No. 1 to
between Salant Corporation Form 8-A dated
and Mellon Securities. July 29, 1993.
4.3 Indenture, dated as of Exhibit 10.34 to
September 20, 1993, between Salant Quarterly Report
Corporation and Bankers on Form 10-Q for
Trust Company, as trustee, the quarter ended
for the 10-1/2% Senior October 2, 1993.
Secured Notes due
December 31, 1998.
10.1 Revolving Credit, Exhibit 10.33 to
Factoring and Security Quarterly Report
Agreement dated September 29, 1993, on Form 10-Q for
between Salant Corporation the quarter ended
and The CIT Group/Commercial October 2, 1993.
Services, Inc.
10.2 Salant Corporation 1987 Stock Plan. Exhibit 19.2 to Annual Report on Form 10-K for fiscal year 1987.
10.3 Salant Corporation 1987 Stock Plan Exhibit 10.12 to Form S-2
Agreement, dated as of June 13, Registration Statement filed
1988, between Nicholas P. DiPaolo June 17, 1988.
and Salant Corporation.
10.4 Salant Corporation 1988 Stock Plan. Exhibit 19.3 to Annual Report on
Form 10-K for fiscal year 1988.
10.5 First Amendment, effective Exhibit 19.1 to Quarterly Report
as of July 25, 1989, to the Salant on Form 10-Q for the quarter
Corporation 1988 Stock Plan. ended September 30, 1989.
10.6 Form of Salant Corporation 1988 Exhibit 19.7 to Annual Report on
Stock Plan Employee Agreement. Form 10-K for fiscal year 1988.
10.7 Form of Salant Corporation Exhibit 19.8 to
1988 Stock Plan Director Annual Report on
Agreement. Form 10-K for fiscal
year 1988.
10.8 Employment Agreement, dated as of Exhibit 19.4 to
December 31, 1990, between Herbert Annual Report on
R. Aronson and Salant Corporation. * Form 10-K for fiscal
year 1990.
10.9 Letter Agreement, dated Exhibit 19.1 to Quarterly
June 20, 1992, amending the Report on Form 10-Q for
Employment Agreement, dated as of the quarter ended October 3, 1992.
December 31, 1990, between Herbert
R. Aronson and Salant Corporation. *
10.10 License Agreement, dated Exhibit 19.1 to Annual Report
January 1, 1991, by and between on Form 10-K for fiscal year 1992.
Perry Ellis International Inc.
and Salant Corporation regarding
men's sportswear.
10.11 License Agreement, dated Exhibit 19.2 to Annual Report
January 1, 1991, by and between on Form 10-K for
Perry Ellis International Inc. fiscal year 1992.
and Salant Corporation regarding
men's dress shirts.
10.12 Employment Agreement, Exhibit 10.32 to
dated as of June 1, 1993, Quarterly Report on
between Todd Kahn Form 10-Q for the
and Salant Corporation. * quarter ended July 8, 1993.
10.13 Employment Agreement, dated Exhibit 10.36 to
as of September 20, 1993, between Quarterly Report on
Nicholas P. DiPaolo and Form 10-Q for the
Salant Corporation. * quarter ended October 2, 1993.
10.14 Employment Agreement, dated Exhibit 10.38 to
as of July 30, 1993, between Quarterly Report on
Richard P. Randall and Form 10-Q for the
Salant Corporation. * quarter ended October 2, 1993.
10.15 Employment Agreement, dated Exhibit 10.32 to Annual Report on
as of December 21, 1993, between Form 10-K for Fiscal Year 1993.
Elliot M. Lavigne and Salant
Corporation. *
10.16 Agreement, dated as of Exhibit 10.33 to Annual Report on
September 22, 1993, between Nicholas Form 10-K for Fiscal Year 1993.
P. DiPaolo and Salant Corporation. *
10.17 Forms of Salant Corporation 1993 Exhibit 10.34 to Annual
Stock Plan Directors' Option Report on Form
Agreement. * 10-K for Fiscal Year 1993.
10.18 Letter Agreement, dated as of Exhibit 10.45 to
August 24, 1994, amending the Quarterly Report on
Revolving Credit, Factoring and Form 10-Q for the
Security Agreement, dated quarter ended October 1, 1994.
September 20, 1993,
between The CIT Group/Commercial
Services, Inc. and Salant Corporation.
10.19 Letter Agreement, dated Exhibit 10.46 to
October 18, 1994, amending the Quarterly Report on
Employment Agreement, dated Form 10-Q for the
December 31, 1990, between Herbert quarter ended October 1, 1994.
R. Aronson and Salant Corporation. *
10.20 Letter Agreement, dated Exhibit 10.47 to
October 25, 1994, amending the Quarterly Report on
Employment Agreement, dated Form 10-Q for the
July 30, 1993, between Richard quarter ended October 1, 1994.
Randall and Salant Corporation. *
10.21 Third Amendment to Credit Agreement, Exhibit 10.48 to Current Report on
dated February 28, 1995, to the Form 8-K, dated March 2, 1995.
Revolving Credit, Factoring and
Security Agreement, dated
September 20, 1993, as amended,
between The CIT Group/Commercial
Services, Inc. and Salant Corporation.
10.22 Salant Corporation Retirement Plan, Exhibit 10.23 to Annual Report on
as amended and restated. * Form 10-K for Fiscal Year 1994.
10.23 Salant Corporation Pension Plan, Exhibit 10.24 to Annual Report on
as amended and restated. * Form 10-K for Fiscal Year 1994.
10.24 Salant Corporation Long Term Savings Exhibit 10.25 to Annual Report on
and Investment Plan as amended Form 10-K for Fiscal Year 1994.
and restated. *
10.25 Letter Agreement, dated Exhibit 10.26 to Annual Report on
February 15, 1995, amending the Form 10-K for Fiscal Year 1994.
Employment Agreement, dated
July 30, 1993, between Richard
Randall and Salant Corporation. *
10.26 Fourth Amendment to Credit Exhibit 10.27 to
Agreement, dated as of March 1, Quarterly Report
1995, to the Revolving Credit, on Form 10-Q for
Factoring and Security Agreement, the quarter
dated as of September 20, 1993, ended April 1,
as amended, between Salant 1995.
Corporation and The CIT Group/
Commercial Services, Inc.
10.27 Letter Agreement, dated April 12, Exhibit 10.28 to
1995, amending the Employment Quarterly Report
Agreement, dated June 1, 1993, on Form l0-Q for
between Todd Kahn and Salant the quarter
Corporation. * ended April 1,
1995.
10.28 Fifth Amendment to Credit Exhibit 10.29
Agreement, dated as of to Quarterly
June 28, 1995, to the Report on
Revolving Credit, Factoring Form l0-Q for
and Security Agreement, the quarter
dated as of September 20, ended July 1,
1993, as amended, between 1995.
Salant Corporation and The
CIT Group/Commercial Services, Inc.
10.29 Sixth Amendment to Credit Exhibit 10.30
Agreement, dated as of to Quarterly
August 15, 1995, to the Report on
Revolving Credit, Factoring Form l0-Q for
and Security Agreement, the quarter
dated as of September 20, ended July 1,
1993, as amended, between 1995.
Salant Corporation and The
CIT Group/Commercial Services, Inc.
10.30 Letter from The CIT Group/ Exhibit 10.31
Commercial Services, Inc., to Quarterly
dated as of July 11, 1995, Report on
regarding the waiver of a Form l0-Q for
default. the quarter
ended July 1,
1995.
10.31 Letter Agreement between Exhibit 10.31
Salant Corporation and The to Quarterly
CIT Group/Commercial Services, Report on
Inc. dated as of July 11, 1995, Form l0-Q for
regarding the Seasonal Overadvance the quarter
Subfacility. ended July 1,
1995.
10.32 Letter Agreement, dated as of Exhibit 10.33 to
August 31, 1995, amending the Quarterly Report
Employment Agreement, dated on Form l0-Q for
September 20, 1993, between the quarter
Nicholas P. DiPaolo and ended September
Salant Corporation. * 30, 1995.
10.33 Letter Agreement, dated Exhibit 10.33 to
December 1, 1995, between Annual Report on
Lubin, Delano & Company and Form 10-K for
Salant Corporation. fiscal year 1995.
10.34 Seventh Amendment to Credit Exhibit 10.34 to
Agreement, dated as of Annual Report on
March 27, 1996, to the Form 10-K for
Revolving Credit, Factoring fiscal year 1995.
and Security Agreement,
dated as of September 20,
1993, as amended, between
Salant Corporation and The
CIT Group/Commercial Services,
Inc.
10.35 First Amendment to the Salant Exhibit 10.35 to
Corporation Retirement Plan, dated Quarterly Report on
as of January 31, 1996. Form 10-Q for the
quarter ended
March 30, 1996.
10.36 First Amendment to the Salant Exhibit 10.36 to
Corporation Long Term Savings and Quarterly Report on
Investment Plan, effective as of Form 10-Q for the
January 1, 1994. quarter ended
March 30, 1996.
10.37 Eighth Amendment to Credit Agreement, Exhibit 10.37 to
dated as of June 1, 1996, to the Quarterly Report on
Revolving Credit, Factoring and Form 10-Q for the
Security Agreement, dated as of quarter ended
September 20, 1993, as amended, June 29, 1996.
between Salant Corporation and
The CIT Group/Commerical Services,
Inc.
10.38 Ninth Amendment to Credit Agreement, Exhibit 10.38 to
dated as of August 16,1996, to the Quarterly Report on
Revolving Credit, Factoring and Form 10-Q for the
Security Agreement, dated as of quarter ended
September 20, 1993, as amended, June 29, 1996.
between Salant Corporation and
The CIT Group/Commerical Services,
Inc.
10.39 Employment Agreement, dated as
of January 1, 1997, between
Nicholas P. DiPaolo and
Salant Corporation. *
10.40 Salant Corporation 1996 Stock Plan
10.41 Tenth Amendment to Credit Agreement,
dated as of February 20, 1997, to the
Revolving Credit, Factoring and
Security Agreement, dated as of
September 20, 1993, as amended,
between Salant Corporation and
The CIT Group/Commerical Services,
Inc.
10.42 Employment Agreement, dated as
of February 11, 1997, between
Michael A. Lubin and
Salant Corporation. *
10.43 Employment Agreement, dated as
of March 24, 1997, between
Jerald S. Politzer and
Salant Corporation. *
21 List of Subsidiaries of the Company
27 Financial Data Schedule
* constitutes a management contract or compensatory plan or arrangement.
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
Birdhill, Limited, a Hong Kong corporation
Carrizo Manufacturing Co., S.A. de C.V., a Mexican corporation
Clantexport, Inc., a New York corporation
Denton Mills, Inc., a Delaware corporation
JJ. Farmer Clothing, Inc., a Canadian corporation
Frost Bros. Enterprises, Inc., a Texas corporation
Manhattan Industries, Inc., a Delaware corporation
Manhattan Industries, Inc., a New York corporation
Manhattan Industries (Far East) Limited, a Hong Kong corporation
Maquiladora Sur S.A. de C.V., a Mexican corporation
Salant Canada, Inc., a Canadian corporation
SLT Sourcing, Inc., a New York corporation
Vera Licensing, Inc., a Nevada corporation
Vera Linen Manufacturing, Inc., a Delaware corporation