Biscayne: 3rd Quarter Earnings News Release FOR IMMEDIATE RELEASE FOR MORE INFORMATION CONTACT: Peter Vandenberg, Jr. President and Chief Operating Officer (973) 473-3240 BISCAYNE APPAREL ANNOUNCES THIRD QUARTER OPERATING RESULTS CLIFTON, NJ - (November 20, 1998) Biscayne Apparel, Inc. (ASE: BHA) today announced its operating results for the third quarter ended September 30, 1998. Net sales in the 1998 third quarter were $20.2 million versus $25.6 million in the same period of 1997. Income from continuing operations in the 1998 third quarter was $2.4 million, or $0.22 per share, versus income from continuing operations of $3.8 million, or $0.35 per share in the third quarter of 1997, reflecting the impact of lower volume. Net sales for the first nine months of 1998 were $37.8 million, compared to $41.9 million in the same period of 1997. Income from continuing operations declined from $2.5 million, or $0.23 per share, in the first nine months of 1997, to $1.6 million, or $0.15 per share in the same period of 1998, reflecting the impact of lower volume. Consolidated sales backlog for continuing operations at October 30, 1998 was $7,170,000 compared to $12,878,000 at October 29, 1997. The decrease is largely due to lower fourth quarter 1998 sales backlog and lower spring 1999 sales backlog. As previously-announced in 1997, OshKosh B'Gosh (NASDAQ:GOSHA)did not renew its license with M&L for the manufacture of children's outerwear effective June 1998. As part of a strategy adopted several years ago, OshKosh decided to sell its outerwear directly to the retail market. The Company replaced part of this business through licensing arrangements with several other well-known children's brand names. For the quarter ended September 30, 1998 and 1997, M&L's sales of Oshkosh outerwear were $2,078,000 and $11,363,000 respectively. For the nine months ended September 30, 1998 and 1997, M&L's sales of Oshkosh outerwear were $11,414,000 and $16,653,000 respectively. The Company's gross margin was 33% in the third quarter of 1998, compared to 34% in the same period in 1997. Selling, general and administrative expense ("S,G&A") was $3.6 million, or 18% of net sales in the third quarter of 1998, compared to $4.4 million, or 17% of net sales in 1997 third quarter. Recently, Biscayne announced that it had retained the investment banking arm of Kurt Salmon Associates, an Atlanta-based consultant to retailers and consumer products companies, to advise the Company on strategic alternatives to maximize its operating profitability and shareholder value. As a result of this process, the Company determined to dispose of the majority of the assets of its subsidiaries' Biscayne Apparel International, Inc. ("BAII") and Mackintosh of New England, Co. ("Mackintosh"). Accordingly, the Company has reclassified Mackintosh, a manufacturer of women's woolen coats and active outerwear, and BAII, a manufacturer of girl's and boy's underwear and girl's daywear, as discontinued operations. The Company is in the process of negotiating the sale of selected assets of these subsidiaries, but to date, no definitive agreements have been finalized. In the event that the sale of these assets does not occur, the operations of BAII and Mackintosh will cease and the Company intends to liquidate such assets. The estimated loss on disposal, net of taxes, is $9.6 million or $0.89 per share, though this figure may differ materially from amounts actually realized on final sale. The liabilities of discontinued operations of $25,419,000 at September 30, 1998 exceeded the assets of discontinued operations of $17,513,000 at September 30, 1998 by $7,906,000. This difference is subject to a change in estimates. From time to time, the Company's discontinued operating subsidiaries have not been able to make timely payments to their trade and other creditors. The Company does not intend to fund the majority of this deficit from the Company's continuing operations, other than those liabilities of its discontinuing operations that are subject to guarantees by the Company's continuing operations. The liabilities of its discontinued operations that are subject to such guarantees approximate $14,700,000 and are primarily related to the Company's notes payable to banks. Such notes payable to banks related to discontinued operations are collateralized by substantially all of the assets of the discontinued operations. The Company intends to pay its bank lenders all of the net proceeds arising from any sale or liquidation of assets of the discontinued operations. The Company does not anticipate that such net proceeds will be adequate to satisfy all liabilities of the discontinued operations, whether owed to its lenders or otherwise. Accordingly, the Company and its lenders will negotiate with respect to the payment of less than all of such obligations, and the Company cannot predict the outcome of such negotiations. Additionally, the Company cannot predict whether creditors of discontinued operations other than its bank lenders will assert claims against the Company arising from those operations. The Company has entered into several amendments to its Loan Agreement during 1998 to amend or waive violations of certain covenants during the 1998 period. The Company has violated certain requirements of its Loan Agreement, relating to collateral coverage and levels of tangible net worth. The Company's lenders have allowed the Company to remain in violation of these agreements. Were the Company's loan obligations required to be immediately repaid, the Company would not be able to operate without immediate alternative financing becoming available, including debtor-in-possession financing that might be available upon a filing under Chapter 11 of the Bankruptcy Code. The Company is discussing its financing needs with its existing lenders; however, there can be no assurances that such existing lenders or any other lenders will agree to fund such needs or otherwise to provide working capital financing that would permit the Company to operate as it has in the past. A Reservation of Rights and Waiver Agreement was entered into on October 1, 1998, whereby the Company's bank lenders agreed to extend credit at their discretion without waiving any rights that might arise upon one or more events of default which occur subsequent to the amendments discussed above. If any lender to the Company determined to exercise any of its rights that might arise upon any event of default by the Company, or if the Company were not able to secure additional or alternative financing, the Company would consider a range of alternatives, including the commencement of a proceeding under Chapter 11 of the Bankruptcy Code. The Company has prepared the accompanying unaudited consolidated financial statements assuming that it will continue as a going concern. This assumption is based upon the continuing operating results for the nine months ended September 30, 1998 and September 30, 1997 and that the Company restructures existing debt and obtains working capital financing for operations; the Company cannot predict whether it will be able to satisfy both of these conditions. The Company believes that it cannot service its existing debt and its other liabilities and meet its prospective working capital needs without restructuring its existing debt and without obtaining working capital financing for its continuing operations. Biscayne is continuing operations through it's third subsidiary, M&L International, Inc. ("M&L"), a designer, manufacturer, and marketer of infant's, toddler's and children's outerwear, sportswear, and swimwear. The Company will continue to investigate available strategic alternatives for M&L, including a possible sale. The Company's common stock is currently traded on the American Stock Exchange ("Amex"). The Amex has certain rules, guidelines and financial measures to maintain a listing. Due to losses sustained from 1995 through 1998 and the related reduction to stockholders' equity, the Company's common stock may be delisted. Were the Company's shares delisted, the Company intends to seek to list its shares for trading in the over-the counter markets for as long as its financial condition permits it to do so. This news release contains certain forward-looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward looking statements involve risks and uncertainties that could cause actual results to differ materially from these forward-looking statements. These risks include, but are not limited to, raw material costs and the ability to pass price increases to customers in a timely fashion, product acceptance and availability, changes in the level of consumer demand and/or spending, fashion trends, weather patterns, further governmental regulations, etc. Disposition of some or all of the remaining operating units and/or assets of the Company may not be completed within the foreseeable future. All forward-looking statements should be considered in light of these risks and uncertainties. Biscayne Apparel, Inc. is a designer, manufacturer, and importer of infant's, toddler's, and children's outerwear and sportswear through its M&L International, Inc. subsidiary. Additional information is available on the Internet at http://www.cfonews.com/bha. ### BISCAYNE APPAREL, INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands) SEPTEMBER 30, DECEMBER 31, 1998 1997 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ - $ 139 Trade accounts receivable, less allowances of $1,245 in 1998 and $630 in 1997 16,280 6,164 Inventories 5,922 7,120 Prepaid expenses and other 522 503 Current assets of discontinued operations 17,513 18,071 - - Total current assets 40,237 31,997 Property, plant and equipment, less accumulated depreciation of $352 in 1998 and $222 in 1997 330 415 Other assets, net 187 190 Non-current assets of discontinued operations - 2,649 $ 40,754 $35,251 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,008 $ 2,123 Accrued liabilities 2,724 2,624 Notes payable to banks 9,790 - Current portion of long-term debt 2,500 2,000 Current liabilities of discontinued operations 25,419 11,306 Total current liabilities 41,441 18,053 Subordinated notes 6,444 6,444 Long-term debt - 2,500 Other liabilities 241 21 Negative goodwill 421 434 Non-current liabilities of discontinued operations - 141 Commitments and contingencies - - Stockholders' Equity: Preferred stock - par value $0.01; 5,000 shares authorized; no shares issued Common stock - par value $0.01; 25,000,000 shares authorized; 10,797,666 and 10,771,308 shares outstanding at September 30, 1998 and December 31, 1997, respectively 108 108 Additional paid-in capital 26,612 26,610 Accumulated deficit (34,513) (19,060) Total stockholders' equity (7,793) 7,658 $ 40,754 $ 35,251 BISCAYNE APPAREL, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands of dollars, except per share data) (Unaudited) THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1998 1997 1998 1997 Net sales $ 20,226 $ 25,614 $ 37,768 $ 41,887 Operating costs and expenses: Cost of goods sold 13,536 16,858 25,247 27,888 Selling, general and administrative 3,631 4,382 9,215 9,968 Operating income 3,059 4,374 3,306 4,031 Other income and (expenses): Interest and other expenses (662) (694) (1,686) (1,684) Interest and other income - 92 3 112 Income from continuing operations before Provision for income taxes 2,397 3,772 1,623 2,459 Provision for income taxes 12 - 12 - Net earnings from continuing operations 2,385 3,772 1,611 2,459 Loss from discontinued operations, net of taxes (2,536) (1,268) (7,424) (2,523) Estimated loss on disposal, net of taxes (9,637) - (9,637) - Net loss from discontinued operations (12,173) (1,268) (17,061) (2,523) Net earnings (loss) $ (9,788) $ 2,504 $(15,450) $ (64) Basic and diluted net earnings (loss) per common share: From continuing operations $ 0.22 $ 0.35 $ 0.15 $ 0.23 From discontinued operations (1.12) (0.12) (1.58) (0.24) Net earnings (loss) per common share $ (0.90) $ 0.23 $ (1.43) $ (0.01) Shares used in computing basic and diluted net earnings (loss) per common share 10,797,666 10,793,639 10,797,666 10,761,288 Ends.