Biscayne: 1996 Operating Results FOR IMMEDIATE RELEASE FOR MORE INFORMATION CONTACT: A. Richard Hurwitz Vice President, Corporate Communications (305) 858-2200 or Peter Vandenberg, Jr. Executive Vice President, CFO (201) 473-3240, x221 or x256 BISCAYNE APPAREL ANNOUNCES 1996 OPERATING RESULTS CLIFTON, NJ - (March 7, 1997) Biscayne Apparel, Inc. (ASE: BHA) today announced its operating results for the year ended December 31, 1996. Net sales in 1996 were $105.4 million versus $100.3 million in the same period of 1995. Net loss in 1996 was $8.7 million, or $0.81 per share, versus a net loss of $6.1 million, or $0.57 per share in 1995. Biscayne's 1996 results before restructuring charges, impairment of long-lived assets, and valuation reserves on Federal tax net operating loss carry forwards, reflect net income of $0.4 million, or $0.04 per share. The Company's gross margin for the 1996 fiscal year was 25.9%, compared to 20.1% in the same period in 1995. The improvement in gross margin was largely attributable to the lowering of production costs at M&L International. Selling, general and administrative expense ("S,G&A") before restructuring charges and impairment of long-lived assets was $24.4 million, or 23.1% of net sales, compared to $25.4 million, or 25.4% in the 1995 period. The improvement was due to increased sales volume and management's ongoing cost reduction efforts. Year-end 1996 results included impairment and restructuring charges and valuation reserves on Federal tax net operating loss carry forwards totaling $9.1 million, net of taxes, or $0.85 per share. Biscayne's net sales for the fourth quarter ended December 31, 1996 were $30.0 million, compared to $29.5 million in the same period of 1995. The net loss for the fourth quarter of 1996 was $8.0 million, or $0.74 per share, compared to a net loss of $4.1 million, or $0.38 per share in 1995. In the fourth quarter of 1996, the Company incurred $9.1 million, net of taxes, in restructuring charges, impairment of long-lived assets, and Federal tax carry forward valuation reserves. Restructuring charges included one-time expenses for the termination of long-term contracts and leases, salary and separation costs, and the relocation of Varon's divisional offices. Impairment of long-lived assets related to the write-down of certain manufacturing facilities to fair market value and the write-off of goodwill in the Andy Johns and Varon divisions. Net income before restructuring charges, impairment of long-lived assets, and Federal tax carry forward valuation reserves in the fourth quarter of 1996 was $1.2 million, or $0.11 per share. Biscayne's backlog as of February 21, 1997 was $55.4 million, compared to $45.5 million at February 21, 1996. Earl W. Powell, President and Chief Executive Officer, commented, "Biscayne's operating results reflected the impact of the strategic operating plan which was introduced in early 1996 when our management team moved aggressively to improve the Company's long-term sales, profitability, and liquidity. We undertook several cost saving activities and operating initiatives, while making investments in product development and marketing. In the past year, we accomplished the following: * reduced total debt from $31.8 million as of December 31, 1995 to $14.2 million as of the 1996 fiscal year-end, * sold our 20% interest in Hartwell Sports, Inc. for $1.75 million, which generated a pre-tax gain of $250,000, * closed high cost manufacturing facilities in the Philippines and the United States, while outsourcing production to low cost foreign manufacturing facilities, and our new offshore manufacturing facility in Honduras, * consolidated our outerwear distribution functions in Seattle, Washington, * redesigned our outerwear lines with a new product development team, * improved our sales and marketing effort with new and proven personnel, * lowered S,G&A through reductions in personnel, management salaries and fees, and facilities consolidation, * implemented co-operative sourcing among the outerwear product groups, utilizing a network of existing overseas satellite offices and staff, and * replaced foreign production agents with Company personnel, thereby reducing costs and improving controls. Powell concluded, "While our strategic operating plan is almost complete, we still expect to generate further administrative and operational cost savings in 1997. We believe that the implementation of these initiatives will make Biscayne leaner and more competitive, and will be reflected in significant improvement in operating comparisons to 1996. " Biscayne Apparel, Inc. is a designer, manufacturer, and importer of diversified apparel and has the following operations: Andy Johns Fashions International - women's and junior's outerwear; Andy Johns Kids - children's outerwear; M&L International - infants', toddlers', and children's outerwear, sportswear and swimwear; Mackintosh of New England - women's woolen coats and outerwear; and Varon - girls' and boys' underwear and girls' daywear. Additional information on Biscayne Apparel, Inc. is available on the Internet World Wide Web at this address: http://www.cfonews.com/bha; or interested parties may dial direct by modem to (718) 279-3590; or may send E-mail to cfo@panix.com, with the subject bha. Biscayne Apparel, Inc. Consolidated Balance Sheet (Dollars in thousands, except for per share data) December 31, December 1996 1995 ------------- ------------- ASSETS Current assets: Cash and cash equivalents.................. $ 327 $ 312 Trade accounts receivable, less allowances of $2,018 in 1996 and $1,967 in 1995...... 14,374 18,271 Inventories................................ 14,554 25,890 Federal income tax receivable.............. 1,455 1,969 Prepaid expenses and other................. 2,261 1,972 ------------- ------------- Total current assets.................... 32,971 48,414 Property, plant and equipment, less accumulated depreciation of $1,912 in 1996 and $1,918 in 1995......................... 2,864 3,652 Investment in Hartwell Sports, Inc........... - 1,627 Goodwill, net................................ - 6,532 Other assets, net............................ 275 1,517 ------------- ------------- $ 36,110 $ 61,742 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable........................... $ 4,024 $ 3,841 Accrued liabilities........................ 6,184 5,914 Notes payable to banks..................... 1,473 17,850 Current portion of long-term debt.......... 1,750 1,250 ------------- ------------- Total current liabilities............... 13,431 28,855 Subordinated notes............................. 6,444 6,444 Long-term debt............................... 4,500 6,250 Other liabilities............................ 557 358 Commitments and contingencies................ - - Stockholders' Equity: Common stock................................. 107 107 Additional paid-in capital................. 26,311 26,309 Unearned stock award compensation.......... (68) (135) Accumulated deficit........................ (15,172) (6,446) ------------- ------------- Total stockholders' equity.............. 11,178 19,835 ------------- ------------- $ 36,110 $ 61,742 ============= ============= BISCAYNE APPAREL CONSOLIDATED STATEMENTS OF CASH FLOW (Dollars in thousands, except for per share data) Year Ended December 31, ------------------------ 1996 1995 ----------- ----------- Operating activities: Net loss........................................... $ (8,724) $ (6,127) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: (Gain) loss on sale of assets..................... (11) 91 Gain on sale and equity in net income of investee......................................... (123) (122) Non-cash stock compensation expense................. 67 68 Depreciation expense................................ 544 584 Amortization expense................................ 95 (35) Provision for losses and sales allowances on receivables..................................... 5,158 4,584 Impairment of long-lived assets..................... 7,062 - (Increase) decrease in operating assets: Trade accounts receivable............................ (951) (1,846) Inventories.......................................... 11,588 (3,737) Prepaid expenses and other........................... (360) (410) Federal income tax receivable........................ 514 (1,969) Other assets......................................... 1,516 (499) Increase (decrease) in operating liabilities: Accounts payable..................................... 60 (2,398) Accrued liabilities.................................. (511) (1,178) Other liabilities.................................... 286 (501) ----------- ----------- Net cash provided by (used in) operating activities 16,210 (13,495) Investing activities: Proceeds from net sale of assets...................... 11 9 Capital expenditures.................................. (257) (941) Proceeds on sale of equity investee................... 1,750 - ----------- ----------- Net cash provided by (used in) investing activities... 1,504 (932) Financing activities: Payments under notes payable to banks................. (87,402) (72,155) Borrowings under notes payable to banks............... 71,025 81,505 Proceeds from term loan............................... - 7,500 Repayment of subordinated notes....................... - (6,276) Principal payments of long-term debt and capital lease (1,322) (26) Proceeds from exercise of employee stock options...... - 13 ----------- ----------- Net cash (used in) provided by financing activities... (17,699) 10,561 Net increase (decrease) in cash and cash equivalents... 15 (3,866) Cash and cash equivalents at beginning of year......... 312 4,178 ----------- ----------- Cash and cash equivalents at end of year............... $ 327 $ 312 =========== =========== BISCAYNE APPAREL, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands of dollars, except for per share data) Three Months Ended December 31, Year Ended (Unaudited) December 31, ------------------------- ------------------------ 1996 1995 1996 1995 ----------- ----------- ----------- ----------- Net sales........... $ 29,995 $ 29,490 $ 105,425 $ 100,294 Operating costs and expenses: Cost of goods sold.. 21,722 27,112 78,112 80,121 Selling, general and administrative..... 6,567 6,933 24,394 25,434 Restructuring expense 2,039 - 2,039 - Impairment of long-lived assets............. 7,062 - 7,062 - ----------- ----------- ----------- ----------- Operating loss..... (7,395) (4,555) (6,182) (5,261) Other income and (expenses): Interest and other expenses.......... (966) (1,380) (3,643) (3,805) Interest and other income............ 37 51 246 109 Gain on sale and equity in net income of investee - (20) 123 122 ----------- ----------- ----------- ----------- Loss before benefit for income taxes... (8,324) (5,904) (9,456) (8,835) Benefit for income taxes.............. (364) (1,797) (732) (2,708) ----------- ----------- ----------- ----------- Net loss........... $ (7,960) $ (4,107) $ (8,724) $ (6,127) =========== =========== =========== =========== Net loss per common share.............. $ (0.74) $ (0.38) $ (0.81) $ (0.57 =========== =========== =========== =========== Shares used in computing net loss per common share... 10,741,748 10,741,253 10,741,748 10,733,551 =========== =========== =========== =========== Ends.