Biscayne: 1998 Second Quarter Earnings FOR IMMEDIATE RELEASE FOR MORE INFORMATION CONTACT: A. Richard Hurwitz Vice President, Corporate Communications (305) 858-2200 BISCAYNE APPAREL ANNOUNCES SECOND QUARTER OPERATING RESULTS CLIFTON, NJ - (August 13, 1998) Biscayne Apparel, Inc. (ASE:BHA) today announced its operating results for the second quarter ended June 30, 1998. Net sales in the 1998 second quarter were $14.5 million versus $12.8 million in the same period of 1997, an increase of 13%. Net loss in the 1998 second quarter was $3.8 million, or $0.35 per share, versus a net loss of $1.5 million, or $0.14 per share, posted in the second quarter of 1997. Net sales in the first half of 1998 were $25.8 million, compared to $27.7 million in the first half of 1997. The 1998 six month net loss was $5.7 million, or $0.53 per share, compared to a loss of $2.6 million, or $0.24 per share in 1997. In the first six months of 1998, the Company recorded income tax reserves of $1.5 million, or $0.14 per share relating to net operating loss carryforwards. These income tax reserves will offset future pretax operating profitability to the extent that such profitability occurs. The Company's gross margin was 18% in the second quarter of 1998, compared to 24% in the same period in 1997, a decrease primarily relating to an increase in production costs in the children's underwear division. Selling, general and administrative expense ("S,G&A") declined from $4.8 million in 1997 second quarter to $4.6 million in the 1998 period, due to management's continued cost reduction efforts. Interest expense increased from $0.7 million in the second quarter of 1997 to $0.9 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 second quarter operating results which reflects the impact of increased production costs and inventories in our children's underwear division. We are taking aggressive steps to improve our performance in this business. "As previously-announced in 1997, OshKosh B'Gosh (NASDAQ:GOSHA) did not renew its license with Biscayne 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. We replaced part of this business through licensing arrangements with several other well-known children's brand names. "Since 70% to 75% of Biscayne's sales are derived from fall and winter outerwear products, net sales for the first half of the fiscal year approximate only 25% to 30% of the Company's annual net sales and typically reflect an operating loss." 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: Mackintosh of New England - women's woolen coats and active outerwear; M&L International - infant's, toddler's, and children's outerwear and sportswear; 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. ### BISCAYNE APPAREL, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands of dollars, except per share data) (Unaudited) THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, 1998 1997 1998 1997 Net sales $ 14,517 $12,845 $25,828 $ 27,694 Operating costs and expenses: Cost of goods sold 11,880 9,824 20,782 20,861 Selling, general and administrative 4,623 4,791 9,182 9,738 Operating loss (1,986) (1,770) (4,136) (2,905) Other income and (expenses): Interest and other expenses (870) (707) (1,530) (1,262) Interest and other income - 8 4 21 Loss before income tax provision (benefit) (2,856) (2,469) (5,662) (4,146) Income tax provision(benefit) 903 (1,011) - (1,578) Net loss $ (3,759) $ (1,458) $(5,662) $ (2,568) Basic and diluted loss per common share $ (0.35) $ (0.14) $ (0.53) $ (0.24) Shares used in computing basic and diluted loss 10,771,662 10,762,895 10,771,622 10,753,037 per common share BISCAYNE APPAREL, INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands) JUNE 30, DECEMBER 31, 1998 1997 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 205 $ 268 Trade accounts receivable, less allowances of $1,476 in 1998 and $2,278 in 1997 12,756 13,509 Inventories 26,670 17,258 Prepaid expenses and other 1,371 962 Federal income tax receivable - - Total current assets 41,002 31,997 Property, plant and equipment, less accumulated depreciation of $2,846 in 1998 and $2,517 in 1997 2,631 2,739 Other assets,net 210 81 $ 43,843 $ 34,817 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 8,216 $ 4,320 Accrued liabilities 3,228 4,878 Notes payable to banks 21,179 6,855 Current portion of long-term debt 2,500 2,000 - - Total current liabilities 35,123 18,053 Subordinated notes 6,444 6,444 Long-term debt 280 2,500 Other liabilities - 162 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; 10,771,622 and 10,771,308 shares outstanding at June 30, 1998 and December 31, 1997,respectively 108 108 Additional paid-in capital 26,610 26,610 Accumulated deficit (24,722) (19,060) - - 1,996 7,658 - - Total stockholders'equity $ 43,843 $ 34,817 Ends.