10-Q 1 form10_q1stqtr2001.txt 2001 1ST QUARTER FORM 10-Q 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 March 31, 2001. 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 1-6666 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 April 25, 2001, there were outstanding 9,901,140 shares of the Common Stock of the registrant. TABLE OF CONTENTS Page PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) 3 - 10 Condensed Consolidated Statements of Operations 3 Condensed Consolidated Statements of Comprehensive (Loss)/Income 4 Condensed Consolidated Balance Sheets 5 Condensed Consolidated Statements of Cash Flows 6 - 7 Notes to Condensed Consolidated Financial Statements 8 - 10 Item 2. Management's Discussion and Analysis of 11 - 16 Financial Condition and Results of Operations PART II. OTHER INFORMATION 17 Item 6. Exhibits and Reports on Form 8-K 17 SIGNATURE 17 Salant Corporation and Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Amounts in thousands, except per share data)
Three Months Ended March 31, April 1, 2001 2000 Net sales $ 49,448 $ 56,656 Cost of goods sold 38,935 43,015 Gross profit 10,513 13,641 Selling, general and administrative expenses (13,016) (12,049) Royalty income 3 40 Goodwill amortization (157) (130) Other expense (13) (12) (Loss)/income before interest and income taxes (2,670) 1,490 Interest income, net 234 251 (Loss)/income before income taxes (2,436) 1,741 Income tax benefit 37 -- Net (loss)/income $ (2,399) $ 1,741 Basic and diluted (loss)/income per share $ (0.24) $ 0.18 Weighted average common stock outstanding 9,901 9,901
See Notes to Condensed Consolidated Financial Statements. Salant Corporation and Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME (Unaudited) (Amounts in thousands)
Three Months Ended March 31, April 1, 2001 2000 Net (loss)/income $ (2,399) $ 1,741 Other comprehensive income, net of tax: Foreign currency translation adjustments -- 31 Comprehensive (loss)/income $ (2,399) $ 1,772
See Notes to Condensed Consolidated Financial Statements. Salant Corporation and Subsidiaries CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands)
March 31, December 30, April 1, 2001 2000 2000 (Unaudited) (*) (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 2,022 $ 34,683 $ 13,017 Accounts receivable, net 34,754 16,588 35,625 Inventories (Note 3) 48,046 45,283 36,579 Prepaid expenses and other current assets 6,654 6,305 5,865 Assets held for sale -- -- 100 Total current assets 91,476 102,859 91,186 Property, plant and equipment, net 13,016 13,185 13,639 Other assets 16,469 14,504 13,819 Total assets $ 120,961 $ 130,548 $ 118,644 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 10,981 $ 14,798 $ 12,724 Liabilities subject to compromise (Note 1) 1,563 1,611 3,560 Accrued liabilities 6,078 9,310 7,903 Net liabilities of discontinued Operations (Note 6) 750 744 1,001 Reserve for business restructuring (Note 5) 968 1,070 1,950 Total current liabilities 20,340 27,533 27,138 Deferred liabilities 5,647 5,642 4,133 Shareholders' equity (Note 1) Common Stock 10,000 10,000 10,000 Additional paid-in capital 206,040 206,040 206,040 Deficit (116,416) (114,017) (125,556) Accumulated other comprehensive income (Note 4) (4,452) (4,452) (2,913) Less - treasury stock, at cost (198) (198) (198) Total shareholders' equity 94,974 97,373 87,373 Total liabilities and shareholders' equity $ 120,961 $ 130,548 $ 118,644 (*) Derived from the audited financial statements.
See Notes to Condensed Consolidated Financial Statements. Salant Corporation and Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Amounts in thousands)
Three Months Ended March 31, April 1, 2001 2000 Cash Flows from Operating Activities: Net (loss)/income $ (2,399) $ 1,741 Adjustments to reconcile (loss)/income from continuing operations to net cash (used)/provided by operating activities: Depreciation 1,120 1,242 Amortization 157 130 Change in operating assets and liabilities (net of business acquired): Accounts receivable (18,166) (19,669) Inventories (816) 5,090 Prepaid expenses and other assets (226) (375) Accounts payable (3,817) 627 Accrued and other liabilities (3,477) (3,848) Reserve for business restructuring (102) (358) Liabilities subject to compromise (48) (1,044) Net cash provided/(used) by continuing operations (27,774) (16,464) Cash (used)/provided by discontinued operations 6 (308) Net cash (used)/provided by operating activities (27,768) (16,772) Cash Flows from Investing Activities: Capital expenditures (605) (206) Store fixture expenditures (249) (152) Asset purchase (4,039) -- Net cash provided/(used) by investing activities (4,893) (358) Cash Flows from Financing Activities: Other, net -- 31 Net cash provided/(used) by financing activities -- 31 Net (decrease)/increase in cash and cash equivalents (32,661) (17,099) Cash and cash equivalents - beginning of year 34,683 30,116 Cash and cash equivalents - end of quarter $ 2,022 $ 13,017
See Notes to Condensed Consolidated Financial Statements. Salant Corporation and Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Continued (Unaudited) (Amounts in thousands) Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 4 $ 36 Income taxes $ -- $ 178 Guaranteed future purchase price payment $ 250 $ -- See Notes to Condensed Consolidated Financial Statements. SALANT CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Amounts in Thousands of Dollars, Except Share Data) (Unaudited) Note 1. Financial Restructuring On December 29, 1998 (the "Filing Date"), Salant Corporation ("Salant") filed a petition under chapter 11 of title 11 of the United States Code (the "Bankruptcy Code") with the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court") (the "1998 Case") in order to implement a restructuring of its 10-1/2 % Senior Secured Notes due December 31, 1998 (the "Senior Notes"). Salant also filed its plan of reorganization (the "Plan") with the Bankruptcy Court on the Filing Date in order to implement its restructuring. On April 16, 1999, the Bankruptcy Court issued an order (the "Confirmation Order") confirming the Plan. The effective date of the Plan occurred on May 11, 1999 (the "Effective Date"). See the Company's annual report on Form 10-K for the fiscal year ended December 30, 2000 for more information on the Plan. The authorized capital stock of Salant as of the Effective Date consists of (i) 45,000,000 shares of new common stock, $1.00 par value per share and (ii) 5,000,000 shares of preferred stock, $2.00 par value per share. No preferred stock has been issued either in connection with the Plan or otherwise. Post-restructuring, Salant has focused primarily on its Perry Ellis men's apparel business and, as a result, Salant exited its other businesses. In addition, the Company continues to evaluate potential transactions to expand its men's apparel business. Note 2. Basis of Presentation and Consolidation The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of Salant and subsidiaries (collectively, the "Company"). The Company's principal business is the designing, sourcing, importing and marketing of men's apparel. The Company sells its products to retailers, including department stores, specialty stores and off-price retailers, in addition to its own outlet stores. During the first quarter of 2001, the Company purchased certain assets of a business. The purchase price was approximately $4.3 million, with additional contingent payments upon achieving future defined benchmarks. The acquisition was accounted for using the purchase method and the Company is currently in the process of allocating the purchase price. Any excess purchase price resulting in goodwill will be amortized over a life of 20 years. The pro forma effect of the asset purchase on the results of operations is not presented, as it is not material. The results of operations for the three months ended March 31, 2001 and April 1, 2000 are not necessarily indicative of a full year's operations. In the opinion of management, the accompanying financial statements include all adjustments of a normal recurring nature which are necessary to present fairly such financial statements. Significant intercompany balances and transactions have been eliminated in consolidation. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's annual report on form 10-K for the fiscal year ended December 30, 2000. Note 3. Inventories
March 31, December 30, April 1, 2001 2000 2000 Finished goods $ 34,878 $ 27,078 $ 23,187 Work-in-Process 6,694 11,009 6,105 Raw materials and supplies 6,474 7,196 7,337 $ 48,046 $ 45,283 $ 36,579
Note 4. Accumulated Other Comprehensive Income
Foreign Minimum Accumulated Currency Pension Other Translation Liability Comprehensive Adjustment Adjustment Income 2001 Beginning of year balance $ (118) $ (4,334) $ (4,452) Three months ended March 31, 2001 change -- -- -- End of quarter balance $ (118) $ (4,334) $ (4,452) 2000 Beginning of year balance $ (143) $ (2,801) $ (2,944) Three months ended April 1, 2000 change 31 -- 31 End of quarter balance $ (112) $ (2,801) $ (2,913)
Note 5. Division Restructuring Costs In the first quarter of 2001, the Company used $102 of the restructure reserve primarily for employee costs necessary to complete the shut down of Mexican operations and other employee benefit costs. As of March 31, 2001, the reserve balance is $968 of which $450 is reserved for severance costs, $195 is reserved for future lease payments, $152 is reserved for costs to close Mexican operations, and $171 is reserved for various miscellaneous restructuring costs. Note 6. Discontinued Operations In the first quarter of 2001, the net liabilities of discontinued operations increased by $6 due to collection activity related to bad debts. As of March 31, 2001, the net liabilities of discontinued operations consist of $545 of reserve for discontinued operations, $185 of liabilities subject to compromise, and $20 of miscellaneous liabilities. Note 7. Segment Reporting The Company operates in two business segments: wholesale and retail. The wholesale apparel segment consists of businesses that design, produce and market men's apparel under various trademarks, owned or licensed by the Company or the customer, to wholesale customers. The retail segment of the Company consists of a chain of outlet stores, through which it sells products produced by the Company and other Perry Ellis licensed manufacturers. As of March 31, 2001, the Company operated 37 Perry Ellis outlet stores. The Company's results of operations for the three-months ended, by segment, were as follows:
March 31, April 1, December 30, 2001 2000 2000 Total Assets Wholesale $110,719 $110,710 $121,709 Retail 10,242 7,934 8,839 $120,961 $118,644 $130,548 Net Sales Wholesale $ 44,905 $ 52,815 Retail 4,543 3,841 $ 49,448 $ 56,656 Gross Profit Wholesale $ 8,520 $ 11,806 Retail 1,993 1,835 $ 10,513 $ 13,641 Operating (Loss)/Income before Interest and Taxes Wholesale $ (1,818) $ 1,957 Retail (852) (467) $ (2,670) $ 1,490
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Results of Operations First Quarter of 2001 Compared with First Quarter of 2000 Net Sales Net sales decreased by $7.2 million or 12.7% in the first quarter of 2001, as compared to the first quarter of 2000. This decrease in net sales is primarily the result of a very difficult and weak retail environment. Net sales for the wholesale segment decreased $7.9 million or 15.0% in the first quarter of 2001, as compared to the first quarter of 2000. Newly acquired and licensed wholesale businesses accounted for an increase $2.5 million for the first quarter of 2001. Net sales for the retail segment increased by $0.7 million or 18.3% in the first quarter of 2001, as compared to the first quarter of 2000. The principal reason for this increase is the net sales contribution related to the additional stores opened between April 1, 2000 and March 31, 2001. Gross Profit The gross profit percentage in the first quarter of 2001 decreased by 2.8%, as compared to the first quarter of 2000. The gross profit percentage for the wholesale segment decreased to 19.0% on the first quarter of 2001 from 22.4% in the first quarter of 2000. The decrease is primarily the result of lower achieved margins in response to the overall softness in the retail market and lower margins on closeout inventories. Total gross profit for the retail segment increased, due to additional stores, by $0.2 million in the first quarter of 2001, from the first quarter of 2000. However, the retail segment gross profit percentage decreased as compared to the first quarter of 2000, primarily as a result of additional markdown activity in response to weakness in retail sales at all levels during the quarter. Selling, General and Administrative Expenses Selling, general and administrative ("SG&A") expenses in the first quarter of 2001 increased to $13.0 million (26.3% of sales) from $12.0 million (21.3% of sales) as compared to the first quarter of 2000. This increase is the result of additional SG&A expenses related to new businesses and additional retail outlet stores. (Loss)/Income Before Interest and Income Taxes Loss from operations before interest and taxes was $(2.7) million for the first quarter of 2001 as compared to income of $1.5 million for the first quarter of 2000. The decrease is primarily the result of lower net sales, which is detailed above. The retail segment's loss from operations before interest and income taxes increased to $(0.8) million in the first quarter of 2001 from $(0.5) million in the first quarter of 2000. Interest Income, Net Net interest income was $234,000 for the first quarter of 2001 as compared to $251,000 for the first quarter of 2000. The decrease is the result of lower invested cash balances and a lower interest rate in the first quarter of 2001. Net (Loss)/Income In the first quarter of 2001, the Company reported a net loss of $(2.4) million, or $(.24) per share, as compared to net income of $1.7 million, or $.18 per share in the first quarter of 2000. Loss/Earnings Before Interest, Taxes, Depreciation, Amortization, Restructuring Charges, Discontinued Operations and Extraordinary Gain Loss before interest, taxes, depreciation, amortization, restructuring charges, and discontinued operations was $(1.3) million (2.8% of sales) for the first quarter of 2001, compared to earnings of $2.9 million (5.0% of net sales) in the first quarter of 2000. The Company believes this information is helpful in understanding cash flow from operations that is available for debt service and capital expenditures. This measure is not contained in Generally Accepted Accounting Principles and is not a substitute for operating income, net income or net cash flows from operations. Liquidity and Capital Resources On May 11, 1999, the effective date of the Plan, the Company entered into a syndicated revolving credit facility (the "Credit Agreement") with The CIT Group/Commercial Services, Inc. ("CIT") pursuant to and in accordance with the terms of a commitment letter dated December 7, 1998. The Credit Agreement provides for a general working capital facility, in the form of direct borrowings and letters of credit, up to $85 million subject to an asset-based borrowing formula. As collateral for borrowings under the Credit Agreement, the Company granted to CIT and a syndicate of lenders arranged by CIT (the "Lenders") a first priority lien on and security interest in substantially all of the assets of the Company. The Credit Agreement has an initial term of three years. The Credit Agreement also provides, among other things, that (i) the Company will be charged an interest rate on direct borrowings of .25% in excess of the Prime Rate or, at the Company's request, 2.25% in excess of LIBOR (as defined in the Credit Agreement), and (ii) the Lenders may, in their sole discretion, make loans to the Company in excess of the borrowing formula but within the $85 million limit of the revolving credit facility. The Company is required under the Credit Agreement to maintain certain financial covenants relating to consolidated tangible net worth, capital expenditures, maximum pre-tax losses/minimum pre-tax income and minimum interest coverage ratios. The Company was in compliance with all applicable covenants at March 31, 2001. Pursuant to the Credit Agreement, the Company is charged the following fees: (i) a documentary letter of credit fee of 1/8 of 1.0% on issuance and 1/8 of 1.0% on negotiation; (ii) a standby letter of credit fee of 1.0% per annum plus bank charges; (iii) a one time commitment fee of $325 thousand; (iv) an unused line fee of .25%; (v) an agency fee of $100 thousand (for the second and third years of the term of the Credit Agreement); (vi) a collateral management fee of $8,333 per month; and (vii) a field exam fee of $750 per day plus out-of-pocket expenses. At March 31, 2001, there were no direct borrowings outstanding; letters of credit outstanding under the Credit Agreement were $30.8 million and the Company had unused availability, based on outstanding letters of credit and existing collateral, of $36.7 million and cash of approximately $2.0 million available to fund its operations. At the end of the first quarter of 2000, there were no direct borrowings outstanding; letters of credit outstanding were $31.5 million, and the Company had unused availability of $32.5 million and cash of approximately $13.0 million available to fund its operations. The Company's cash used by operating activities for the first three months of 2001 was $27.8 million, which primarily reflects (i) an increase in net accounts receivable of $18.2 million, (ii) an increase in net inventories of $0.8 million, (iii) a decrease in accounts payable of $3.8 million, (iv) a decrease in accrued liabilities and reserve for business restructuring of $3.6 million, (v) an increase in prepaid assets of $0.2 million, (vi) and net losses from continuing operations of $2.4 million. These items were offset by non-cash charges, depreciation and amortization, of $1.3 million. Cash used by investing activities for the first three months of 2001 was $4.9 million, which reflects $4.0 million used to purchase the assets of a business, $0.6 million for capital expenditures, and $0.3 million for the installation of store fixtures in department stores. During fiscal 2001, the Company plans to make capital expenditures of approximately $4.1 million and to spend $1.1 million for the installation of stores fixtures in department stores. Working Capital At March 31, 2001, working capital totaled $71.1 million as compared to $64.0 million at the end of the first quarter of 2000 and the current ratio improved to 4.5:1 as compared to 3.4:1 in the first quarter of 2000. The components of working capital also changed significantly in the first quarter of 2001 as compared to the first quarter of 2000. Cash decreased by $11.0 million, which was offset by an increase in inventory, a reduction in current liabilities and the purchase of the assets of a business. The increase in inventory was due to weakness at retail, additional inventory requirements related to additional retail outlet stores and two new businesses that were added between the first quarter of 2000 and the first quarter of 2001. Liabilities decreased $6.8 million in the first quarter of 2001 as compared to the first quarter of 2000 due to the settlement of liabilities subject to compromise, restructuring charges and the timing of the payments in the normal course of business. Although quarterly sales decreased from the prior year, the accounts receivable balance did not significantly change from the first quarter of 2001 as compared to the first quarter of 2000, reflecting a change in the timing of the sales during the quarter. Factors that May Affect Future Results and Financial Condition. This report contains or incorporates by reference forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Where any such forward-looking statement includes a statement of the assumptions or bases underlying such forward-looking statement, the Company cautions that assumed facts or bases almost always vary from the actual results, and the differences between assumed facts or bases and actual results can be material, depending on the circumstances. Where, in any forward-looking statement, the Company or its management expresses an expectation or belief as to future results, there can be no assurance that the statement of the expectation or belief will result or be achieved or accomplished. The words "believe", "expect", "estimate", "project", "seek", "anticipate" and similar expressions may identify forward-looking statements. The Company's future operating results and financial condition are dependent upon the Company's ability to successfully design, source, import and market apparel. Taking into account the foregoing, the following are identified as important factors that could cause results to differ materially from those expressed in any forward-looking statement made by, or on behalf of, the Company: Competition. The apparel industry in the United States is highly competitive and characterized by a relatively small number of multi-line manufacturers (such as the Company) and a large number of specialty manufacturers. The Company faces substantial competition in its markets from manufacturers in both categories. Many of the Company's competitors have greater financial resources than the Company. The Company also competes for private label programs with the internal sourcing organizations of many of its own customers. Strategic Initiatives. During the second quarter of 2000, the Company entered into a licensing agreement with Hartz & Company, Inc. ("Hartz") to design, produce and distribute men's sportswear and furnishings for Hartz's exclusive Tallia brand. In the first quarter of 2001, the Company purchased the assets and trademarks of Tricots St. Raphael, Inc. which designs, produces, and markets better men's sweaters and sportswear. Management of the Company is continuing to consider various strategic opportunities, including but not limited to, new menswear licenses and/or acquisitions. Management is also exploring ways to increase productivity and efficiency, and to reduce the cost structures of its respective businesses. Through this process management expects to increase its distribution channels and achieve effective economies of scale. No assurance may be given that any transactions resulting from this process will be announced or completed. Apparel Industry Cycles and other Economic Factors. The apparel industry historically has been subject to substantial cyclical variation, with consumer spending on apparel tending to decline during recessionary periods. A decline in the general economy or uncertainties regarding future economic prospects may affect consumer spending habits, which, in turn, could have a material adverse effect on the Company's results of operations and financial condition. Retail Environment. Various retailers, including some of the Company's customers, have experienced declines in revenue and profits in recent periods. To the extent that these financial difficulties continue, there can be no assurance that the Company's financial condition and results of operations would not be adversely affected. Seasonality of Business and Fashion Risk. The Company's principal products are organized into seasonal lines for resale at the retail level during the Spring, Transition, Fall and Holiday Seasons. Typically, the Company's products are designed as much as one year in advance and manufactured approximately one season in advance of the related retail selling season. Accordingly, the success of the Company's products is often dependent on the ability of the Company to successfully anticipate the needs of the Company's retail customers and the tastes of the ultimate consumer up to a year prior to the relevant selling season. Foreign Operations. The Company's foreign sourcing operations are subject to various risks of doing business abroad, including currency fluctuations (although the predominant currency used is the U.S. dollar), quotas, and in certain parts of the world, political instability. Any substantial disruption of its relationship with its foreign suppliers could adversely affect the Company's operations. Some of the Company's imported merchandise is subject to United States Customs duties. In addition, bilateral agreements between the major exporting countries and the United States impose quotas, which limit the amount of certain categories of merchandise that may be imported into the United States. Any material increase in duty levels, material decrease in quota levels or material decrease in available quota allocation could adversely affect the Company's operations. The Company's operations in Asia are subject to certain political and economic risks including, but not limited to, political instability, changing tax and trade regulations and currency devaluations and controls. Although the Company has experienced no material foreign currency transaction losses, its operations in the region are subject to an increased level of economic instability. The impact of these events on the Company's business, and in particular its sources of supply, cannot be determined at this time. Dependence on Contract Manufacturing. The Company produces substantially all of its products (in units) through arrangements with independent contract manufacturers. The use of such contractors and the resulting lack of direct control could subject the Company to difficulty in obtaining timely delivery of products of acceptable quality. In addition, as is customary in the industry, the Company does not have any long-term contracts with its fabric suppliers or product manufacturers. While the Company is not dependent on one particular product manufacturer or raw material supplier, the loss of several such product manufacturers and/or raw material suppliers in a given season could have a material adverse effect on the Company's performance. Because of the foregoing factors, as well as other factors affecting the Company's operating results and financial condition, past financial performance should not be considered to be a reliable indicator of future performance, and investors are cautioned not to use historical trends to anticipate results or trends in the future. In addition, the Company's participation in the highly competitive apparel industry often results in significant volatility in the Company's common stock price. New Accounting Pronouncements. In June 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities, which is effective for all fiscal years beginning after June 15, 1999. SFAS 133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities. Under SFAS 133, certain contracts that were not formerly considered derivatives may now meet the definition of a derivative. The Company adopted SFAS 133 effective as of December 31, 2000. The adoption of SFAS 133 did not have a significant impact on the financial position or results of operations of the Company because the Company does not have significant derivative activity. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K Reports on Form 8-K During the first quarter of 2001, the Company did not file a current report on Form 8-K. Exhibits Number Description 10.49 Letter Agreement, dated March 28, 2001, amending the Employment Agreement, dated February 1, 1999, as amended on July 1, 1999, between Awadhesh Sinha and Salant Corporation. * 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: May 11, 2001 /s/ Awadhesh K. Sinha Awadhesh K. Sinha Chief Operating Officer and Chief Financial Officer * constitutes a management contract or a compensatory plan or arrangement