Biscayne: Earnings News Release FOR IMMEDIATE RELEASE FOR MORE INFORMATION CONTACT: A. Richard Hurwitz Vice President, Corporate Communications (305) 858-2200 BISCAYNE APPAREL ANNOUNCES 1998 FIRST QUARTER RESULTS CLIFTON, NJ - (May 15, 1998) Biscayne Apparel, Inc. (ASE:BHA) today announced its operating results for the first quarter ended March 31, 1998. Net sales in the 1998 first quarter were $11.3 million, compared to $14.8 million in the same period of 1997. The net loss in the 1998 first quarter was $1.9 million, or $0.18 per share, compared to a net loss of $1.1 million, or $0.10 per share in the first quarter of 1997. The Company's gross margin was 21.3% in the first quarter of 1998, compared to 25.7% in the same period in 1997, a decrease resulting from lower sales volumes in each of the Company's three product lines and an increase in production costs in the children's underwear division. Selling, general and administrative expense ("S,G&A") declined 8% from $4.9 million in 1997 to $4.6 million in 1998 due to management's continued cost reduction efforts. Interest expense increased from $0.6 million in the first quarter of 1997 to $0.7 million in the same period of 1998 due to higher average debt balances. Peter Vandenberg, Jr., President and Chief Operating Officer, commented, "We are disappointed with Biscayne's 1998 first quarter operating results which reflected the impact of several factors, including: unseasonably warm fall/winter weather, which impeded sell-through of outerwear at wholesale and retail, soft spring sales in general, increased inventories, and increased production costs. However, Biscayne's first quarter typically provides only about 15% of total annual sales, and we believe that the Company's operating results will improve from these levels over the balance of the year." 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. All forward-looking statements should be considered in light of these risks and uncertainties. Biscayne Apparel, Inc. is a designer, manufacturer, and importer of diversified apparel and has the following operations: M&L International - infant's, toddler's, and children's outerwear, sportswear and swimwear; Mackintosh of New England - women's woolen coats and active outerwear; and Varon - girl's and boy's underwear and girl's 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 STATEMENTS OF OPERATIONS (In thousands of dollars, except per share data) (Unaudited) THREE MONTHS ENDED MARCH 31, 1998 1997 Net sales......................... $ 11,311 $ 14,849 Operating costs and expenses: Cost of goods sold.............. 8,902 11,037 Selling, general and administrative 4,559 4,947 Operating loss.................... (2,150) (1,135) Other income and (expenses): Interest and other expenses.................... (660) (555) Interest and other income........ 4 13 Loss before income tax benefit.... (2,806) (1,677) Income tax benefit........................... (903) (567) Netloss........................... $ (1,903) $ (1,110) Basic and diluted loss per common share............................. $ (0.18) $ (0.10) Shares used in computing basic and diluted loss per common share..... 10,771,622 10,741,819 BISCAYNE APPAREL, INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands) MARCH 31, DECEMBER 31, 1998 1997 (Unaudited) ASSETS Current assets: Cash and cash equivalents............... $ 356 $ 268 Trade accounts receivable, less allowances of $1,361 in 1998 and $2,278 in 1997... 7,382 13,509 Inventories............................... 21,532 17,258 Prepaid expenses and other.............. 1,164 962 Federal income tax receivable........... 1,170 - Total current assets................. 31,604 31,997 Property, plant and equipment, less accumulated depreciation of $2,679 in 1998 and $2,517 in 1997...................... 2,732 2,739 Other assets,net.......................... 367 81 $ 34,703 $ 34,817 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable........................ $ 5,763 $ 4,320 Accrued liabilities..................... 3,077 4,878 Notes payable to banks.................. 10,777 6,855 Current portion of long-term debt....... 2,500 2,000 Total currentliabilities............. 22,117 18,053 Subordinated notes........................ 6,444 6,444 Long-term debt............................ - 2,500 Other liabilities......................... 387 162 Commitments and contingencies............. - - Stockholders' Equity: Preferred stock - par value $0.01; 5,000,000 shares authorized; no shares issued Common stock - par value $0.01; 25,000,000 shares authorized; 10,771,622 and 10,771,308 shares outstanding at March 31, 1998 and December 31, 1997, respectively.......... 108 108 Additional paid-in capital................. 26,610 26,610 Accumulated deficit........................ (20,963) (19,060) 5,755 7,658 Total stockholders'equity............ $ 34,703 $ 34,817 BISCAYNE APPAREL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) THREE MONTHS ENDED MARCH 31, 1998 1997 Operating activities: Net loss........................... $ (1,903) $ (1,110) Adjustments to reconcile net loss to net cash (used in)provided by operating activities: Depreciation expense..................... 161 144 Amortization expense................... (4) 78 Amortization of unearned stock award compensation.......................... - 17 Amortization of warrant costs........... 17 33 Provision for losses and sales allowances on receivables......................... 637 635 (Increase) decrease in operating assets: Trade accounts receivable................. 5,490 4,421 Inventories................................. (4,274) (920) Prepaid expenses and other................ (202) 140 Federal income tax receivable............. (1,170) (640) Other assets.............................. (300) (306) Increase (decrease) in operating liabilities: Accounts payable.......................... 1,443 534 Accrued liabilities....................... (1,798) (1,670) Other liabilities......................... 245 (58) - - Net cash (used in) provided by operating activities............................. (1,658) 1,298 Investing activities: Capital expenditures........................ - - Net cash used in investing activities..... (154) (124) Financing activities: Payments under notes payable to banks....... (5,009) (5,306) Borrowings under notes payable to banks...... 8,931 6,190 Principal payments under term loan........... (2,000) (1,750) Principal payments of long-term debt and capital leases....................................... (22) (22) Net cash provided by (used in) financing activities................................ 1,900 (888) Net increase in cash and cash equivalents.................................... 882 86 Cash and cash equivalents at beginning of year.. 268 327 Cash and cash equivalents at end of period....... $ 356 $ 613 Supplemental disclosure information: Interest expense paid........................... $ 457 $ 366 Income taxes paid............................... $ 12 $ - Ends.