-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, sikY67TeEk7GURY5SB8h1UFbZdQy10ZM6fFmwb0viywl3w1GsAE5OhLN2P93AB4+ sNlu0V/5/yNyZBbJObaqRg== 0000086346-94-000016.txt : 19941116 0000086346-94-000016.hdr.sgml : 19941116 ACCESSION NUMBER: 0000086346-94-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19941001 FILED AS OF DATE: 19941114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SALANT CORP CENTRAL INDEX KEY: 0000086346 STANDARD INDUSTRIAL CLASSIFICATION: 2320 IRS NUMBER: 133402444 STATE OF INCORPORATION: DE FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06666 FILM NUMBER: 94559854 BUSINESS ADDRESS: STREET 1: 1114 AVE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10036 BUSINESS PHONE: 2122217500 MAIL ADDRESS: STREET 1: 1058 CLAUSSEN RDSTE 101 CITY: AUGUSTA STATE: GA ZIP: 30907 10-Q 1 THIRD QUARTER 10-Q 1994 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 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 October 1, 1994. 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 0-2433 SALANT CORPORATION (Exact name of registrant as specified in its charter) Delaware 13-3402444 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1114 Avenue of the Americas, New York, New York 10036 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (212) 221-7500 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark 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 November 2, 1994 there were outstanding 14,220,786 shares of the Common Stock of the registrant. TABLE OF CONTENTS PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Statements of Operations......... Condensed Consolidated Balance Sheets................... Condensed Consolidated Statements of Cash Flow............................................... Notes to Condensed Consolidated Financial Statements.... Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.... PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders................................. Item 6. Exhibits and Reports on Form 8-K................. SIGNATURE................................................. Salant Corporation and Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Amounts in thousands except per share data)
Three Months Ended Nine Months Ended October 1,October 2,October 1, October 2, 1994 1993 1994 1993 Net sales $ 126,919 $ 113,252 $ 307,580 $ 294,227 Cost of goods sold 96,830 84,810 235,718 223,176 Gross profit 30,089 28,442 71,862 71,051 Selling, general and administrative expenses 21,198 19,809 60,029 58,388 Royalty income, net of related expenses 1,581 1,386 4,463 4,776 Bankruptcy administration expenses - 3,405 - 8,861 Income from operations before interest, taxes and extraordinary gain 10,472 6,614 16,296 8,578 Interest expense, net 4,318 2,090 11,658 3,874 Income before income taxes and extraordinary gain 6,154 4,524 4,638 4,704 Income taxes 56 78 195 338 Net income before extraordinary gain 6,098 4,446 4,443 4,366 Extraordinary Gain(Notes 3 and 7) - 24,707 63 24,707 Net income $ 6,098 $29,153 $4,506 $29,073 Earning per share: Income per share before extraordinary gain $ 0.40 $ 0.83 $ 0.30 $ 1.00 Extraordinary gain - 4.63 - 5.61 Income per share $ 0.40 $ 5.46 $ 0.30 $ 6.61 Weighted average common stock and common stock equivalents outstanding (Note 1) 15,174 5,338 15,107 4,401
See Notes to Condensed Consolidated Financial Statements CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands)
October 1, October 2, 1994 January 1, 1993 (Unaudited) 1994 (Unaudited) ASSETS Current Assets: Cash and cash equivalents $ 1,700 $ 2,157 $ 1,781 Accounts receivable, net 69,877 37,382 57,008 Inventories 125,918 104,513 115,013 Prepaid expenses and other current assets 3,948 4,420 3,066 Total Current Assets 201,443 148,472 176,868 Property, Plant and Equipment, net 27,698 27,493 30,493 Other Assets 81,529 77,425 78,068 Total Assets $ 310,670 $ 253,390 $ 285,429 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Loans payable $ 54,447 $ - $ 32,334 Accounts payable 29,712 21,777 20,900 Accrued liabilities 15,476 22,056 23,490 Reserve for business restructuring 612 2,038 15,351 Total Current Liabilities 100,247 45,871 92,075 Long Term Debt 108,251 111,851 111,851 Deferred Liabilities 18,282 16,766 16,607 Shareholders' Equity Common stock 15,242 15,016 15,015 Additional paid-in capital 107,017 106,726 106,723 Deficit (35,955) (40,461) (55,096) Excess of additional pension liability over unrecognized prior service cost adjustment (986) (986) (353) Accumulated foreign currency translation adjustment 186 221 221 Less - treasury stock, at cost (1,614) (1,614) (1,614) Total Shareholders' Equity 83,890 78,902 64,896 Total Liabilities and Shareholders' Equity $ 310,670 $ 253,390 $ 285,429
See Notes to Condensed Consolidated Financial Statements CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (Amounts in thousands)
Nine Months Ended October 1, October 2, 1994 1993 Cash Flows from Operating Activities: Net income before extraordinary gain $ 4,443 $ 4,366 Adjustments to reconcile income from operations to net cash used in operating activities: Depreciation 3,902 4,183 Amortization of intangibles 1,959 1,848 Change in assets and liabilities before acquisitions: Accounts receivable (32,495) (18,109) Inventories (17,919) (9,866) Prepaid expenses and other current assets 1,018 855 Other assets (89) 25 Accounts payable 7,935 (1,315) Accrued liabilities and reserve for business restructuring (7,891) 4,971 Deferred liabilities (69) 479 Net cash used in operating activities (39,206) (12,563) Cash Flows from Investing Activities: Capital expenditures, net (3,858) (5,810) Acquisitions (9,094) - Proceeds from sale of assets 274 152 Net cash used in investing activities (12,678) (5,658) Cash Flows from Financing Activities: Net short-term borrowings 54,447 32,334 Repayment of pre-petition secured debt - (15,097) Repurchase of long-term debt (3,537) - Exercise of stock options 517 64 Net cash provided by financing activities 51,427 17,301 Net decrease in cash and cash equivalents (457) (920) Cash and cash equivalents-beginning of year 2,157 2,701 Cash and cash equivalents-end of third quarter $ 1,700 $ 1,781
See Notes to Condensed Consolidated Financial Statements. Salant Corporation and Subsidiaries CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (Amounts in thousands)
Nine Months Ended Supplemental disclosures of cash flow information: October 1, October 2, 1994 1993 Cash paid during the year for: Interest $ 14,661 $ 3,520 Income taxes $ 152 $ 141 Reorganization items: Conversion of accrued liabilities and liabilities deferred pursuant to chapter 11 cases $ 9,492 Issuance of long term debt and common stock pursuant to plan of reorganization $ 212,079
See Notes to Condensed Consolidated Financial Statements SALANT CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Thousands of Dollars Except Share Data) (Unaudited) Note 1. Basis of Presentation and Consolidation The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of Salant Corporation ("Salant") and subsidiaries (collectively, the "Company"). The results of operations for the three and nine months ended October 1, 1994 and October 2, 1993 are not necessarily indicative of a full year's operations. In the opinion of management, the accompanying financial statements include all adjustments which are necessary to present fairly such financial statements. Significant intercompany balances and transactions are eliminated in consolidation. Certain reclassifications were made to the 1993 unaudited Condensed Consolidated Financial Statements to conform with the 1994 presentation. Income per share is based on the weighted average number of common shares (including shares to be issued pursuant to the Company's plan of reorganization) and common stock equivalents outstanding during the three and nine months ended October 1, 1994 and October 2, 1993. Note 2. Consummation of the Plan of Reorganization On July 30, 1993, the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court") issued an order confirming the Third Amended Joint Plan of Reorganization of Salant and Denton Mills, Inc. (the "Plan"). Salant consummated the Plan on September 20, 1993. Upon consummation, the Company made cash payments of $5,753, issued $111,851 of new 10-1/2% senior secured notes and issued 1.5 million shares of common stock in settlement of certain undisputed claims in the chapter 11 proceeding. Note 3. Extraordinary Gain In September 1993, the Company recorded an extraordinary gain of $24,707 consisting of (i) an extraordinary gain of $45,974 from the settlement and anticipated settlement of claims arising from the chapter 11 proceeding for less than their full amount and (ii) an extraordinary loss of $21,267 arising from the settlement of accrued interest and fees in respect of the Company's secured bank debt during the pendency of the Company's chapter 11 cases. Note 4. Discontinued Operations Subsequently Retained In March 1993, the Company adopted a formal plan to restructure and sell the Salant Children's Apparel Group. Consequently, the division was accounted for as a discontinued operation for fiscal 1992 and the first three quarters of fiscal 1993. In March 1994, the Company concluded that the value of the division would be maximized by retaining the Salant Children's Apparel Group as part of its continuing operations. As a result, the assets, liabilities and results of operations of the Salant Children's Apparel Group for all periods have been presented as part of continuing operations. The following is a summary of certain selected financial data for the Salant Children's Apparel Group during the prior year period in which it was reported as a discontinued operation.
as of October 2, 1993 Total assets $ 31,874 Total liabilities 17,229 Quarter Ended October 2, 1993 Net sales $ 21,843 Operating income 1,725
Note 5. Inventories
October 1, January 1, October 2, 1994 1994 1993 Finished goods...... $ 77,298 $ 60,686 $ 70,792 Work-in-process..... 26,924 27,661 26,211 Raw materials and supplies.... 21,696 16,166 18,010 $ 125,918 $ 104,513 $ 115,013
Note 6. Long Term Debt In May 1994, the Company purchased and retired $3,600 of its 10 1/2% Senior Secured Notes due December 31, 1998 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. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following discussion and analysis of the consolidated results of operations and financial condition should be read in conjunction with the accompanying unaudited Condensed Consolidated Financial Statements and related Notes to provide additional information concerning the financial activities and condition of Salant Corporation ("Salant") and its subsidiary companies (collectively, the "Company"). Results of Operations The following discussion compares the operating results of the Company for the three and nine months ended October 1, 1994 with the operating results for the three and nine months ended October 2, 1993. As announced in March 1994, the Company determined to retain and continue to operate its Children's Apparel Group. Consequently, the Company's financial statements include the results of operations of that division in the results of operations for the three and nine months ended October 1, 1994. Operating results for the three and nine months ended October 2, 1993 (which had reflected the Children's Apparel Group in discontinued operations) have been adjusted accordingly.
(dollars in millions) Three months ended Nine months ended October 1, October 2, October 1, October 2, 1994 1993 1994 1993 Net sales $126.9 $113.3 $307.6 $294.2 Gross profit 30.1 28.4 71.9 71.1 Gross margin percentage 23.7% 25.1% 23.4% 24.1% EBITDA (a) $ 12.5 $ 11.8 $ 22.2 $ 23.5
(a) Earnings before interest, taxes, depreciation, amortization, bankruptcy administration expenses and extraordinary gain. Third Quarter 1994 Compared to Third Quarter 1993 For the third quarter of 1994, net sales amounted to $126.9 million, a 12.1% increase over net sales of $113.3 million in the comparable 1993 quarter. The increase was realized in men's sportswear, dress shirts and slacks. Approximately one third of the increase in net sales related to JJ. Farmer sportswear (a label acquired in June 1994). Gross profit as a percentage of net sales decreased to 23.7% ($30.1 million) in the third quarter of 1994 from 25.1% of net sales ($28.4 million) in the comparable 1993 quarter. The reduction in gross profit as a percentage of net sales was incurred primarily in men's sportswear, neckwear and dress shirts and in denim-based products. The cause of the reduction was (a) continuing pressure on selling prices, (b) a change in mix to lower priced sportswear, which carries a lower gross profit margin, as a result of the introduction of Manhattan Sportswear late in the third quarter of 1993, and (c) certain cost increases related to wrinkle-free dress shirts. For the third quarter of 1994, income from operations (before net interest expense of $4.3 million) was $10.5 million, or 8.3% of net sales. For the third quarter of 1993, income from operations (before an extraordinary gain of $24.7 million, bankruptcy administration expenses of $3.4 million and net interest expense of $2.1 million) was $10.0 million, or 8.8% of net sales. Income from operations as a percentage of net sales was lower in 1994 primarily as the result of continuing gross margin pressures in men's sportswear, denim-based products and men's dress shirts. Net interest expense for the third quarter of 1994 amounted to $4.3 million as compared to $2.1 million in the prior year's third quarter. Until September 20, 1993, Salant was operating under chapter 11 of the Bankruptcy Code and accordingly, was not accruing interest on its prepetition debt. Net income for the 1994 third quarter was $6.1 million, compared with net income of $4.4 million (exclusive of the $24.7 million extraordinary gain related to the Company's emergence from bankruptcy) for the third quarter of 1993. The 37% increase in net income (exclusive of the extraordinary gain) was due to an increase in net sales as well as the absence of bankruptcy administration expenses in 1994, as offset by the increase in interest expense. Net income per share for the third quarter of 1994 was $0.40 (based on a weighted average of 15,174,000 common shares and share equivalents outstanding) compared to net income per share of $5.46 (based on a weighted average of 5,338,000 common shares and share equivalents outstanding) for the third quarter of 1993, which included the extraordinary gain of $4.63 per share. The increase in the number of shares outstanding is primarily attributable to the issuance of shares of common stock in connection with Salant's emergence from bankruptcy in 1993. Year to Date 1994 Compared to Year to Date 1993 For the nine months ended October 1, 1994, net sales were $307.6 million, an increase of 4.5% over the net sales of $294.2 million in the comparable 1993 period. Gross profit as a percentage of net sales decreased to 23.4% ($71.9 million) for the nine months ended October 1, 1994 from 24.1% of net sales ($71.1 million) in the comparable 1993 period. The decline in gross profit percentage for the nine months is primarily the result of the same factors as the third quarter of 1994. For the first nine months of 1994, income from operations (before net interest expense of $11.7 million) was $16.3 million, or 5.3% of net sales, compared to income from operations (before the extraordinary gain of $24.7 million, bankruptcy administration expenses of $8.9 million and net interest expense of $3.9 million) of $17.4 million, or 5.9% of net sales, in the first nine months of 1993. Income from operations for the nine months was lower primarily due to (a) reduced gross margins resulting from continuing selling price pressures in dress shirts as well as start-up costs relating to the manufacture of wrinkle free shirts and (b) continuing weaker margins of Perry Ellis sportswear. Current retail sales of Perry Ellis sportswear and slacks are strong. Net interest expense for the first nine months of 1994 amounted to $11.7 million as compared to $3.9 million in the first nine months of 1993. Until September 20, 1993, Salant was operating under chapter 11 of the Bankruptcy Code and, accordingly, was not accruing interest on its prepetition debt. Net income for the first nine months of 1994 was $4.5 million compared with net income of $4.4 million (exclusive of the $24.7 million extraordinary gain related to the Company's emergence from bankruptcy) in the first nine months of 1993. Net income per share for the first nine months of 1994 was $0.30 (based on a weighted average of 15,107,000 common shares and share equivalents outstanding), compared to net income per share of $6.61 (based on a weighted average of 4,401,000 common shares and share equivalents outstanding) in the first nine months of 1993, which included the extraordinary gain of $5.61 per share. Liquidity and Capital Resources In September 1993, the Company entered into a two year revolving credit, factoring and security agreement (the "Credit Agreement") with The CIT Group/Commercial Services, Inc. ("CIT") to provide seasonal working capital financing, in the form of direct borrowings and letters of credit, up to an aggregate of $120 million (subject to an asset based borrowing formula). Interest on direct borrowings is charged monthly at an annual rate of one-half of one percent in excess of the prime rate of Chemical Bank (which prime rate was 7.75% at October 1, 1994). 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. As of October 1, 1994, direct borrowings and letters of credit outstanding under the Agreement were $54.4 million and $38.9 million, respectively, and the Company had unused availability of $3.7 million. As of October 2, 1993, direct borrowings and letters of credit outstanding under the Credit Agreement were $32.3 million and $34.7 million, respectively, and the unused availability amounted to $7.0 million. The average interest rate on borrowings for the three months ended October 1, 1994 and October 2, 1993 was 7.9% and 6.9%, respectively. The average interest rate on borrowings for the nine months ended October 1, 1994 and October 2, 1993 was 7.4% and 7.2%, respectively. In September 1993, the Company issued $111.9 million principal amount of 10 1/2% Senior Secured Notes due December 31, 1998 (the "Secured Notes") in connection with the consummation of its plan of reorganization. In May 1994, the Company purchased and retired $3.6 million of the Secured Notes in an open market transaction at a price below the principal amount thereof. The Credit Agreement and the indenture governing the Secured Notes contain numerous financial and operating covenants, including restrictions on incurring indebtedness and liens, making investments in or purchasing the stock of all or a substantial part of the assets of another person, selling property, making capital expenditures, and paying cash dividends. In addition, the Company is required to maintain minimum levels of working capital and stockholders' equity and to satisfy tests relating to its ratio of total liabilities to stockholders' equity, fixed charge coverage, and maximum cumulative net loss. At October 1, 1994, the Company was in compliance with all covenants. During the first nine months of 1994, the Company's short term borrowings increased by $54.4 million as compared to an increase of $32.3 million during the comparable 1993 period. Short term borrowings normally rise during the first nine months of the year, reflecting the seasonal patterns of the Company's business. The increase in 1994 over 1993 was primarily the result of a larger increase in accounts receivable of $14.4 million due to substantially higher sales in September 1994, cash payments aggregating $9.1 million in connection with the acquisitions of the JJ. Farmer business and the GANT and SALTY DOG license agreements, a larger increase in inventories of $8.1 million in anticipation of higher sales in the 1994 fourth quarter, and the purchase and retirement of $3.6 million principal amount of the Secured Notes. The Company's business is seasonal in nature. As a result, the Company's working capital requirements increase significantly during the first three quarters of each year. Salant's principal sources of liquidity, both on a short-term and a long-term basis, are provided by operations and borrowings under the Credit Agreement. The Company believes that the Credit Agreement, together with the Company's cash flow from operations, will provide sufficient funds to satisfy its anticipated financing requirements into the second quarter of 1995. In anticipation of increased sales growth in 1995, including that resulting from the acquisition of the JJ. Farmer business and the licensing of the GANT and SALTY DOG trademarks, the Company projects the need to borrow funds during certain periods of 1995 in excess of the current $120 million limitation under the Credit Agreement. The Company has sufficient assets available under the asset based borrowing formula of the Credit Agreement to provide it with sufficient funds to support its planned growth in 1995, however its needs are projected to exceed the maximum borrowing limitation that currently exists under the Credit Agreement. Accordingly, the Company has commenced discussions with CIT to increase the maximum borrowing limitation under the Credit Agreement. The Company believes that either the maximum borrowing limitation under the Credit Agreement will be increased by CIT or that the Company will be able to obtain alternative financing on a timely basis, sufficient to support its planned growth in 1995. Based upon its analysis of its consolidated financial position, its cash flow during the past twelve months, and its cash flow anticipated from future operations, Salant believes that its future cash flow, together with the funds available under the Credit Agreement and/or other financing agreements, will be adequate to meet its financing requirements for the growth it anticipates in the next twelve months. There can be no assurance, however, that the Company will be able to obtain such additional or alternative financing or that future developments and general economic trends will not adversely affect the Company's operations and, hence, its anticipated cash flow. PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K Reports on Form 8-K The Company did not file any reports on Form 8-K during the quarter ended October 1, 1994. Exhibits Number Description 10.45 Letter Agreement, dated as of August 24, 1994, between Salant Corporation ("Salant") and the CIT Group/Commercial Services, Inc. ("CIT") amending the Revolving Credit, Factoring and Security Agreement, dated as of September 20, 1993 between Salant and CIT. 10.46 Letter Agreement, dated as of October 18, 1994, between Salant Corporation and Herbert Aronson, amending his employment agreement dated December 31, 1990. 10.47 Letter Agreement, dated as of October 25, 1994, between Salant Corporation and Richard Randall, amending his employment agreement dated July 30, 1993. 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. SALANT CORPORATION Date: November 11, 1994 /s/Richard P. Randall Richard P. Randall Senior Vice President and Chief Financial Officer (Principal Financial Officer) EX-1 2 October 25, 1994 Mr. Richard P. Randall 131 Peaceable Street Redding, Connecticut 06896 Dear Dick: Reference is hereby made to the Employment Agreement, dated as of July 30, 1993, between yourself as the Employee and Salant Corporation. We have mutually agreed to amend the Employment Agreement, effective January 1, 1995, as follows: Section 3 of the Employment Agreement is hereby deleted in its entirety and substituted with the following therefore: "Section 3. Term of Employment. For purposes of this Agreement, the term "Employment Period" shall mean the period commencing January 1, 1995 and ending December 31, 1996. The Corporation agrees that if it intends to renew or extend the term of the Employment Period beyond December 31, 1996, it will so notify the Employee in writing on or before July 1, 1996." Paragraph (a) of Section 4 is hereby deleted in its entirety and substituted with the following therefore: "(a) Salary. As annual salary for the services to be rendered by the Employee a salary at the rate of $300,000 per annum from January 1, 1995 to December 31, 1995; and $320,000 per annum from January 1,1996 through December 31, 1996, payable in equal semimonthly installments during the Employment Period." Section 13 of the Employment Agreement is hereby deleted in its entirety and substituted with the following therefore: "Section 13. Automobile Allowance. During the Employment Period, the Corporation will provide the Employee with an automobile allowance in the amount of $680 per month. Except as specifically set forth herein, the Employment Agreement remains in full force and effect and is hereby ratified, confirmed and approved. The Employment Agreement, as modified by this letter, is the only agreement that governs the terms of your employment All other letters, agreements and memorandum are hereby null and void. If the foregoing correctly sets forth our mutual agreement, please sign and return to me the three attached copies of this letter. Very truly yours, SALANT CORPORATION By: /s/ Nicholas P. DiPaolo Nicholas P. DiPaolo Chairman of the Board, President and CEO Accepted and Agreed To: By: /s/Richard P. Randall Richard P. Randall Date: October 26,1994 EX-2 3 October 18, 1994 Mr. Herbert Aronson 150 Central Park South Apt. 506 New York, New York 10019 Dear Herb: Reference is hereby made to both the Employment Agreement, dated as of December 31, 1990 and the Renewal and Extension Letter, dated June 30, 1992, between yourself as the Employee and Salant Corporation. We have mutually agreed to amend the Employment Agreement, effective January 1, 1995, as follows: The first sentence of Section 3 of the Employment Agreement is hereby amended as follows: "3. Employment Period. The period of the Employee's employment (the "Employment Period") shall commence on January 1, 1995 and shall end on December 31, 1996." Section 4 of the Employment Agreement is hereby deleted in its entirety and is substituted with the following therefore: "4. Compensation. During the Employment Period, Salant shall pay to the Employee as compensation for his services: (a) a salary at the rate of $365,000 per annum for the 1995 fiscal year; and a salary at the rate of $380,000 per annum for the 1996 fiscal year, payable in equal semi- monthly installments. (b) A bonus, in accordance with attached Exhibit 1. Each bonus shall be paid by Salant to the Employee within ninety (90) days after the end of the fiscal year of Salant for which such bonus is payable. If the employment of the Employee is terminated under Section 11 or otherwise than "for cause" as defined in Section 10, or if the fiscal year of Salant is changed so that the termination of the Employment Period is not on the last day of Salant's fiscal year, the bonus amount payable under this Section 4 shall be the amount to which the Employee would have been entitled thereunder had his employment continued for the full fiscal year, prorated by the proportion that the number of months of the employment of the Employee hereunder completed during that fiscal year (as rounded to the nearest month) bears to twelve (12)." Section 7 is hereby deleted in its entirety and is substituted with the following therefore: " 7. Consulting Period. (a) Upon the termination of the Employment Period on December 31, 1996, unless sooner terminated under Section 10 or Section 11, the Employee shall cease to be an employee of Salant and the Employee hereby agrees to become a consultant (as an independent contractor and not as an employee) to Salant, and Salant so agrees to retain the Employee for a five (5) year period commencing on January 1, 1997 and ending on December 31, 2001 (the "Consulting Period"). There shall not be a Consulting Period if the Employment Period is terminated under Section 10 or Section 11. As a consultant, the Employee shall render such consulting services to Salant during the Consulting Period as Salant may reasonably request, subject to the following: (i) the Employee shall only be required to render such consulting services in New York, New York and the Employee shall not be required to render such consulting services for more than fifty-four (54) complete business days in any fiscal year of Salant during the Consulting Period; (ii) Salant shall pay to the Employee on the last day of each and every month during the Consulting Period the sum of $8,333.33 per month during the Consulting Period, provided, however, that if Salant elects to call on the Employee for more than fifty-four (54) complete days of consulting during any fiscal year of the Consulting Period, and the Employee renders such services, it will pay Employee an additional sum of $1,800 per day for each day of consulting in excess of fifty-four (54) in such fiscal year. The Employee has the right to decline to perform consulting services in excess of fifty-four (54) days in any fiscal year; once the Employee has worked fifty-four (54) days in any fiscal year the $1,800 per day shall commence and be paid to the Employee on the last day of each month during said fiscal year for the number of days so worked by the Employee; and (iii) the noncompetition covenant contained in Section 9 shall remain in full force and effect throughout the Consulting Period and the Employee agrees to be bound thereby. (b) At any time the Employee may elect to terminate the Consulting Period (or, if during the Employment Period, to eliminate the Consulting Period), in each case effective on ninety (90) days prior written notice to Salant (or upon the termination of the Employment Period, as the case may be). If such election is made, upon the termination of the last of the Employment Period or the Consulting Period, the Employee shall not be required to observe and comply with the noncompetition covenant contained in Section 9 herein, and Salant shall not be required to make any further payments to the Employee after termination of the Consulting Period or Employment Period, as the case may be, except for salary, bonus or consulting fees accrued but unpaid to such termination date, and upon such payment, this Agreement shall terminate." The first sentence of Section 9 of the Employment Agreement is hereby deleted and substituted with the following therefore: "Subject to the provisions of Section 7 of this Agreement, the Employee agrees, as a separate and independent covenant which is of the essence of this Agreement, that in the event the Employee shall cease to remain in the employ of Salant for any reason other than the wrongful discharge of the Employee or other substantial breach of this Agreement by Salant, the Employee will not, for a period commencing with the date of such termination of employment and concluding on December 31, 2001, without express written approval in each case of the Board of Directors of Salant (or any corporation succeeding to a substantial portion of its assets), engage, or be otherwise directly or indirectly interested, (i) as an individual, (ii) as a director, officer, employee, consultant, independent contractor or other similar capacity, (iii) by acting through or with any other person, firm or corporation, or (iv) by owning any stock or having any other interest in such a business other than a corporation listed on a national securities exchange in which the Employee and members of his family, directly or indirectly, own less than 1% of the outstanding stock, in the business of manufacturing and/or selling men's shirts, ties, scarves or other neckwear items, belts, suspenders and small leather goods (hereinafter called the "Products") anywhere in the United States of America, its territories and possessions, or sell or solicit orders for the Products from any customer, either for himself or on behalf of any other person, firm, partnership, association or corporation." Section 11(c) is hereby deleted in its entirety and is substituted with the following therefore: "(c) Further Payments. (i) In the event that the Employment Period hereunder is terminated because of death or disability of the Employee as provided in (a) or (b) above, Salant agrees to pay the Employee or his estate (i) any sums accrued but unpaid as of the date of termination of the Employment Period; and (ii) the sum of $50,000 a year, in equal monthly installments on the last day of each month, for a period of five (5) years commencing on the date of such termination of the Employment Period. If such termination is caused by the disability of the Employee, such payment shall only be made so long as the Employee continues to comply with the noncompetition agreement contained in Section 9, hereof. (ii) In the event that the Consulting Period hereunder is terminated because of death or disability of the Employee as provided in (a) or (b) above, Salant agrees to pay the Employee or his estate (i) any sums accrued but unpaid as of the date of termination of the Consulting Period; and (ii) the sum of $50,000 a year, in equal monthly installments on the last day of each month, for the remaining balance of the Consulting Period had it not been so terminated. If such termination is caused by the disability of the Employee, such payments shall only be made so long as the Employee continues to comply with the noncompetition agreement contained in Section 9 hereof." Section 12(a) is hereby deleted in its entirety and is substituted with the following therefore: "12. Change in Control. (a) In the event of a "change in control" of Salant (defined in accordance with Section 12(b) below) during the Employment Period (but not during the Consulting Period) and if Employee is not then in material default in the performance of his obligations under this Agreement, Employee shall have the right to elect to terminate his obligation to render services under this Agreement by notice in writing to Salant. In the event he elects to do so, Salant shall pay the Employee, as severance pay, in a lump sum (on the later of the date of Employee's termination of employment or five days after the delivery to Salant of Employee's written notice of his election to terminate his employment) the salary (not including bonus or the value of any fringe benefits) to be paid for the remainder of the Employment Period (and not including the Consulting Period), but in no event less than the salary (not including bonus or the value of any fringe benefits) for six months. In the event Employee elects to terminate the Employment Period under this Section 12, there shall then commence, for a five (5) year period, the Consulting Period, as to which the provisions of Sections 7 and 9 above shall apply. (b) The "change in control" that shall be the precondition for the exercise of the Employee's rights under this Section 12 shall be defined in the same manner, and the Employee's right to terminate his employment shall be exercisable under the same circumstances, as shall be provided for in the employment contract of Salant's Chief Executive Officer." Salant Corporation's address, as referenced in Section 16 of the Employment Agreement is hereby deleted in its entirety and substituted with the following therefore: "Salant Corporation 1114 Avenue of the Americas, 36th Floor New York, New York 10036 Attention: Todd Kahn, Esq." Except as specifically set forth herein, the Employment Agreement remains in full force and effect and is hereby ratified, confirmed and approved. The Employment Agreement, as modified by this letter, is the only agreement that governs the terms of your employment. Effective January 1, 1995, all other letters, agreements and memorandum are hereby null and void. If the foregoing correctly sets forth our mutual agreement, please sign and return to me the attached copies of this letter. Very truly yours, SALANT CORPORATION By: /s/ Nicholas P. DiPaolo Nicholas P. DiPaolo Chairman of the Board, President and CEO Accepted and Agreed To: By: /s/ Herbert R. Aronson Herbert R. Aronson Date: 10/21/94 EX-27 4
5 1000 QTR-3 9-MOS DEC-31-1994 DEC-31-1994 OCT-01-1994 OCT-01-1994 1,700 1,700 0 0 79,802 79,802 (9,925) (9,925) 125,918 125,918 201,443 201,443 64,843 64,843 (37,145) (37,145) 310,670 310,670 100,247 100,247 108,251 108,251 15,242 15,242 0 0 0 0 68,648 68,648 310,670 310,670 126,919 307,580 128,500 312,043 96,830 235,718 118,028 295,747 0 0 0 0 4,318 11,658 6,154 4,638 56 195 6,098 4,443 0 0 0 63 0 0 6,098 4,506 0 0 .4 .3
EX-3 5 August 24, 1994 Salant Corporation 1114 Avenue of the Americas New York, New York 10036 Re: Amendment to Credit Agreement with respect to Additional Guarantors Gentlemen: Reference is made to the Revolving Credit, Factoring and Security Agreement, dated as of September 20, 1993, between The CIT Group/Commercial Services, Inc. and Salant Corporation (as amended, the "Credit Agreement"). Initially capitalized terms used not otherwise defined herein shall have their respective meanings as set forth in the Credit Agreement. It is hereby agreed effective as of the date hereof that Section 1.41 of the Credit Agreement as amended in its entirety to read as follows: "1.41 'Guarantors' shall mean Clantexport Inc., a New York corporation, Denton Mills, Inc. a Delaware corporation, Frost Bros. Enterprises, Inc., a Texas corporation, Sea Isle Sportswear Inc., a New York corporation, Vera Licensing, Inc. a Nevada Corporation, Salant Canada Inc., a Canadian corporation and J.J. Farmer Clothing Inc., a Canadian corporation, and each of their respective successors and assigns". Except as hereinabove amended, the Credit Agreement remains in full force and effect in accordance with its terms. Please indicate your agreement to the foregoing by executing a copy of this letter where indicated below and return it to us. Very truly yours, The CIT Group/Commercial Services, Inc. By: /s/ Anthony Lombardi Title: AGREED: Salant Corporation By:/s/ Todd Kahn /s/ John Rodgers Title: -----END PRIVACY-ENHANCED MESSAGE-----