-----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, PqRT0xDby65iMqhFVFI+sbj39e1n25Dlq1yIxr9MkyKGsGUd6U+M7HWDcXwgbkcA 6yXdR3SmCG36H9qVK+uFUw== 0000950112-96-002344.txt : 19960715 0000950112-96-002344.hdr.sgml : 19960715 ACCESSION NUMBER: 0000950112-96-002344 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960601 FILED AS OF DATE: 19960712 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: 96593779 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, INC. 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 June 1, 1996 ------------ 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 (IRS Employer of incorporation or organization) Identification 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 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 July 2, 1996, the Registrant had outstanding 2,988,796 shares of common stock not including 3,052 shares classified as Treasury Stock. NANTUCKET INDUSTRIES, INC. AND SUBSIDIARIES ------------------------------------------- QUARTERLY REPORT ---------------- QUARTER ENDED JUNE 1, 1996 -------------------------- 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 - 8 Management's discussion and analysis of financial condition and results of operations 9 - 10 Part II.- OTHER INFORMATION 11 ----------------- Signature 12 2 NANTUCKET INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
JUNE 1, March 2, 1996 1996 --------------- ------------ (unaudited) (1) ASSETS CURRENT ASSETS Cash $15,085 $15,085 Accounts receivable, less allowance for doubtful accounts of $70,000 and $40,000, respectively 4,081,638 4,417,033 Inventories (Note 2) 9,207,688 10,156,639 Other current assets 805,225 729,145 --------------- --------------- Total current assets 14,109,636 15,317,902 PROPERTY, PLANT AND EQUIPMENT - NET 3,358,903 3,498,825 OTHER ASSETS,NET 35,806 38,413 --------------- --------------- $17,504,345 $18,855,140 =============== ================ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Current maturities of long-term debt (Note 6) $1,170,000 $1,275,000 Accounts payable 1,297,384 1,721,852 Accrued salaries and employee benefits 511,406 383,595 Accrued unusual charge (Note 5) 465,000 465,000 Accrued expenses and other liabilities 382,584 392,789 Accrued royalties 230,402 249,792 Income taxes payable 1,909 2,934 --------------- ---------------- Total current liabilities 4,058,685 4,490,962 LONG-TERM DEBT (Note 6) 8,672,664 8,428,782 ACCRUED UNUSUAL CHARGE (Note 5) 576,878 678,879 --------------- ---------------- 13,308,227 13,598,623 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY (Note 4) 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 11,556,386 11,556,386 Accumulated deficit (7,640,016) (6,579,617) --------------- ---------------- 4,216,055 5,276,454 Less 3,052 shares at June 1, 1996 and 3,052 at March 2, 1996 of common stock held in treasury, at cost 19,937 19,937 --------------- ---------------- 4,196,118 5,256,517 --------------- ---------------- $17,504,345 $18,855,140 =============== ================
(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) Thirteen Weeks Ended ---------------------------- June 1, May 27, 1996 1995 ------------- ------------ Net sales $6,687,913 $10,492,736 Cost of sales 5,711,140 7,886,142 ------------ ------------ Gross profit 976,773 2,606,594 Selling, general and administrative expenses 1,765,483 2,019,026 ------------ ------------ Operating (loss) profit (788,710) 587,568 Interest expense 271,689 331,326 ------------ ------------ Net (loss) income (1,060,399) 256,242 ============ ============ Net (loss) income per share ($0.36) $0.09 ============ ============ Weighted average common shares outstanding 2,988,796 2,981,296 =========== ============ The accompanying notes are an integral part of these statements. 4 Nantucket Industries, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS
Thirteen Weeks Ended -------------------------------- June 1, May 27, 1996 1995 --------------- ------------- Cash flows from operating activities Net (loss) income ($1,060,399) $256,241 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities Depreciation and amortization 76,218 91,898 Provision for doubtful accounts 30,000 30,000 Provision for obsolete and slow moving inventory 235,000 60,000 Decrease (increase) in assets Accounts receivable 365,484 (732,755) Inventories 713,951 197,801 Other current assets (76,080) (38,219) (Decrease) increase in liabilities Accounts payable (424,467) 185,515 Accrued expenses and other liabilities 98,216 (311,591) Income taxes payable (1,026) - Accrued unusual charge (102,001) (98,788) --------------- ------------- Net cash used in operating activities (145,104) (359,898) --------------- ------------- Cash flows from investing activities Removals (additions) to property, plant and equipment 3,615 (44,799) Decrease in other assets 2,607 31,850 --------------- ------------- Net cash provided by (used in) investing activities 6,222 (12,949) --------------- ------------- Cash flows from financing activities Payments of short-term debt (160,000) - Borrowings under line of credit agreement, net 298,882 372,647 --------------- ------------- Net cash provided by financing activities 138,882 372,647 --------------- ------------- NET DECREASE IN CASH 0 ($200) Cash at beginning of period 15,085 32,049 --------------- ------------- Cash at end of period $15,085 $31,849 =============== ============= SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION: Cash paid during the period: Interest $165,884 $302,911 =============== ============= Income taxes - - =============== =============
The accompanying notes are an integral part of these statements 5 NANTUCKET INDUSTRIES, INC. -------------------------- AND SUBSIDIARIES ---------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ THIRTEEN WEEKS ENDED JUNE 1, 1996 AND MAY 27, 1995 -------------------------------------------------- (unaudited) 1. CONSOLIDATED FINANCIAL STATEMENTS The consolidated balance sheet as of June 1, 1996 and the consolidated statements of operations and statements of cash flows for the thirteen weeks ended June 1, 1996 and May 27, 1995 have been prepared by the Company without audit. In the opinion of management, all adjustments necessary for a fair presentation of the financial position of the Company and its subsidiaries at June 1, 1996 and the results of their operations and cash flows for the thirteen weeks ended June 1, 1996 and May 27, 1995 have been made on a consistent basis. 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 1996 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: June 1, May 27, 1996 1995 -------------- -------------- Raw materials $ 1,252,006 $ 1,812,761 Work in process 3,993,808 5,449,009 Finished goods 3,961,874 3,464,625 ------------ ------------ $ 9,207,688 $ 10,726,395 ------------- ------------- 6 NANTUCKET INDUSTRIES, INC. -------------------------- AND SUBSIDIARIES ---------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ THIRTEEN WEEKS ENDED JUNE 1, 1996 AND MAY 27, 1995 -------------------------------------------------- (continued) (unaudited) 3. INCOME TAXES At June 1, 1996 the Company had a net deferred tax asset in excess of $5,500,000 which is fully reserved until it can be utilized to offset deferred tax liabilities or realized against taxable income. The Company had a net operating loss carryforward for book and tax purposes of approximately $12,000,000. Accordingly, no provision for income taxes has been reflected in the accompanying financial statements. Certain tax regulations relating to the change in ownership may limit the Company's ability to utilize it's net operating loss caryforward if the ownership change, as computed under such regulations, exceeds 50%. Through June, 1996 the change in ownership was approximately 40%. 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 $ 180,000 at June 1, 1996. 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. 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. Pursuant to the agreement, the Company issued to Chemical Bank 10,000 treasury common shares, 7,500 in the fiscal year ended March 2, 1996 and 2,500 in the fiscal year ended February 25, 1995, related to its decision to defer making mandatory prepayments. 5. UNUSUAL CHARGE 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 June 1, 1996, $872,000 of this accrual has been paid; $770,000 through March 2, 1996 and $102,000 in the current fiscal year through June 1, 1996 7 6. CREDIT AGREEMENT AMENDMENT As of May 31, 1996, the Company amended its Loan and Security Agreement with Congress Financial Corporation dated March 24, 1994. This amendment provided (a) $ 251,000 in additional equipment term loan financing, (b) extension of the repayment period for all outstanding equipment term loans, (c) supplemental revolving loan availability from March 1st through June 30th of each year and (d) the extension of the agreement through March 20, 1998. Renewal date to March 20, 1998. 7. Private Placement In April, 1996 the Company signed a letter of intent for a $3.5 Million private placement consisting of 250,000 shares of common stock and $ 2,625,000 of 12.5% convertible subordinated debentures due August 31, 1996. The debentures would be secured by a second mortgage on the Company's manufacturing and distribution facility in Georgia and are convertible into 467,167 shares of common stock in specified amounts after specified dates at prices ranging from $5.10 to $6.00. On June 25, 1996 the Company discontinued negotiations and commenced discussions with a new investor group. Upon completion of this transaction, the net proceeds will be used to prepay the balance payable to Chemical Bank. Accordingly, the entire balance is included in current liabilities. The remaining net proceeds will be used to reduce the outstanding balance with Congress. 8 NANTUCKET INDUSTRIES, INC. -------------------------- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations - --------------------- Sales Net sales for the three months ended June 1, 1996 decreased 36% from prior year levels to $6,688,000. This decline reflects the planned inventory reductions by the Company's major customer in anticipation of the second fiscal quarter introduction of Brittania by Levi's with initial shipments of significant orders expected at the end of July, 1996. Sales of GUESS? products increased 34% over prior year levels as retailers made available space for introductions of the new GUESS? Essentials line which began selling at retail in June, 1996. Gross Margin Gross profit margins decreased from prior year levels of 25% to 15%. This decline is a result of increased manufacturing variances associated with additional processing costs of imported garments coupled with the impact of close-out sales in the GUESS? division during the first quarter. Losses associated with these sales were reserved for in the fourth quarter of the prior fiscal year. Selling, general and administrative expenses Selling, general and administrative expenses decreased 12% to $1,765,000 compared to $2,019,000 for the first quarter of the prior year. The decrease of $254,000 is primarily the result of a reduction in variable selling costs related to the changes in net sales. Selling, general and administrative expenses increased to 26% of sales of the prior year's level of 19% reflecting the fixed components of these expenses. 9 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 sale 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 which commenced March 31, 1996. The Company believes that the credit facility provides adequate financing flexibility to fund its operations at current levels. The company is seeking additional funding to finance its expected growth. Working capital decreased $828,000 from year-end levels to $9,998,000. This decrease is primarily due to a $949,000 decline in inventory levels resulting from close-out sales. A decrease in accounts receivable was offset by a decrease in accounts payable. The Company believes that the moderate rate of inflation over the past few years has not had significant impact on sales or profitability. 10 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 - -------------------------- As of May 31, 1996, the Company amended its Loan and Security Agreement with Congress Financial Corporation dated March 24, 1994. This amendment provided (a) $ 251,000 in additional equipment term loan financing, (b) extension of the repayment period for all outstanding equipment term loans, (c) supplemental revolving loan availability from March 1st through June 30th of each year and (d) the extension of the agreement through March 20, 1998. Renewal date to March 20, 1998. Item 6. Exhibits and Reports on Form 8-K - ----------------------------------------- (c) Exhibits (10)(ii)(1) Amendment dated May 31, 1996 to the Loan and Filed Herewith Security Agreement with Congress Financial Corporation dated March 24, 1994. (27) Financial Data Schedule for 3 months period ending June 1, 1996. (b) Reports on Form 10K None 11 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 ---------------------- (Chief Accounting Officer) Vice President - Finance July 12, 1996 12 EX-10.(II)(1) 2 Exhibit 10(ii)1 AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT ---------------------------------------------- NANTUCKET INDUSTRIES, INC. 105 Madison Avenue New York, New York 10016 May 31, 1996 Congress Financial Corporation 1133 Avenue of the Americas New York, New York 10036 Gentlemen: Congress Financial Corporation ("Lender") and Nantucket Industries, Inc. ("Borrower") have entered into certain financing arrangements pursuant to which Lender may make loans and advances and provide other financial accommodations to Borrower as set forth in the Loan and Security Agreement, dated March 21, 1994, between Lender and Borrower (as amended hereby and as the same may hereafter be further amended, modified, supplemented, extended, renewed, restated or replaced, the "Loan Agreement," and together with all agreements, documents and instruments at any time executed and/or delivered in connection therewith or related thereto, collectively, the "Financing Agreements"). Borrower has requested that Lender (a) make an additional advance to Borrower in the principal amount of $236,167 and agree to amend and restate the terms of Term Loan A (as hereinafter defined), (b) make an additional advance to Borrower in the principal amount of $15,000 and agree to amend and restate the terms of a Purchase Money Term Loan made by Lender to Borrower on July 22, 1994, (c) make supplemental revolving loans to Borrower from March 1 through June 30 during each calendar year, (d) increase the advance rate from forty (40%) percent to fifty (50%) with respect to the Value of Eligible Inventory consisting of unpackaged finished goods, (e) increase the amount of the sublimit of Revolving Loans with respect to Eligible Inventory from $7,000,000 to $7,500,000, and (f) extend the Renewal Date for one (1) year. Lender is willing to agree to the foregoing, subject to the terms and conditions contained herein. In consideration of the foregoing, the respective agreements and covenants contained herein, and other good and valuable consideration, the adequacy and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Definitions. ----------- (a) Additional Definitions. As used herein, the following terms ---------------------- shall have the respective meanings given to them below and the Loan Agreement shall be deemed and is hereby amended to include, in addition and not in limitation, each of the following definitions: (i) "Amended Purchase Money Note One" shall mean the Amended ------------------------------- and Restated Purchase Money Term Promissory Note, dated of even date herewith, made by Borrower payable to Lender in the original principal amount of $157,500, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced. (ii) "First Amended Term Note A" shall mean the First Amended ------------------------- and Restated Term Promissory Note A, dated of even date herewith, made by Borrower payable to Lender in the original principal amount of $442,500, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced. (iii) "Purchase Money Loan One" shall mean the Purchase Money ----------------------- Term Loan made by Lender to Borrower evidenced by the Purchase Money Term Note One. (iv) "Purchase Money Note One" shall mean the Purchase Money ----------------------- Term Promissory Note, dated July 22, 1994, by Borrower payable to Lender in the original principal amount of $225,000, as in effect immediately prior to the effective date hereof. (v) "Term Note A" shall mean the Term Promissory Note, dated ----------- as of March 21, 1994, made by Borrower payable to Lender in the original principal amount of $650,000, as in effect immediately prior to the effective date hereof. (vi) "Supplemental Loans" shall mean the loans hereafter made ------------------ by Lender to or for the benefit of Borrower on a revolving basis (involving advances, repayments and readvances) as set forth in Section 6(a) hereof. (vii) "Supplemental Loan Period" shall mean, as to any ------------------------ applicable calendar year, the period commencing on March 1 of such calendar year and ending on June 30 of the same such calendar year, beginning with the calendar year 1996 and each calendar year thereafter during the effectiveness of this Agreement and the other Financing Agreements. - 2 - (b) Amendments to Definitions. ------------------------- (i) All references to the term "Loans" herein and in the Loan Agreement and the other Financing Agreements shall be deemed and each such reference is hereby amended to include the Supplemental Loans as defined herein and the Purchase Money Term Loans. (ii) All references to the term "Obligations" herein and in the Loan Agreement and the other Financing Agreements shall be deemed and each such reference is hereby amended to include the Supplemental Loans as defined herein and the Purchase Money Term Loans. (iii) All references to the term "Purchase Money Term Loans" herein and in the Loan Agreement and the other Financing Agreements shall be deemed and each such reference is hereby amended to include, without limitation, the outstanding Obligations owed to Lender by Borrower consisting of the indebtedness evidenced by the Amended Purchase Money Note One. (iv) All references to the term "Term Loan A" herein and in the Loan Agreement and the other Financing Agreements shall be deemed and each such reference is hereby amended to mean the outstanding Obligations owed to Lender by Borrower consisting of the indebtedness evidenced by the First Amended Term Note A. (v) All references to the term "Prime Rate" herein and in the Loan Agreement and the other Financing Agreements shall be deemed and each such reference is hereby amended to mean the rate from time to time publicly announced by Core States Bank, N.A., or its successors, at its office in Philadelphia, Pennsylvania, as its prime rate, whether or not such announced rate is the best rate available at such bank. (c) Interpretations. For purposes of this Amendment, unless --------------- otherwise defined herein, all terms used herein, including, but not limited to, those terms used and/or defined above, shall have the respective meanings assigned to such terms in the Loan Agreement. 2. Term Loan A. ----------- (a) Borrower hereby acknowledges, confirms and agrees that as of May 31, 1996, Borrower is indebted to Lender for the Obligations in respect of Term Loan A in the principal amount of $206,333, plus accrued fees and interest thereon. On the date hereof, subject to the terms and conditions contained herein, Lender is making an additional advance to Borrower in the amount of $236,167. Such advance shall, together with the amount outstanding in respect of Term Loan A immediately prior thereto, - 3 - constitute Term Loan A, which shall be in the original principal amount of $442,500. (b) The terms of the indebtedness of Borrower to Lender arising pursuant to Term Loan A, including the additional advance by Lender to Borrower described in Section 2(a) hereof, are hereby amended and restated as set forth in the First Amended Term Note A. The terms of Term Loan A (including the additional advance described in Section 2(a) hereof) shall be as set forth in the First Amended Term Note A and the existing indebtedness arising pursuant to Term Loan A, together with the additional advance by Lender to Borrower described in Section 2(a) hereof, shall be evidenced thereby and shall together constitute Term Loan A as such term is used herein and in the Loan Agreement and the other Financing Agreements. Term Loan A shall be (i) evidenced by the First Amended Term Note A executed and delivered by Borrower to Lender concurrently herewith, (ii) repaid, together with interest and other amounts due thereunder, in accordance with the terms and provisions of the First Amended Term Note A, the Loan Agreement and the other Financing Agreements, and (iii) secured by all of the Collateral. Borrower may not reborrow any principal amounts repaid in respect of Term Loan A. (c) The amendment and restatement contained herein and in the First Amended Term Note A, shall not, in any manner, be construed to constitute payment of, or impair, limit, cancel or extinguish, or constitute a novation in respect of, any of the Obligations evidenced by or arising under the Financing Agreements, and the liens and security interests securing such Obligations shall not in any manner be impaired, limited, terminated, waived or released. 3. Purchase Money Loan One. ----------------------- (a) Borrower hereby acknowledges, confirms and agrees that as of May 31, 1996, Borrower is indebted to Lender for the Obligations in respect of Purchase Money Loan One in the principal amount of $142,500, plus accrued fees and interest thereon. On the date hereof, subject to the terms and conditions contained herein, Lender is making an additional advance to Borrower in the amount of $15,000. Such advance shall, together with the amount outstanding in respect of Purchase Money Loan One immediately prior thereto, constitute Purchase Money Loan One which shall be in the original principal amount of $157,500. (b) The terms of the indebtedness of Borrower to Lender arising pursuant to Purchase Money Loan One, including the additional advance by Lender to Borrower described in Section - 4 - 3(a) hereof, are hereby amended and restated as set forth in the Amended Purchase Money Note One. The terms of Purchase Money Loan One (including the additional advance described in Section 3(a) hereof) shall be as set forth in the Amended Purchase Money Note One and the existing indebtedness arising pursuant to Purchase Money Loan One, together with the additional advance by Lender to Borrower described in Section 3(a) hereof, shall be evidenced thereby and shall together constitute Purchase Money Loan One as such term is used herein and in the Loan Agreement and the other Financing Agreements. Purchase Money Loan One shall be (i) evidenced by the Amended Purchase Money Note One executed and delivered by Borrower to Lender concurrently herewith, (ii) repaid, together with interest and other amounts due thereunder, in accordance with the terms and provisions of the Amended Purchase Money Note No. One, the Loan Agreement and the other Financing Agreements, and (iii) secured by all of the Collateral. Borrower may not reborrow any principal amounts repaid in respect of Purchase Money Loan One. (c) The amendment and restatement contained herein and in the Amended Purchase Money Note One shall not, in any manner, be construed to constitute payment of, or impair, limit, cancel or extinguish, or constitute a novation in respect of, any of the Obligations evidenced by or arising under the Financing Agreements, and the liens and security interests securing such Obligations shall not in any manner be impaired, limited, terminated, waived or released. 4. Acknowledgment by Guarantor. Guarantor hereby acknowledges, confirms --------------------------- and agrees that the Guarantee, dated March 21, 1994, by Guarantor in favor of Lender (the "Guarantee"), guaranteeing the payment and performance of all Obligations of Borrower is in full force and effect as of the date hereof, and the "Guaranteed Obligations" (as such term is defined in the Guarantee) shall extend to and cover Term Loan A and Purchase Money Loan One as the terms thereof are amended and restated as set forth in Sections 2 and 3 hereof, respectively. The Guaranteed Obligations are unconditionally owed to Lender, without offset, defense or counterclaim of any kind, nature or description whatsoever and the Guarantee in favor of Lender shall continue to be in full force and effect from and after the date hereof. 5. Revolving Loans. Section 2.1(a)(ii) of the Loan Agreement is hereby --------------- deleted in its entirety and replaced with the following: "(ii) the lesser of: (A) the sum of (1) sixty (60%) percent of the Value of Eligible Inventory consisting of packaged finished goods and greige goods (including legwear) plus (2) fifty (50%) percent of ---- the Value of Eligible Inventory consisting of raw materials, dyed piece goods and unlabelled waist bands, yarn and fabric plus (3) fifty ---- (50%) percent of the Value of Eligible Inventory consisting of unpackaged - 5 - finished goods or (B) the amount equal to $7,500,000, less" ---- 6. Supplemental Loans. ------------------ (a) In addition to the Revolving Loans that Lender may make to Borrower pursuant to Section 2.1(a) of the Loan Agreement, upon the request of Borrower made at any time during the Supplemental Loan Period, and subject to and upon the terms and conditions contained herein and in the Loan Agreement and the other Financing Agreements, Lender agrees, in its good faith discretion, to make Supplemental Loans to Borrower from time to time during the Supplemental Loan Period in amounts requested by Borrower that would otherwise be available to Borrower under Sections 2.1(a)(ii)(A)(1) and (3) of the Loan Agreement of up to ten (10%) percent of the Value of Eligible Inventory consisting of (i) packaged finished goods and (ii) unpackaged finished goods, respectively, as calculated by Lender and subject to the sublimit set forth in Section 2.1(a)(ii)(B) of the Loan Agreement and Lender's right to establish Availability Reserves. (b) Except in Lender's sole discretion, Borrower shall not have any right to request, and Lender shall not make, any Supplemental Loans at any time other than during the Supplemental Loan Period. The Supplemental Loans shall be secured by all the Collateral. Notwithstanding anything to the contrary contained herein or in the Loan Agreement or the other Financing Agreements, all Supplemental Loans shall be payable ON DEMAND. In any event, unless sooner demanded by Lender, all outstanding and unpaid Obligations arising pursuant to the Supplemental Loans during any applicable Supplemental Loan Period (including, without limitation, principal, interest, fees, costs, expenses and other charges in respect thereof payable by Borrower to Lender), shall automatically, without notice or demand, be absolutely and unconditionally due and payable and Borrower shall pay to Lender in immediately available funds all such Obligations on June 30 of each Supplemental Loan Period. Interest shall accrue and be due, until and including the next business day, if the amount so paid by Borrower to the Blocked Account is received no later than 11:00 a.m., New York City time. 7. Letter of Credit Accommodations. Section 2.2(c) of the Loan Agreement ------------------------------- is hereby deleted in its entirety and replaced with the following: "(c) No Letter of Credit Accommodations shall be available unless on the date of the proposed issuance of any Letter of Credit Accommodations, the Revolving Loans available to Borrower (subject to the Maximum Credit and any Availability Reserves) are equal to or greater than: (i) if the proposed Letter of Credit Accommodations is for the purpose of purchasing - 6 - Eligible Inventory, the sum of (A) the percentage equal to one hundred (100%) percent minus the applicable percentage set forth in Section 2.1(a)(ii)(A) hereof with respect to the category of Eligible Inventory being so purchased, plus (B) freight, taxes, duty and other amounts which Lender estimates must be paid in connection with such Inventory upon arrival and for delivery to one of Borrower's locations for Eligible Inventory within the United States of America and (ii) if the proposed Letter of Credit Accommodation is for any other purpose, an amount equal to one hundred (100%) percent of the face amount thereof and all other commitments and obligations made or incurred by Lender with respect thereto. Effective on the issuance of each Letter of Credit Accommodation, the amount of Revolving Loans which might otherwise be available to Borrower shall be reduced by the applicable amount set forth in Section 2.2(c)(i) or Section 2.2(c)(ii) hereof." 8. Term. ---- (a) The first sentence of Section 12.1(a) of the Loan Agreement is hereby deleted in its entirety and replaced with the following sentence: "This Agreement and the other Financing Agreements shall become effective as of the date set forth on the first page hereof and shall continue in full force and effect for a term ending on March 20, 1998 (the "Renewal Date"), and from year to year thereafter, unless sooner terminated pursuant to the terms hereof." (b) Section 12.1(e)(iii) is hereby deleted in its entirety and replaced with the following: "(iii) eighty-three March 22, 1996 hundredths (.83%) to and percent of the Maximum including Credit March 20, 1998." 9. Additional Representations and Warranties. Each of Borrower and ----------------------------------------- Guarantor represents, warrants and covenants with and to Lender as follows, which representations, warranties and covenants are continuing and shall survive the execution and delivery hereof, and the truth and accuracy of, or compliance with each, together with the representations, warranties and covenants in the other Financing Agreements, being a continuing condition of the making of Loans by Lender to Borrower: (a) The failure of Borrower to comply with the covenants, conditions and agreements contained herein or in any - 7 - other agreement, document or instrument at any time executed and/or delivered by Borrower with, to or in favor of Lender shall constitute an Event of Default under the Financing Agreements. (b) No Event of Default or act, condition or event which with notice or passage of time or both would constitute an Event of Default exists or has occurred as of the date of this Amendment (after giving effect to the amendments to the Financing Agreements made by this Amendment). (c) Each of this Amendment, the First Amended Term Note A and the Amended Purchase Money Term Note One has been duly executed and delivered by Borrower and/or Guarantor, as the case may be, and is in full force and effect as of the date hereof and the agreements and obligations of Borrower and Guarantor contained herein constitute legal, valid and binding obligations of Borrower and Guarantor enforceable against Borrower and Guarantor in accordance with their respective terms. 10. Conditions to Effectiveness of Amendment. The effectiveness of the ---------------------------------------- other provisions of this Amendment shall be subject to the satisfaction of each of the following additional conditions precedent: (a) Lender shall have received, in form and substance satisfactory to Lender, (i) an executed original or executed original counterparts of this Amendment, as the case may be, (ii) an executed original of the First Amended Term Note A, and (iii) an executed original of the Amended Purchase Money Term Note One; (b) all requisite corporate action and proceedings in connection with this Amendment shall be in form and substance satisfactory to Lender, and Lender shall have received all information and copies of all documents, including, without limitations, records of requisite corporate action and proceedings which Lender may have reasonably requested in connection therewith, such documents where requested by Lender or its counsel to be certified by appropriate corporate officers or governmental authorities; and (c) no Event of Default shall exist or have occurred and no event shall have occurred or exist which with notice or passage of time or both would constitute an Event of Default. 11. Effect of this Amendment. Except as modified pursuant hereto, no ------------------------ other changes or modifications to the Financing Arrangements are intended or implied and in all other respects the Financing Agreements are hereby specifically ratified, restated and confirmed by all parties hereto as of the effective date hereof. To the extent of conflict between the terms of this Amendment and the other Financing Agreements, the terms of this - 8 - Amendment shall control. The Loan Agreement and this Amendment shall be read and construed as one agreement. 12. Further Assurances. The parties hereto shall execute and deliver such ------------------ additional documents and take such additional action as may be necessary or desirable to effectuate the provisions and purposes of this Amendment. 13. Governing Law. The validity, interpretation and enforcement of this ------------- Amendment and any dispute arising out of the relationship between the parties hereto in connection with this Amendment, whether in contract, tort, equity or otherwise, shall be governed by the internal laws of the State of New York (without giving effect to principles of conflicts of law). 14. Binding Effect. This Amendment shall be binding upon and inure to the -------------- benefit of each of the parties hereto and their respective successors and assigns. 15. Counterparts. This Amendment may be executed in any number of ------------ counterparts, but all of such counterparts shall together constitute but one and the same agreement. In making proof of this Amendment, it shall not be necessary to produce or account for more than one counterpart thereof signed by each of the parties hereto. Please sign the enclosed counterpart of this Amendment in the space provided below whereupon this Amendment as so accepted by Lender, shall become a binding agreement between Borrower and Lender. Very truly yours, NANTUCKET INDUSTRIES, INC. By: /s/ Steve Sawberg -------------------------- Title: Chairman ----------------------- ACKNOWLEDGED: NANTUCKET MILLS, INC. By: /s/ Steve Sawberg --------------------------- Title: Chairman ------------------------ AGREED: CONGRESS FINANCIAL CORPORATION By /s/ Daniel Marisca --------------------------- Title: Assistant V.P. ------------------------ - 9 - EX-27 3
5 THIS SCHEDULE CONTAINS INFORMATION EXTRACTED FROM THE STATEMENTS DATED JUNE 1, 1996 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 3-MOS MAR-2-1996 JUN-1-1996 15,085 5,335 4,151,638 70,000 9,207,688 14,109,636 7,378,648 4,019,745 17,504,345 4,058,685 0 0 500 299,185 3,896,433 17,504,345 6,687,913 6,687,913 5,711,140 5,711,140 1,765,483 235,000 271,689 (1,060,399) 0 (1,060,399) 0 0 0 (1,060,399) (0.36) (0.36)
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