-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LX7SGDbGxLvgkAHFitphkmOYipKZYiNDJP9l+XSS+EDjUFeb5YcFRA9N8aVd+UH3 rRNjsLaHtYUdgNGfahZC/Q== 0000950112-96-000036.txt : 19960111 0000950112-96-000036.hdr.sgml : 19960111 ACCESSION NUMBER: 0000950112-96-000036 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19951125 FILED AS OF DATE: 19960109 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: NANTUCKET INDUSTRIES INC CENTRAL INDEX KEY: 0000069623 STANDARD INDUSTRIAL CLASSIFICATION: KNITTING MILLS [2250] IRS NUMBER: 580962699 STATE OF INCORPORATION: DE FISCAL YEAR END: 0225 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08509 FILM NUMBER: 96501914 BUSINESS ADDRESS: STREET 1: 105 MADISON AVE CITY: NEW YORK STATE: NY ZIP: 10016 BUSINESS PHONE: 212-889-5656 MAIL ADDRESS: STREET 1: 105 MADISON AVENUE CITY: NEW YORK STATE: NY ZIP: 10016 FORMER COMPANY: FORMER CONFORMED NAME: NANTUCKET LINGERIE INC DATE OF NAME CHANGE: 19690715 10-Q 1 NANTUCKET INDUSTRIES UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Form 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended November 25, 1995 ----------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to ________________ Commission File Number: 1-8509 ------ NANTUCKET INDUSTRIES, INC. -------------------------- (Exact name of registrant as specified in its charter) Delaware 58-0962699 -------- ---------- (State of other jurisdiction of (IRS Employer Identification of incorporation or organization No.) 105 Madison Avenue, New York, New York 10016 -------------------------------------- ----- (Address of principal executive offices) (Zip Code) (212)889-5656 ------------- (Registrant's telephone number, including area code) _________________________________________________________________ (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve 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 ninety days. X YES NO ----- ----- APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDING DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant had filed all documents and reports required to be filed by Sections 12,13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. YES NO ----- ----- APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. As of December 22, 1995, the Registrant had outstanding 2,988,796 shares of common stock. NANTUCKET INDUSTRIES, INC. AND SUBSIDIARIES ------------------------------------------- QUARTERLY REPORT ---------------- QUARTER ENDED NOVEMBER 25, 1995 ------------------------------- I N D E X --------- PAGE ---- Part I.- FINANCIAL INFORMATION ---------------------- Consolidated balance sheets 3 Consolidated statements of operations 4 Consolidated statements of cash flows 5 Notes to consolidated financial statements 6 - 9 Management's discussion and analysis of financial condition and results of operations 10 - 12 Part II.- OTHER INFORMATION 13 ----------------- Signature 14 2
Nantucket Industries, Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS November 25, February 25, 1995 1995 ---------------- ----------------- (unaudited) (1) ASSETS CURRENT ASSETS Cash $25,778 $32,049 Accounts receivable, less allowance for doubtful accounts of $204,000 and $194,000, respectively 6,986,247 6,472,148 Inventories (Note 2) 11,422,194 10,984,196 Other current assets 466,094 760,054 ------------- ------------- Total current assets 18,900,313 18,248,447 PROPERTY, PLANT AND EQUIPMENT - NET 3,570,763 3,766,871 OTHER ASSETS,NET 70,879 168,194 ------------- ------------- $22,541,955 $22,183,512 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Current maturities of long-term debt $1,155,000 $975,000 Accounts payable 1,581,154 2,405,989 Accrued salaries and employee benefits 360,015 811,882 Accrued unusual charge (Note 5) 465,000 465,000 Accrued expenses and other liabilities 376,619 358,267 Accrued royalties 319,662 399,546 Income taxes payable 45,194 2,640 ------------- ------------- Total current liabilities 4,302,644 5,418,324 LONG-TERM DEBT 11,152,295 9,941,799 ACCRUED UNUSUAL CHARGE (Note 5) 789,114 1,058,330 NOTE PAYABLE TO RELATED PARTY (Note 5) 300,000 ------------- ------------- 16,244,053 16,718,453 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Preferred stock, $.10 par value; 500,000 shares authorized, of which 5,000 shares have been designated as non-voting convertible and are issued and outstanding 500 500 Common stock, $.10 par value; authorized 6,000,000 shares; issued 2,991,848 299,185 299,185 Additional paid-in capital 11,576,898 11,576,898 Accumulated deficit (5,538,232) (6,340,135) -------------- -------------- 6,338,351 5,536,448 Less 3,052 shares (10,552 at February 25, 1995) shares of common stock held in treasury, at cost 40,449 71,389 ------------- ------------- 6,297,902 5,465,059 ------------- ------------- $22,541,955 $22,183,512 ============= =============
(1) Derived from audited financial statements The accompanying notes are an integral part of these statements. 3
Nantucket Industries, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) Thirty-nine Weeks Ended Thirteen Weeks Ended ------------------------------ --------------------------- November 25, November 26, November 25, November 26, 1995 1994 1995 1994 ------------ ------------ ------------ ------------ Net sales $27,701,932 $28,713,098 $9,848,694 $10,995,726 Cost of sales 20,455,527 22,529,333 7,333,568 8,621,446 ----------- ----------- ------------ ----------- Gross profit 7,246,405 6,183,765 2,515,126 2,374,280 Selling, general and administrative expenses 5,746,473 5,764,594 1,974,761 2,042,738 Unusual charge (credit) (Note 5) (300,000) 1,252,400 (300,000) ------------- ------------ ------------ ---------- Operating profit (loss) 1,799,932 (833,229) 840,365 331,542 Interest expense 998,029 887,846 342,535 307,098 Net income (loss) 801,903 (1,721,075) 497,830 24,444 ============ ============= ============ ========== Net income (loss) per share $0.27 ($0.65) $0.17 $0.01 ============ ============= ============ ========== Weighted average common shares 2,983,576 2,663,103 2,986,159 2,978,796 outstanding ============ ============ =========== ==========
The accompanying notes are an integral part of these statements. 4 Nantucket Industries, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS
Thirty-nine Weeks Ended --------------------------------- November 25, November 26, 1995 1994 -------------- ------------- Cash flows from operating activities Net income (loss) $801,903 ($1,721,075) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities Depreciation and amortization 271,908 238,676 Provision for doubtful accounts 90,000 60,000 Unusual charge (300,000) 1,252,400 Treasury stock issued in compliance with credit 30,190 - agreement Provision for obsolete and slow moving inventory 180,000 180,000 Decrease (increase) in assets Accounts receivable (604,099) (3,512,180) Refundable income taxes - 527,237 Inventories (617,998) (1,730,123) Other current assets 293,960 37,032 (Decrease) increase in liabilities Accounts payable (824,835) (1,226,856) Accrued expenses and other liabilities (513,399) (1,260,963) Income taxes payable 42,554 (7,544) Accrued unusual charge (269,216) (627,136) --------------- -------------- Net cash used in operating activities (1,419,032) (7,790,532) --------------- -------------- Cash flows from investing activities Additions to property, plant and equipment (75,800) (350,368) Decrease in other assets 97,315 4,409 --------------- -------------- Net cash provided by (used in) investing 21,515 (345,959) activities --------------- -------------- Cash flows from financing activities Payments of previous line of credit agreement - (5,090,294) Payments of long-term debt and capital lease obligations - (500,000) Issuance of convertible preferred stock - 1,000,000 Net proceeds from sale of treasury stock 750 2,901,351 Borrowings under line of credit agreement, net 1,390,496 9,259,553 --------------- -------------- Net cash provided by financing activities 1,391,246 7,570,610 --------------- -------------- NET DECREASE IN CASH ($6,271) ($565,881) Cash at beginning of period 32,049 595,918 --------------- -------------- Cash at end of period $25,778 $30,037 =============== ============== SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION: Cash paid during the period: Interest $920,411 $705,906 =============== ============== Income taxes - $60,577 =============== ==============
The accompanying notes are an integral part of these statements 5 NANTUCKET INDUSTRIES, INC. -------------------------- AND SUBSIDIARIES ---------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ THIRTY-NINE WEEKS ENDED NOVEMBER 25, 1995 AND NOVEMBER 26, 1994 --------------------------------------------------------------- (unaudited) 1. CONSOLIDATED FINANCIAL STATEMENTS The consolidated balance sheet as of November 25, 1995 and the consolidated statements of operations for the thirty-nine and thirteen week periods and statements of cash flows for the thirty-nine weeks ended November 25, 1995 and November 26, 1994 have been prepared by the Company without audit. In the opinion of management, all adjustments (consisting of only normal recurring accruals) necessary for a fair presentation of the financial position of the Company and its subsidiaries at November 25, 1995 and the results of their operations for the thirty-nine and thirteen week periods and cash flows for the thirty-nine weeks ended November 25, 1995 and November 26, 1994 have been made on a consistent basis. The consolidated balance sheet as of November 26, 1994 and the consolidated statements of operations for the thirty-nine and thirteen week periods and statements of cash flows for the thirty-nine weeks ended November 26, 1994 have been restated and an amended Form 10-Q filed with regards to the unusual charge discussed in Note 5 Unusual Charge. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company's 1995 Annual Report on Form 10-K. The results of operations for the periods presented are not necessarily indicative of the operating results for the full year. 2. INVENTORIES Inventories are summarized as follows: November 25, February 25, 1995 1995 ------------- -------------- Raw materials $ 1,564,510 $ 1,960,413 Work in process 6,984,183 5,594,387 Finished goods 2,873,501 3,429,396 ------------- ------------ $ 11,422,194 $ 10,984,196 ------------- ------------ 6 NANTUCKET INDUSTRIES, INC. -------------------------- AND SUBSIDIARIES ---------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ THIRTY-NINE WEEKS ENDED NOVEMBER 25, 1995 AND NOVEMBER 26, 1994 --------------------------------------------------------------- (continued) (unaudited) 3. INCOME TAXES At November 25, 1995 the Company had a net deferred tax asset in excess of $4,600,000 which is fully reserved until it can be utilized to offset deferred tax liabilities or realized against taxable income. In addition, the Company had a net operating loss carryforward for book and tax purposes of approximately $12,000,000 and $9,000,000 respectively. Accordingly, no provision for income taxes has been reflected in the accompanying financial statements. 4. STOCKHOLDERS' EQUITY On March 22, 1994, the Company sold to its Management Group 5,000 shares of non-voting convertible preferred stock for $1,000,000. These shares are convertible into 200,000 shares of common stock at the rate of $5.00 per share. These shares provide for cumulative dividends at a floating rate equal to the prime rate and approximate $138,000 at November, 1995. Such dividends are convertible into common stock at the rate of $5.00 per share. These preferred shares are redeemable, at the option of the Company, on or after February 28, 1999 and have a liquidation preference of $200 per share. On August 22, 1994, the Company sold 490,000 shares of its common treasury stock to GUESS?, Inc. and certain of its affiliates at $6.00 per share. The treasury stock issued had an average cost of $6.52 per share. Accordingly the difference between the net proceeds, approximating $2,900,000 and the treasury share's cost of $3,196,000 was applied to the Company's Retained Earnings. In connection with the Company's refinancing on March 22, 1994, the Company entered into a $2,000,000 Term Loan Agreement with Chemical Bank. Mandatory prepayments of $1,000,000 were made in the prior fiscal year and, pursuant to the agreement, were applied to the scheduled payments which were due December 15, 1994 and June 15, 1995. Pursuant to the agreement, the Company issued to Chemical Bank 10,000 treasury common shares, 7,500 in the current fiscal year and 2,500 at the end of the prior fiscal year, related to mandatory prepayments which were not made. As described in Note 6, this agreement was amended on December 15, 1995. 7 NANTUCKET INDUSTRIES, INC. -------------------------- AND SUBSIDIARIES ---------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ THIRTY-NINE WEEKS ENDED NOVEMBER 25, 1995 AND NOVEMBER 26, 1994 --------------------------------------------------------------- (continued) (unaudited) 5. UNUSUAL CHARGE In November, 1992, the Company acquired the Puerto Rico facility, Phoenix Associates, Inc., pursuant to a stock purchase agreement. A portion of the purchase price was debt payable to a related party, the former owners of Phoenix, of which $300,000 was due February 2, 1998. In April, 1993, the Company discovered an inventory variance of $1,700,000 principally attributable to unrecorded manufacturing and material cost variances at the Puerto Rico facility incurred prior to the Company's acquisition of this facility. In connection with the acquisition of the Puerto Rico facility, the Company initiated an action against the former owners of that facility as more fully described in the Company's 1995 Annual Report on Form 10-K. In the fourth quarter of fiscal 1994, the Company formulated plans to close the Puerto Rico facility, discontinue a portion of its women's innerwear business, reduce costs and streamline operations. The Company provided, in fiscal 1994, for the costs associated with these matters, including the write-off of unamortized goodwill in the amount of $1,478,000, as an unusual charge. The closing of the Puerto Rico facility required additional write-offs, reflected as an unusual charge of $1,252,400 in the period ended November 26, 1994. In March, 1994, the Company terminated the employment contracts of its Chairman and Vice Chairman. In accordance with the underlying agreement, they will be paid an aggregate of approximately $400,000 per year in severance, as well as certain other benefits, through February 28, 1999. The present value of these payments, $1,915,000, was accrued at February 26, 1994. Through November 25, 1995 $654,000 of this accrual has been paid; $391,000 through February, 1995 and $263,000 in the current fiscal year through November 25, 1995. In the third quarter of the current fiscal year, the Company concluded that its counterclaims against the holder of the note payable from a related party described above are in excess of the $300,000 due and, in the opinion of legal counsel and management, the likelihood of any payment of this note is remote. Accordingly the Company has eliminated this payable and reflected such reduction as an unusual charge in the accompanying financial statements. 8 NANTUCKET INDUSTRIES, INC. -------------------------- AND SUBSIDIARIES ---------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ THIRTY-NINE WEEKS ENDED NOVEMBER 25, 1995 AND NOVEMBER 26, 1994 --------------------------------------------------------------- (continued) (unaudited) 6. CREDIT AGREEMENT AMENDMENT Pursuant to the terms of the $2,000,000 Term Loan Agreement with Chemical Bank, scheduled installments of $500,000 each were due on December 15, 1995 and March 15, 1996. As of December 15, 1995 the Company agreed to an amendment providing for payments of $100,000 each on December 31, 1995 and January 31, 1996, with the remaining $800,000 to be paid in 15 equal installments commencing March 31, 1996. As of November 25, 1995, the accompanying financial statements reflect $320,000 as the non current portion of this loan. 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operation - -------------------- Sales Net sales for the nine months ended November 25, 1995 decreased 3.5% from prior year levels to $27,702,000. Most of this decline reflects the elimination of unprofitable product lines. The sales decline in the Company's core men's fashion underwear products for the nine months to date was 2.6%. A soft retail environment contributed to an overall 10% decrease in third quarter sales levels, generally in the core mens' fashion underwear products. Increases in the GUESS? intimate apperal products were offset by decreases resulting from the elimination of unprofitable product lines. The year to date and third quarter also reflect the impact of: Increase (Decrease) 9 Months 3rd Quarter ---------- ----------- Elimination of unprofitable product lines ($1,713,000) ($298,000) GUESS? product line increased sales $1,326,000 $186,000 Third quarter and nine months net sales were impacted favorably by the introduction of the JC Penney Arizona line. Gross Margin Gross profit margins continued to improve from prior year levels as follows: 9 Months 3rd Quarter -------- ----------- Current fiscal year 26.2% 25.5% Prior fiscal year 21.5% 21.6% This is a result of the improved product mix from the increased sales of the higher margin GUESS? Innerwear line, the elimination of the unprofitable products, improved plant efficiencies and lower cost product sources. 10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Selling, general and administrative expenses Selling, general and administrative expenses for the third quarter declined 3% to $1,975,000 from the prior year level. For the nine months, there was a slight decrease of $18,000. These changes are generally due to the variable selling costs related to the changes in net sales. Selling, general and administrative expenses for the third quarter of the current fiscal year include a charge of $43,000 related to a minor franchise tax adjustments of prior years. The nine months in the current fiscal year have been reduced by a $102,000 recovery of an insurance claim which was expensed in the fourth quarter of the prior fiscal year. Unusual charge Prior year results reflect an unusual charge of $1,252,400 related to additional costs incurred with the shutdown of the Puerto Rico facility. In November, 1992, the Company acquired the Puerto Rico facility, Phoenix Associates, Inc., pursuant to a stock purchase agreement. A portion of the purchase price was debt payable to a related party, the former owners of Phoenix, of which $300,000 was due February 2, 1998. In April, 1993, the Company discovered an inventory variance of $1,700,000 principally attributable to unrecorded manufacturing and material cost variances at the Puerto Rico facility incurred prior to the Company's acquisition of this facility. In connection with the acquisition of the Puerto Rico facility, the Company initiated an action against the former owners of that facility as more fully described in the Company's 1995 Annual Report on Form 10-K. In the third quarter of the current fiscal year, the Company concluded that its counterclaims against the holder of the note payable from a related party incurred in connection with the acquisition of the Puerto Rico facility in November, 1992 are in excess of the $300,000 due. In the opinion of legal counsel and management, the likelihood of any payment of this note is remote. Accordingly the Company has eliminated this payable and reflected such $300,000 reduction as an unusual credit in the accompanying financial statements. Interest expense The increase in interest expense of $110,000 for the nine months is primarily due to the higher prime rates in effect during fiscal year 1996. The $36,000 increase in the third fiscal quarter reflects an increase in levels of financing. 11 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Liquidity and Capital Resources - ------------------------------- In March, 1994 the Company was successful in refinancing its credit agreements with (i) a three year $15,000,000 revolving credit facility, including a $3,000,000 letter of credit facility, with Congress Financial, (ii) a $2,000,000 Term Loan Agreement with Chemical Bank and (iii) an additional $1,500,000 Term Loan with Congress replacing the Industrial Revenue Bond financing of the Cartersville, Georgia manufacturing plant. Additionally, the $1,000,000 investment in the Company by the Management Group and the sale of 490,000 shares of common treasury stock to GUESS?, Inc. and certain of its affiliates increased the Company's liquidity and capital resources. The net proceeds of $2.9 million from the sales of treasury shares was used to prepay $500,000 of bank debt and the balance provided additional working capital resources. Under the terms of the $2,000,000 Term Loan Agreement with Chemical Bank, scheduled installments of $500,000 each were due on December 15, 1995 and March 15, 1996. As of December 15, 1995 the Company agreed to an amendment providing for payments of $100,000 each on December 31, 1995 and January 31, 1996, with the remaining $800,000 to be paid in 15 equal installments commencing March 31, 1996. As of November 25, 1995, the accompanying financial statements reflect $320,000 as the non current portion of this loan. The Company believes that the credit facility provides adequate financing flexibility to fund its operations. Working capital increased $1,768,000 from year-end levels to $14,598,000. This increase reflects an increase in inventory levels caused by the lower sales levels experienced in the overall retail environment, increase in accounts receivables due to seasonal sales, and a $1.3 million reduction of accounts payable and accrued liabilities. In addition, working capital was increased by the $320,000 non current portion of the Chemical loan which was previously classified as current. The Company believes that the moderate rate of inflation over the past few years has not had significant impact on sales or profitability. 12 PART II -------- Item 1. Legal Proceedings - -------------------------- None Item 2. Changes in Securities - ------------------------------ None Item 3. Defaults Upon Senior Securities - ---------------------------------------- None Item 4. Submission of Matters to a Vote of Security Holders - ------------------------------------------------------------ None Item 5. Other Information - -------------------------- One December 15, 1995 the Company amended its Credit Agreement dated March 21, 1994 with Chemical Bank. Pursuant to that amendment, the required payments on the Company's term loan were extended from $500,000 due on each of December 15, 1995 and March 15, 1996 to $100,000 on each of December 31, 1995 and January 31, 1996 and the $800,000 balance payable in 15 monthly installments commencing March 31, 1996. Item 6. Exhibits and Reports on Form 8-K - ----------------------------------------- (c) Exhibits 10(vv) First Amendment, dated as of December 15, 1995, Filed to Amended and Restated Credit Agreement dated as of Herewith March 21, 1994, among Nantucket Industries, Inc. and subsidiaries and Chemical Bank. (b) Reports on Form 8-K None 13 SIGNATURE --------- Pursuant to the requirements of the 'Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NANTUCKET INDUSTRIES, INC. (Registrant) By: s/Ronald S. Hoffman -------------------- January 8, 1996 Ronald S. Hoffman, Vice President - Finance (Chief Accounting Officer) 14 EX-10.(V)(V) 2 Exhibit 10 (v)(v) ----------------- FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT FIRST AMENDMENT, dated as of December 15, 1995 (the "Amendment"), to --------- the AMENDED AND RESTATED CREDIT AGREEMENT, dated as of March 21, 1994, among NANTUCKET INDUSTRIES, INC., a Delaware corporation (the "Company"), ------- NANTUCKET MILLS, INC., a Delaware corporation ("Nantucket Mills") and --------------- NANTUCKET MANAGEMENT CORP., a New York corporation ("Nantucket Management," -------------------- and together with Nantucket Mills, the "Guarantors"), and CHEMICAL BANK, a ---------- New York banking corporation (the "Bank"): ---- W I T N E S S E T H: WHEREAS, the Company, the Guarantors and the Bank are parties to that certain Amended and Restated Credit Agreement, dated as of March 21, 1994 (as the same may be amended, modified or supplemented from time to time, the "Credit Agreement"); and ---------------- WHEREAS, the Company and the Guarantors have requested that from and after the Effective Date (as hereinafter defined) of this Amendment, the Credit Agreement be amended subject to and upon the terms and conditions set forth herein; NOW, THEREFORE, the parties hereto hereby agree as follows: As used herein, all terms that are defined in the Credit Agreement shall have the same meanings herein. Section 2.03 of the Credit Agreement is hereby amended by deleting the amount "two (2%) percent" set forth therein and inserting in lieu thereof the amount "three (3%) percent". Section 2.04(a) of the Credit Agreement is hereby amended in its entirety to read as follows: "(a) Intentionally Omitted." Section 2.04 of the Credit Agreement is hereby further amended by deleting the amount "four (4%) percent" set forth in clauses (b), (c) and (d) thereof and inserting each time in lieu thereof the amount "five (5%) percent". Section 2.04(b) of the Credit Agreement is hereby further amended by deleting the parenthetical phrase "(other than the failure to make a Mandatory Prepayment in whole or in part)" set forth therein and inserting in lieu thereof the phrase ", including, without limitation, any prepayment of the Loan required pursuant to Sections 2.06(e), (f), (g) or (h)," Section 2.04 of the Credit Agreement is hereby further amended by inserting the following new clause (e) at the end thereof: "(e) In the event that any of the Obligations remain unpaid and outstanding (i) on June 30, 1996, the Company shall pay to the Bank, in immediately available funds, a fee in the amount of $5,000 and (ii) on December 31, 1996, the Company shall pay to the Bank, in immediately available funds, a fee in the amount of $10,000." The definition of the term "Maturity Date" set forth in Section 1.01 of the Credit Agreement is hereby amended to read in its entirety as follows: "Maturity Date" shall mean May 31, 1997. ------------- Section 2.05(a) of the Credit Agreement is hereby amended in its entirety to read as follows: "Section 2.05. Repayment of Loan. (a) The Loan shall ----------------- be payable as to principal, unless earlier accelerated in accordance with the terms hereof, or prepaid pursuant to Section 2.06, in installments (each a "Scheduled Payment") payable on the dates and in the ----------------- amounts set forth below: Repayment Date Amount -------------- ------ December 31, 1995 $100,000.00 January 31, 1996 $100,000.00 March 31, 1996 $ 53,333.33 April 30, 1996 $ 53,333.33 May 31, 1996 $ 53,333.33 June 30, 1996 $ 53,333.33 July 31, 1996 $ 53,333.33 August 31, 1996 $ 53,333.33 September 30, 1996 $ 53,333.33 October 31, 1996 $ 53,333.33 November 30, 1996 $ 53,333.33 December 31, 1996 $ 53,333.33 January 31, 1997 $ 53,333.33 February 28, 1997 $ 53,333.33 March 31, 1997 $ 53,333.33 April 30, 1997 $ 53,333.33 May 31, 1997 $ 53,333.38 Section 2.06(c) of the Credit Agreement is hereby amended by inserting the parenthetical phrase "(other than as required pursuant to clauses (e), (f), (g) and (h) below)" immediately following the phrase "All prepayments of the Loan" set forth at the beginning thereof. Section 2.06 of the Credit Agreement is hereby further amended by inserting the following new clauses (e), (f), (g), (h) and (i) at the end thereof: 2 "(e) Refinancing of Congress Mortgage. Simultaneous -------------------------------- with the refinancing, if any, of that certain Deed to Secure Debt, Security Agreement and Assignment of Leases and Rents, dated June 8, 1994 made by the Company in favor of Congress (the "Congress Mortgage") ----------------- encumbering the real property of the Company located in Cartersville, Georgia, the Company shall prepay the Loan in an amount equal to 50% of the proceeds of such refinancing, net of (i) payments made by the Company to Congress on account of the Term Loan B (as such term is defined in the Congress Loan Agreement as in effect on the Closing Date), (ii) non-recoverable costs paid in connection therewith, including mortgage recording taxes and (iii) the reasonable fees and expenses incurred in connection with such refinancing. (f) Equity Offerings. Upon receipt by the Company or ---------------- any of the Guarantors, the Company shall prepay the Loan in an amount equal to 50% of the proceeds (net of underwriting discounts, commissions and other reasonable fees and expenses incurred in connection therewith) of any public or private sale, disposition or other offering of equity securities by the Company or any of the Guarantors. (g) Incurrence of Indebtedness. Upon receipt by the -------------------------- Company or any of the Guarantors, the Company shall prepay the Loan in an amount equal to (i) 75% of the proceeds (net of underwriting discounts, commissions and other reasonable fees and expenses incurred in connection therewith) of any Subordinated Indebtedness incurred after the date hereof that requires the payment of current cash interest, (ii) 50% of the proceeds (net of underwriting discounts, commissions and other reasonable fees and expenses incurred in connection therewith) of any Subordinated Indebtedness incurred after the date hereof that requires the accrual of interest or the payment of pay-in-kind interest and (iii) 100% of the proceeds (net of underwriting discounts, commissions and other reasonable fees and expenses incurred in connection therewith) of any other Indebtedness (including any replacement or refinancing of Indebtedness under the Congress Loan Agreement) incurred after the date hereof, other than Indebtedness permitted pursuant to Section 7.03(a), including any revolving loans thereunder, (but not any replacement or refinancing of such Indebtedness), Section 7.03(d) or Section 7.03(i), or Indebtedness incurred in connection with the refinancing of the Congress Mortgage. (h) Excess Availability. On the last date of each ------------------- fiscal quarter of the Company, commencing with the fiscal quarter of the Company ending on or about February 23, 1996, the Company shall (x) prepay the Loan in an amount equal to 50% of the amount by which the Company's Excess Availability (as such term is defined in the Congress Loan Agreement as in effect on the Closing Date but without giving effect to any proceeds received by the Company in connection with any of the transactions described in Section 2.06(e), (f) and (g)) exceeds 3 $500,000 for the immediately preceding fiscal quarter of the Company as of the last date of such fiscal quarter and (y) deliver to the Bank a certificate of the Chief Financial Officer of the Company setting forth in detail reasonably satisfactory to the Bank a calculation of such Excess Availability as of the last date of such fiscal quarter. (i) Application of Prepayments; Interest. All ------------------------------------ prepayments of the Loan required pursuant to clauses (e), (f), (g) and (h) above shall be applied in the inverse order of maturity and shall be accompanied by accrued interest on the principal amount being prepaid to the date of prepayment." Section 7.03(e) of the Credit Agreement is hereby amended in its entirety to read as follows: "(e) Subordinated Indebtedness upon terms satisfactory to the Bank and with the prior written consent of the Bank." This Amendment shall become effective on the date (the "Effective Date") on which (i) counterparts to this Amendment executed by -------------- each of the parties hereto shall have been delivered to the Bank, (ii) the Bank shall have received an amendment fee in the amount of $10,000 and (iii) the Bank shall have received all outstanding accrued fees and disbursements, including, without limitation, all outstanding fees and disbursements of counsel to the Bank. Except to the extent hereby amended, the Credit Agreement and each of the Loan Documents remain in full force and effect and are hereby ratified and affirmed. The Company agrees that its obligations set forth in Section 10.3 of the Credit Agreement shall extend to the preparation, execution and delivery of this Amendment, including the reasonable fees and disbursements of counsel to the Bank. This Amendment shall be limited precisely as written and shall not be deemed (a) to be a consent granted pursuant to, or a waiver or modification of, any other term or condition of the Credit Agreement or any of the instruments or agreements referred to therein or (b) to prejudice any right or rights which the Bank may now have or have in the future under or in connection with the Credit Agreement or any of the instruments or agreements referred to therein. Whenever the Credit Agreement is referred to in the Credit Agreement, the Loan Documents or any of the instruments, agreements or other documents or papers executed or delivered in connection therewith, such reference shall be deemed to mean the Credit Agreement as modified by this Amendment. This Amendment may be executed in any number of counterparts and by the different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York. 4 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the day and the year first above written. COMPANY: NANTUCKET INDUSTRIES, INC. By: Title: GUARANTORS: NANTUCKET MILLS, INC. By: Title: NANTUCKET MANAGEMENT CORP. By: Title: BANK: CHEMICAL BANK By: Title: 5 EX-27 3 ART. 5 FDS FOR 3RD QUARTER 10-Q
5 THIS SCHEDULE CONTAINS INFORMATION EXTRACTED FROM THE STATEMENTS DATED NOVEMBER 25, 1995 AS FILED IN FORM 10-Q FOR THE QUARTERLY PERIOD THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 1 9-MOS FEB-25-1995 NOV-25-1995 25,778 0 7,190,247 240,000 11,422,194 18,900,313 7,420,855 3,850,092 22,541,955 4,302,644 0 0 500 299,185 5,998,217 22,541,955 27,701,932 27,701,932 20,455,527 20,455,527 5,446,473 90,000 998,029 801,903 0 801,903 0 0 0 801,903 0.27 0.27
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