ANVIL HOLDINGS INC - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K

Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

For the Fiscal Year Ended February 2, 2002

Commission File Number 333-26999

ANVIL HOLDINGS, INC.
(Exact name of registrant as specified in its charter)

DELAWARE 13-3801705
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

228 EAST 45TH STREET
NEW YORK, NEW YORK 10017
(address of principal (Zip Code)
executive office)

Registrant's telephone number (212) 476-0300
(including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b)OR 12(g) OF THE ACT:
None

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. /X/

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K /X/

The Company is not required to make filings under Section 16 of the Exchange Act
because it has no registered securities under Section 12 of the Securities
Exchange Act of 1934.

At April 24, 2002 there were 390,000 shares of the registrant's Class B Common
Stock, $0.01 per share par value (the "Class B Common") held by non-affiliates.
At such date, there was no established trading market for these shares. At April
24, 2002, there were 290,000 shares of the registrant's Class A Common Stock,
$0.01 per share par value (the "Class A Common") and 3,590,000 shares of Class B
Common outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:

Those portions of the Information Statement for the Company's 2002 Annual
Meeting of Stockholders (the "Information Statement") are incorporated
herein by reference in Part III, Items 10, 11, 12 and 13.

PART I

ITEM 1. BUSINESS

CORPORATE STRUCTURE AND RECENT ACQUISITIONS

As used herein, the "Company" refers to Anvil Holdings, Inc. ("Holdings"),
including, in some instances, its wholly-owned subsidiary, Anvil Knitwear, Inc.,
a Delaware corporation ("Anvil"), and its other subsidiaries, as appropriate to
the context.

The Company's current capital structure is the result of a March 1997
recapitalization (the "Recapitalization") pursuant to which: (i) the Company
redeemed or repurchased a substantial portion of its outstanding shares of
capital stock; (ii) Bruckmann, Rosser, Sherrill & Co., L.P. and certain of its
employees and affiliates (collectively, "BRS") purchased new common stock; (iii)
399 Venture Partners, Inc. and certain of its employees and affiliates
(collectively, "399 Venture") and certain members of management of the Company
(the "Management Investors") reinvested a portion of their shares of capital
stock of the Company in exchange for newly issued common stock; and (iv) 399
Venture exchanged a portion of its capital stock for Senior Exchangeable
Preferred Stock and new common stock.

Concurrently with the Recapitalization, the Company sold 30,000 Units consisting
of (i) $30,000,000, 13% Senior Exchangeable Preferred Stock, due 2009 and (ii)
390,000 shares of Class B common stock (the "Units Offering"). Additionally, on
March 14, 1997, Anvil sold $130,000,000 of 10-7/8% Senior Notes due 2007
("Senior Notes") in connection with the Recapitalization.

During February 2000, Anvil purchased certain assets of the TOWELSPLUS Division
of Mid-America Wholesalers, Inc. for an aggregate amount of $1,940,000. This
business now operates as a division of Anvil and markets towels and robes
manufactured by outside contractors for sale by Anvil through its distribution
channels.

The Company's fiscal years end on the Saturday closest to January 31.
Accordingly, when referring to the Company's fiscal years in this report,
"fiscal 2001" refers to the year ended February 2, 2002, "fiscal 2000" refers to
the year ended February 3, 2001, etc.

GENERAL

The Company is a leading designer, manufacturer and marketer of high quality
activewear for sale principally into the "imprinted" or "decorated" segment of
the U.S. apparel industry. The Company offers an extensive line of activewear
products designed for men, women and children, including short and long sleeve
T-shirts, classic button and collar knit sport shirts (known as "plackets"),
collarless short and long sleeve knit shirts (known as "henleys"), fleeced
sweatshirts and athletic shorts, supplemented with caps, towels, robes and bags.
The Company markets and sells its products primarily to distributors and screen
printers under the ANVIL, COTTON DELUXE and TOWELSPLUS brand names, the ANVIL
logo, as well as private labels. Prior to their ultimate resale to the consumer,
the Company's products typically are printed or embroidered with logos, designs
or characters. The Company believes that its operating performance is favorably
affected by: (i) its broad range of high quality products; (ii) its strong
relationships with customers and suppliers; (iii) its flexible, vertically
integrated manufacturing operations; (iv) its commitment to controlling costs
and improving manufacturing processes; and (v) the continuing growth of the
activewear market.

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The Company offers high quality activewear in a variety of styles, colors,
fabric weights and blends, enabling it to serve a number of market niches
effectively as well as to serve the traditional T-shirt market segment. The
Company works closely with its distributor and screen printer customers to meet
their needs for style and color innovation. The Company continues to compete
successfully by: (i) targeting niche products on which its competitors have not
traditionally focused; (ii) responding quickly to market developments; (iii)
regularly introducing new products; and (iv) providing a broad range of
products, thereby permitting distributors to increase efficiency by reducing the
number of vendors and deliveries. In addition, the Company continues to make
significant investments to maintain and modernize its manufacturing and
distribution facilities and to seek methods to improve quality, increase
efficiency, reduce costs, manage inventories and shorten production cycles.

BUSINESS STRATEGY

The Company's objective is to increase net sales and improve results of
operations by implementing the following key elements of its business strategy:

OFFER A BROAD RANGE OF HIGH QUALITY PRODUCTS. The Company will continue to offer
high quality activewear in a wide variety of styles, colors, fabric weights and
blends, enabling it to serve a number of market niches effectively. The Company
expects to continue to expand its product offerings under its ANVIL, COTTON
DELUXE and TOWELSPLUS brands and the ANVIL logo, capitalizing on the growth in
the activewear market. In addition, the Company seeks to strengthen its position
in the activewear market by introducing products to supplement its traditional
activewear business.

ENHANCE AND EXPAND CUSTOMER RELATIONSHIPS. The Company continually seeks to
strengthen and expand its customer relationships by promoting the Company's: (i)
broad product offerings; (ii) ability to design customized products; (iii)
quick, reliable delivery; and (iv) ability to accommodate modifications to
customer orders. The Company's direct salesforce focuses on developing strong
relationships with distributors, and enhancing "pull through" by the
distributors' customers. In Fiscal 2001, sales to domestic distributors
accounted for approximately 77% of the Company's net sales. In the Company's
experience, distributors typically place larger orders, purchase a broader
product mix, maintain higher inventory levels and develop more predictable order
and re-order patterns than certain of its other customers. The Company estimates
that distributors resell products to more than 30,000 smaller screen printers,
embroiderers and other customers. The Company's broad product offerings have
enabled it to more effectively service distributors and satisfy the disparate
preferences of consumers.

MAINTAIN FLEXIBLE, VERTICALLY INTEGRATED MANUFACTURING OPERATIONS. The Company
is a vertically integrated manufacturer (i.e., performing substantially all of
the manufacturing processes required to produce its products) which knits
(exclusively from purchased yarn), bleaches, dyes, finishes, cuts and sews its
activewear products at its manufacturing facilities. The Company believes that
being vertically integrated allows it to maintain a competitive cost structure,
minimize delivery time and provide consistent, high quality products. The
Company's manufacturing efficiency enables it to provide its customers with low
cost, quality products.

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CONTINUE TO CONTROL COSTS AND IMPROVE MANUFACTURING. The Company continues to
make capital expenditures to maintain and modernize its manufacturing and
distribution facilities and explore methods to improve quality, increase
efficiency, reduce costs, manage inventories and shorten production cycles. The
Company believes it can continue to improve its operating results by: (i)
maximizing the use of offshore manufacturing operations; and (ii) continually
improving its textile manufacturing processes.

CAPITALIZE ON THE GROWTH OF THE ACTIVEWEAR MARKET. The Company believes that
sales of activewear products have been, and will continue to be driven by: (i)
the increased consumer preference for comfortable apparel selections; (ii) more
flexible dress codes, including the greater acceptance of casual wear in the
workplace; and (iii) the heightened emphasis on physical fitness.

PRODUCTS

The Company's activewear products, which are designed for men, women and
children, include short and long sleeve T-shirts, tank tops, classic button and
collar knit sport shirts (known as "plackets") and collarless short and long
sleeve knit shirts (known as "henleys") as well as a variety of other niche
activewear products, such as fleeced sweatshirts and athletic shorts,
supplemented with caps, towels, robes and bags. This broad array of casual
knitwear and athletic wear is marketed and sold by the Company under its ANVIL,
COTTON DELUXE and TOWELSPLUS brand names and the ANVIL logo, as well as under
private labels. The Company manufactures its products in a variety of fabrics
and fabric blends. Prior to their ultimate resale to the consumer, the Company's
products typically are imprinted or embroidered with logos, designs or
characters.

BASIC AND SPECIALTY T-SHIRTS. Basic and specialty T-shirts are the Company's
principal products. The basic T-shirt was the first product introduced by the
Company in the early 1970s. In addition to basic T-shirts, the Company also
manufactures a variety of specialty T-shirts. This category accounted for
approximately 68% of the Company's net sales in fiscal 2001.

PLACKETS AND HENLEYS. The Company introduced its first line of plackets in the
early 1980s and its first line of henleys in the early 1990s. Plackets include
classic button and collar knit sport shirts which are produced in both short and
long sleeve versions. Henleys are collarless knit shirts, which are produced in
both short and long sleeve versions. This category accounted for approximately
25% of the Company's net sales in fiscal 2001.

OTHER PRODUCTS. The Company's other products include fleeced sweatshirts, knit
shorts, caps, towels, robes and bags. In addition to products which it
manufactures in-house, this category includes those products which the Company
sources as finished products. This category accounted for approximately 7% of
the Company's net sales in fiscal 2001.

SALES AND MARKETING

The Company markets its products primarily through a direct salesforce
complemented by a sales support staff and the Company's marketing department.

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The Company seeks to differentiate itself from other activewear manufacturers by
marketing niche products to its customers and encouraging its customers to
purchase a broader product mix. The Company believes that by encouraging its
customers to expand their product mix towards higher priced products with more
style elements, it has been able to compete effectively against other companies
that concentrate primarily on basic, lower priced, T-shirts. The Company
believes that this strategy has enabled it to penetrate the large and
middle-tier wholesale T-shirt distributor market.

CUSTOMERS

The Company markets its products primarily to distributors, a wide range of
screen printers and private label customers. The Company also sells a small
percentage of its products directly to retailers. The Company currently services
over 200 customers, of which 20 account for approximately 81% of the Company's
net sales. Two such customers, Alpha Shirt Company and Broder Bros., accounted
for approximately 20% and 10%, respectively, of the Company's net sales in
fiscal 2001. No other individual customer accounted for more than 10% of the
Company's net sales in fiscal 2001.

RAW MATERIALS

The Company's primary raw material is cotton yarn. The Company does not spin its
own yarn. Instead, the Company purchases substantially all of its yarn pursuant
to purchase orders from a number of domestic spinners. One individual spinner
accounted for approximately 39% of the Company's purchased yarn in fiscal 2001.
The vast majority of the yarn used by the Company is readily available and can
be purchased from a number of sources. Accordingly, the Company does not have to
rely on its orders with or deliveries from any single supplier. With the ability
to substitute its supply of yarn, the Company believes that the inability to
obtain yarn from any one supplier would not have a long term material adverse
effect on the Company's ability to manufacture. Other raw materials purchased by
the Company include dyes and chemicals used in the dyeing and bleaching of
fabrics.

The Company believes that it is one of the larger purchasers of yarn in its
industry segment and has a sound relationship with each of its suppliers. The
Company believes these relationships allow the Company to order quantities of
yarn at competitive prices. The Company's relationships with its suppliers help
the Company's continued access to supplies of raw materials during periods when
yarn is in peak demand. As a result, the Company has not experienced any
significant shortages of raw materials.

The Company determines the size of its purchase orders for yarn based on its
estimate of future yarn prices and levels of supply and periodically places
large purchase orders as a means of fixing its raw materials costs. The
Company's purchase orders typically are for quantities of yarn ranging from 30
days' to a year's supply.

Certain of the Company's primary competitors spin their own yarn. The Company
estimates that in-house yarn production could reduce overall yarn costs. The
Company has concluded, however, that the benefits achieved by acquiring in-house
spinning capacity would not justify the investment required to achieve that
capacity. In addition, the Company believes that the quality of its purchased
yarn is at least equal to the quality of yarn produced by fully integrated
manufacturers in its industry market segment.

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COMPETITION

The imprinted activewear segment of the apparel market includes a number of
significant competitors and the activewear segment of the industry overall is
extremely competitive. Competition in this activewear segment of the apparel
industry is generally based upon price, quality, service and breadth of product
offerings. In response to market conditions and industry-wide adjustments in
price, the Company reviews and adjusts its product offerings and pricing
structure from time to time. The Company believes that its overall turnaround
time provides a competitive advantage and enables it to continue to capitalize
on its timely responsiveness to its customers' requests. In addition, the
Company focuses on providing its customers with a broad array of branded and
private label niche products at competitive prices on a timely basis.

The Company believes that its strategy of emphasizing higher quality, niche
products, promoting a broader product mix, and use of lower-cost offshore
manufacturing operations, should enable it to continue to compete effectively in
its industry market segment.

The Company's principal competitors include several domestic and foreign
manufacturers of activewear, some of which are larger and have greater financial
and other resources than the Company. Increased competition has caused many
domestic apparel manufacturers to move their manufacturing operations offshore
to lower costs. The Company currently performs substantially all of its cutting
and sewing activities offshore.

Historically, the Company has benefited from quotas and tariffs imposed by the
United States on the importation of apparel. The Uruguay Round of GATT, which
became effective on January 1, 1995, requires a complete phase-out of all
existing quotas over a ten-year period. To date, only a small amount of products
manufactured by the Company have been subject to quota reductions under GATT. In
addition to the phasing-out of the use of quotas, GATT also requires that the
United States reduce tariffs on textile/apparel imports over the same ten-year
period. To date, there have been only relatively small reductions in such
tariffs.

Under the United States-Caribbean Basin Trade Partnership Act, effective October
1, 2000, quotas and duties were eliminated on apparel imported from certain
Caribbean basin countries, provided such apparel is made from U.S. fabric (made
from U.S. yarn) formed and cut in the United States. The same exemption from
quotas and duties applies to apparel made from U.S. fabric cut in a Caribbean
basin country if U.S. thread is used. This Act also exempts a limited amount of
knit apparel (other than outerwear T-shirts) made from regional fabric (made
from U.S. yarn), and T-shirts (other than underwear T-shirts) using fabric (made
from U.S. yarns) formed in a Caribbean basin country.

EMPLOYEES

At February 2, 2002, the Company, including its offshore subsidiaries, employed
a total of 4,099 people (154 full-time salaried employees and 3,945 full-time
and part-time hourly employees) in the following areas: manufacturing and
distribution: 3,988; finance and administration: 75; and sales and marketing:
36. Of the Company's 4,099 employees, 967 are employed in the United States and
3,132 at offshore locations.

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None of the Company's employees is covered by a collective bargaining agreement.
The Company has not experienced any work stoppages and considers its relations
with its employees to be good.

INTELLECTUAL PROPERTY

The Company attempts to register its material trademarks and trade names. The
Company believes that it has developed strong brand awareness among its targeted
customer base and as a result regards its brand names as valuable assets. The
Company has registered or applied for trademark registrations for ANVIL, COTTON
DELUXE, TOWELS PLUS and the ANVIL logo as well as other labels in the United
States and certain foreign countries.

ENVIRONMENTAL MATTERS

The Company, like other apparel manufacturers, is subject to federal, state and
local environmental and occupational health and safety laws and regulations.
While there can be no assurance that the Company is at all times in complete
compliance with all such requirements, the Company believes that any
noncompliance is unlikely to have a material adverse effect on the financial
condition or results of operations of the Company. The Company has made, and
will continue to make, expenditures to comply with environmental and
occupational health and safety requirements. The Company currently does not
anticipate material capital expenditures for environmental control equipment in
fiscal 2002 or beyond. As is the case with manufacturers in general, if a
release of hazardous substances occurs on or from the Company's properties or
any associated offsite disposal location, or if contamination from prior
activities is discovered at any of the Company's properties, the Company may be
held liable. While the amount of such liability could be material, the Company
endeavors to conduct its operations in a manner that reduces such risks.

In 1990, Winston Mills, Inc., a subsidiary of McGregor Corporation ("McGregor")
and a predecessor of the Company, entered into an Administrative Order on
Consent ("AOC") with the North Carolina Department of Environment, Health and
Natural Resources ("DEHNR") concerning certain groundwater contamination
discovered at its Asheville, North Carolina facility. Since that time, McGregor,
through Culligan International Company ("Culligan"), a former affiliate, has
been conducting investigative and corrective action under DEHNR oversight and
has remained responsible to DEHNR with respect to contamination that is subject
to the AOC. While the total cost of the cleanup at the facility will depend upon
the extent of contamination and the corrective action approved by the DEHNR,
preliminary cleanup cost estimates range from $1.0 to $4.0 million. McGregor
continues to be a party to the Asheville, North Carolina facility's hazardous
waste permit and Culligan has guaranteed McGregor's obligations under the AOC.
McGregor also contractually agreed to fully indemnify the Company with respect
to the contamination as part of the terms of the acquisition of the Anvil
business (the "Acquisition"). This indemnity is guaranteed by Culligan and by
Astrum International Corp. (now known as Samsonite Corporation), an affiliate of
McGregor, in the event Culligan is unable to perform its guarantor obligations.
The Company could be held responsible for the cleanup of this contamination if
McGregor, Culligan and Samsonite were all to become unable to fulfill their
obligations to DEHNR. McGregor also agreed to fully indemnify the Company for
any costs associated with certain other environmental matters identified at the
time of the Acquisition. The Company believes that, even if McGregor were unable
to fulfill its indemnification obligations, these

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other matters would not have a material adverse effect on the financial
condition or results of operations of the Company. McGregor also agreed to
indemnify the Company, subject to certain limitations, with respect to
environmental liabilities that arise from events that occurred or conditions in
existence prior to the Acquisition. Culligan and Samsonite have also guaranteed
McGregor's obligations under these indemnities.

ITEM 2. PROPERTIES

The Company conducts its operations principally through nine manufacturing
facilities and a centralized distribution center. The Company utilizes a
vertically integrated manufacturing process (i.e., performing substantially all
of the manufacturing processes required to produce its products) with fabric
being knit, bleached or dyed, from purchased yarn, at its domestic textile
facilities, and then cutting and sewing such fabric at its offshore facilities.
The Company utilizes offshore and domestic contractors as it deems necessary.

TEXTILE FACILITY OPERATIONS. The Company conducts textile operations at two
facilities owned by the Company located in Kings Mountain and Asheville, North
Carolina. Cottontops operates a small dyehouse and a small screen printing
facility, both in Farmville, North Carolina. The Company operates approximately
270 knitting machines at its textile facilities where circular knitting machines
knit yarn into tubes of basic fabric constructions such as jersey and fleece and
circular rib and flat knitting machines knit collars. The tubes of fabric
correspond in weight and diameter to the various styles and sizes required to
make the Company's activewear products. The knitted fabric is then batched for
bleaching or dyeing. Substantially all of the Company's activewear products are
either bleached to remove the color of natural cotton or dyed for colored
products. The Company's textile facilities contain computerized controls, dye
simulators and spectrometers and modern jet vessels to assist the Company in
maintaining an efficient and quality controlled environment for the dyeing and
bleaching process. The Company's textile facilities each operated near capacity
during fiscal 2001.

Management has recognized the need for more efficient textile facilities.
Accordingly, during the fourth quarter of fiscal 2001, the Company announced
its intention to consolidate its textile operations into a single expanded
facility located in Asheville, North Carolina. Such consolidation and
expansion is expected to be completed during fiscal 2003. With newer and more
sophisticated equipment in one facility, Management believes that its current
textile capacity will be maintained and may be increased. The Company
continues to explore the option of establishing offshore textile operations,
which may be required depending upon future demand, world economic conditions
and government policies affecting foreign operations.

CUTTING AND SEWING FACILITIES. The Company's sewing operations are conducted at
three leased facilities located in Honduras and El Salvador and at offshore
contractors. Cutting is also conducted at leased facilities located in Honduras
and El Salvador. Fabric produced at the Company's textile operations is shipped
to cutting facilities where it is marked by hand from design patterns, cut and
then transferred to the sewing facilities to be sewn. During fiscal 2001, the
Company's cutting and sewing facilities operated generally at capacity.

DISTRIBUTION OPERATIONS. The Company performs substantially all of its
distribution functions at its centralized distribution facility located in
Dillon, South Carolina. This centralized distribution facility, opened in fiscal
1996, enables the Company to provide efficient and responsive customer service
and to efficiently manage inventory.

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The following table sets forth certain information regarding the Company's
facilities:

- ----------
(1) The lease for the Company's executive office space expires in 2008.
(2) The lease for this facility can be extended to 2012.
(3) The leases for these facilities expire in 2003.
(4) The lease for this facility expires 2002 and can be extended to 2006.
(5) The lease for this facility expires in 2005
(6) The lease for this facility expires in 2006
(7) The lease for this facility expires in 2004.

Management estimates that capital expenditures in fiscal 2002 will aggregate
approximately $15 million. This amount includes expenditures relating to the
aforementioned consolidation of the Company's textile facilities, as well as
routine capital expenditures in the ordinary course of business. For fiscal
years thereafter, current estimates are that capital expenditures will
approximate $6 million annually.

The Company considers its owned and leased facilities and equipment to be in
good condition and suitable and adequate for the Company's current operations.
Management of the Company believes that its ongoing maintenance and improvement
program for its existing manufacturing facilities, including its plans for the
consolidation of its textile facilities, will enable it to accommodate
anticipated sales growth.

Periodically, as necessary, the Company contracts certain manufacturing
operations to outsiders. Management considers this ordinary industry practice
and foresees no material risks in continuing this policy as necessary.

MANAGEMENT INFORMATION SYSTEMS. The Company continues its commitment to the
growth and modernization of its information technology systems through the
upgrading of both its purchased and in-house developed systems and equipment.
Its advanced order entry, allocation and customer service systems tie into its
in-house radio frequency centralized warehouse systems and its customers'
automatic replenishment and EDI systems. The Company's new planning and
scheduling system has allowed it to optimize available manufacturing resources
(textile and garment) which has helped reduce lead times and inventories and
improve the timeliness of deliveries. The system is driven by the Company's

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in-house forecasting system as well as by customer orders. The Company has
installed hardware and contracted for satellite communications service between
its offshore and domestic locations. This enables all offshore facilities to
communicate directly with the Company's data center.

ITEM 3. LEGAL PROCEEDINGS

The Company is a party to various litigation matters incidental to the conduct
of its business. The Company does not believe that the outcome of any of the
matters in which it is currently involved will have a material adverse effect on
the financial condition, liquidity, business or results of operations of the
Company. See ITEM 1. "BUSINESS--ENVIRONMENTAL MATTERS," above.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

There is no established public trading market for any of the Company's common
equity securities. At April 24, 2002 there were 25 record holders of the Class A
Common and 26 record holders of the Class B Common. All of Anvil's issued and
outstanding capital stock is owned by Holdings.

RECENT SALES OF UNREGISTERED SECURITIES.

As required by the Certificate of Designations relating to the Redeemable
Preferred Stock, the Company has paid stock dividends aggregating 1,004,147
shares ($25,104 liquidation value) through the year ended February 2, 2002.

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ITEM 6. SELECTED FINANCIAL DATA

SELECTED HISTORICAL FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Set forth below are the selected historical financial data of the Company as of
the dates and for the periods shown. The selected historical statement of
operations data of the Company for fiscal years 1999 through 2001 and the
balance sheet data for fiscal years 2000 and 2001 have been derived from the
consolidated financial statements of the Company which have been audited by
Deloitte & Touche LLP, whose report thereon appears under "Item 8. Financial
Statements and Supplementary Data." The selected consolidated statement of
operations data for fiscal years 1997 and 1998 and the balance sheet data for
fiscal years 1997 through 1999 have been derived from audited consolidated
financial statements which are not included herein. Holdings has no independent
operations apart from its wholly owned subsidiary, Anvil, and its sole asset is
the capital stock of Anvil. The selected consolidated financial data should be
read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and with the consolidated financial
statements and related notes thereto included elsewhere herein.

- ----------
(1) In connection with the Recapitalization, the Company recorded a special
charge for compensation related to the exercise of options by members of
management, payment of a special transaction bonus to members of management
and payments under a then existing equity buy-out plan to members of
management. These charges aggregated $10,915, and are considered by
management to be nonrecurring in nature.

(2) In connection with the Recapitalization, the Company recorded an
extraordinary charge of $2,757, net of an income tax benefit, in the year
ended January 31, 1998, as a result of losses incurred in connection with
the early extinguishment of debt. The Company also recorded an
extraordinary charge of $627 (net of taxes) during the year ended January
29, 2000, in connection with the Loan Agreement and concurrent repayment of
a prior credit facility. Such amount represents the write off of deferred
financing fees and other costs related to that refinancing.

(3) EBITDA is defined as operating income plus depreciation and amortization.
EBITDA is not a measure of performance under accounting principles
generally accepted in the United States ("GAAP"). EBITDA should not be
considered in isolation or as a substitute for net income, cash flows from
operating activities and other income or cash flow statement data prepared
in accordance with GAAP, or as a measure of profitability or liquidity.
Management believes, however, that EBITDA represents a useful measure of
assessing the performance of the Company's ongoing operating activities as
it reflects earnings trends of the Company without the impact of purchase
accounting applied in connection with the Acquisition. In addition,
management believes EBITDA is a widely accepted financial indicator of a
company's ability to service and/or incur indebtedness. EBITDA should not
be construed as an indication of the Company's operating performance or as
a measure of liquidity. EBITDA does not take into account the Company's
debt service requirements and other commitments and, accordingly, is not
necessarily indicative of amounts that may be available for discretionary
uses. The EBITDA measure presented herein may not be comparable to other
similarly titled measures of other companies.

(4) See Note 12 to Financial Statements, included elsewhere herein.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

GENERAL

The following discussion provides information with respect to the results of
operations of the Company for each of the three fiscal years in the period ended
February 2, 2002. The following information should be read in conjunction with
ITEM 6. "SELECTED FINANCIAL DATA"

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and the consolidated financial statements and the notes thereto included
elsewhere herein. It should also be noted that the year ended February 3, 2001
contains 53 weeks, whereas all the other fiscal years presented herein contain
52 weeks. Accordingly, if all other factors were equal, revenue and expense
items in that year would be representative of approximately 2% more volume than
other fiscal years.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company's significant accounting policies are more fully described in Note 3
to the consolidated financial statements, included elsewhere herein. The
application of accounting policies require judgement by management in selecting
the appropriate assumptions for calculating financial estimates. By their
nature, these judgements are subject to an inherent degree of uncertainty and
are based upon historical experience, trends in the industry, and information
available from outside sources. The preparation of financial statements in
conformity with GAAP requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The
Company's significant accounting policies include:

REVENUE RECOGNITION--Revenue is recognized at the time merchandise is shipped
and title has passed. Allowances for sales returns, discounts and for estimated
uncollectible accounts are provided when sales are recorded, based upon
historical experience and current trends, and periodically updated, as
appropriate. While the actual amounts have been within expectations, the Company
cannot guarantee that this will continue in the future.

INVENTORIES--Inventories are stated at the lower of cost or market, with cost
being determined by the first-in, first-out (FIFO) method. If required, based
upon management's judgment, reserves for slow moving inventory and markdowns of
inventory which has declined significantly in value are provided. While such
markdowns have been within management's expectations, the Company cannot
guarantee that it will continue to experience the same level of markdowns as in
the past.

EVALUATION OF LONG-LIVED ASSETS--Long-lived assets are assessed for
recoverability whenever events or changes in circumstances indicate that an
asset may have been impaired. In evaluating an asset for recoverability, the
Company estimates the future cash flows expected to result from the use of the
asset and eventual disposition. If the sum of the expected future cash flows
(undiscounted and without interest charges) is less than the carrying amount of
the asset, an impairment loss, equal to the excess of the carrying amount over
the fair value of the asset, is recognized. Pursuant to SFAS No. 121, through
February 2, 2002, there were no adjustments to the carrying amount of long-lived
assets resulting from the Company's evaluation for any periods presented in the
accompanying financial statements.

RESULTS OF OPERATIONS

The Company's results of operations are affected by numerous factors, including
competition, general economic conditions, raw material costs, mix of products
sold and plant utilization. Certain activewear products of the type manufactured
by the Company are generally available from multiple sources and the Company's
customers often purchase

13

products from more than one source. To remain competitive, the Company reviews
and adjusts its pricing structure from time to time in response to price
changes. In the basic T-shirt market the Company generally does not lead its
competitors in setting the current pricing structure and modifies its prices to
the extent necessary to remain competitive with prices set by its competitors in
this market.

The gross profit margins of the Company's products vary significantly.
Accordingly, the Company's overall gross profit margin is affected by its
product mix. In addition, plant utilization levels are important to
profitability due to the substantial fixed costs of the Company's textile
operations. The largest component of the Company's cost of goods sold is the
cost of yarn. The Company obtains substantially all of its yarn from a number of
domestic yarn suppliers, generally placing orders, as appropriate, depending
upon management's expectations regarding future yarn prices and levels of
supply. Yarn prices fluctuate from time to time principally as a result of
competitive conditions in the yarn market and supply and demand for raw cotton.
The Company adjusts the timing and size of its purchase orders for yarn in an
effort to minimize fluctuations in its raw material costs resulting from changes
in yarn prices. Historically, management has been successful in mitigating the
impact of fluctuating yarn prices and is continually reviewing and adjusting the
Company's purchase commitments to take maximum advantage of price changes.
Current prices for yarn are considerably lower than they have been in recent
fiscal periods, and the Company began to realize the favorable impact of such
prices during its last fiscal quarter and expects such benefits to continue into
the next fiscal year.

During the fourth quarter of fiscal 2001, the Company announced its intention
to consolidate its textile operations into a single expanded facility located
in Asheville, North Carolina. Such consolidation and expansion is expected to
be completed during fiscal 2003. As a result, the useful life of certain
production equipment was adjusted, and certain other assets were written off.
The necessary adjustments were recorded in the fourth quarter of the fiscal
year ended February 2, 2002, and resulted in additional depreciation of $0.3
million and a direct write-off of assets of $0.4 million, both of which were
charged to cost of goods sold. The additional depreciation charge of $0.3
million will continue during each of the four quarters of the fiscal year
ending February 1, 2003.

14

The following table sets forth, for each of the periods indicated, certain
statement of operations data, expressed as a percentage of net sales, for the
Company for each of the three years in the period ended February 2, 2002:

(1) EBITDA is defined as operating income plus depreciation and amortization.
EBITDA is not a measure of performance under GAAP. EBITDA should not be
considered in isolation or as a substitute for net income, cash flows from
operating activities and other income or cash flow statement data prepared
in accordance with GAAP, or as a measure of profitability or liquidity.
Management believes, however, that EBITDA represents a useful measure of
assessing the performance of the Company's ongoing operating activities as
it reflects earnings trends of the Company without the impact of purchase
accounting applied in connection with the Acquisition. In addition,
management believes EBITDA is a widely accepted financial indicator of a
company's ability to service and/or incur indebtedness. EBITDA should not
be construed as an indication of the Company's operating performance or as
a measure of liquidity. EBITDA does not take into account the Company's
debt service requirements and other commitments and, accordingly, is not
necessarily indicative of amounts that may be available for discretionary
uses. The EBITDA measure presented herein may not be comparable to other
similarly titled measures of other companies.

YEAR ENDED FEBRUARY 2, 2002 COMPARED TO YEAR ENDED FEBRUARY 3, 2001

NET SALES for the fiscal year ended February 2, 2002 amounted to $199.7 million,
as compared to $216.5 million for the prior fiscal year. While total units sold
increased more than 4%, the decrease in revenues of $16.8 million (7.8%) was the
result of two factors: (i) industry-wide declining selling prices for basic
goods; and (ii) an unfavorable change in product mix towards goods having lower
selling prices and gross margins. The industry-wide decline in selling prices
has been continuing over the last several years. Overall, the Company's average
selling prices were approximately 12% less than the prior fiscal year, and have
declined approximately 28% over the last three fiscal years.

GROSS PROFIT for the fiscal year ended February 2, 2002 decreased
approximately $15.6 million (24.9%). Gross margins have declined from 29.0%
in the prior fiscal year to 23.6% in the current fiscal year. This decline
was caused by: (i) the aforementioned lower selling prices and less favorable
product mix; (ii) higher per unit textile production costs; and (iii) higher
yarn prices. As discussed above, gross profit was also adversely affected by
charges aggregating approximately $0.8 million relating to the planned
consolidation of the Company's textile facilities. The unfavorable changes
were partially offset by significant savings realized by the relocation of
cutting and sewing operations offshore.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (including distribution expense)
for the fiscal year ended February 2, 2002 declined approximately $0.4 million
(1.8%) as compared to the prior fiscal year. Reflective of the lower operating
results, the Company reduced its

15

incentive-related selling and administrative compensation for the year. The
savings achieved in these areas were partially offset by higher advertising
expenditures and higher distribution costs.

INTEREST EXPENSE declined approximately $0.3 million (1.8%) in the current
fiscal year compared to the same period of the prior year. Interest rates have
declined slightly, and the level of borrowings during the current fiscal year
were lower than the prior year. At the end of each of the last two fiscal years,
the Company was able to reduce its revolving credit borrowings to zero.

YEAR ENDED FEBRUARY 3, 2001 COMPARED TO YEAR ENDED JANUARY 29, 2000

NET SALES for the year ended February 3, 2001 increased $17.6 million, or 8.9%,
to $216.5 million from $198.9 million for the year ended January 29, 2000. The
overall increase in net sales is comprised of an increase in units sold of
approximately 20%, partially offset by a decrease of 9% in the average selling
price of all goods sold in the year ended February 3, 2001. In addition, the
percentage of sales of goods having lower selling prices increased.

GROSS PROFIT for the year ended February 3, 2001 increased by $10.7 million
(20.6%) over the prior year. This improvement is the result of the
aforementioned higher sales as well an improvement in gross profit margin from
26.1% in the year ended January 29, 2000 to 29.0% in the year ended
February 3, 2001. The improved gross profit margins are the result of
significantly lower production costs, partially offset by unfavorable changes in
product mix.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (including distribution expense)
for the year ended February 3, 2001 increased by $1.2 million, or 5.5%, to $23.9
million from $22.7 million from the prior year. Increases in salaries and fringe
benefits relating to general and administrative, and distribution amounted to
approximately $0.9 million, and were partially offset by a decrease of $0.4
million due to sales staff reductions. Additional costs of $0.6 million were
incurred due to the establishment of the Company's German subsidiary, and an
increase in Cottontops' expenses due to higher volume. Additional warehouse
supplies and repairs accounted for the remaining increase of approximately $0.1
million in the year ended February 3, 2001.

INTEREST EXPENSE for the year ended February 3, 2001 decreased by $0.9 million,
or 5.6%, to $14.9 million from $15.8 million for the prior year. Interest rates
were slightly higher in the period ended February 3, 2001, but there were
significantly lower levels of borrowings made possible by improved operating
results.

Amortization of intangible assets increased by $0.3 million in the year ended
February 3, 2001, compared to the prior year, as a result of the amortization of
goodwill and a covenant not to compete relating to the acquisition of
TOWELSPLUS.

LIQUIDITY AND CAPITAL RESOURCES

The Company has historically utilized funds generated from operations and
borrowings under its credit agreements to meet working capital and capital
expenditure requirements. The Company made capital expenditures of approximately
$6.6 million in the year ended February 2, 2002, $6.2 million in the year ended
February 3, 2001 and $3.4 million in the year ended January 29, 2000.
Historically, the Company's major capital expenditures have

16

related to the acquisition of machinery and equipment and management information
systems hardware and software.

The Company's principal working capital requirements are financing accounts
receivable and inventories. At February 2, 2002 the Company had net working
capital of approximately $64.7 million, comprised of $11.9 million in cash and
cash equivalents, $28.8 million of accounts receivable, $45.3 million of
inventories, $3.8 million of other current assets, and $25.1 million in accounts
payable and other current liabilities.

Anvil's Loan and Security Agreement (the "Loan Agreement") provides for a
maximum credit facility of $60.0 million, consisting of a term loan (the "Term
Loan") and a revolving credit facility (the "Revolving Credit Facility"). The
Loan Agreement, as extended, expires March 11, 2003, with automatic annual
renewals unless contrary notice is given by either party 60 days prior to the
expiration date. The Term Loan was in the principal amount of $11.7 million,
repayable in quarterly principal installments of $0.6 million through April
2004, subject to further extension of the Loan Agreement. Amounts due under the
Loan Agreement are secured by substantially all the inventory, receivables and
property, plant and equipment of Anvil. Holdings and Cottontops guaranty amounts
due under the Loan Agreement. Interest on the Term Loan and the Revolving Credit
Facility are at prime plus one-quarter percent or LIBOR plus 2-1/4%, at the
Company's option. At February 2, 2002 there were no amounts outstanding under
the Revolving Credit Facility.

Holdings has no independent operations with its sole asset being the capital
stock of Anvil, which stock is pledged to secure the obligations under the Loan
Agreement. As a holding company, Holdings' ability to pay cash dividends on the
Senior Preferred Stock or, if issued, principal and interest on the debentures
into which the Senior Preferred Stock is convertible (the "Exchange Debentures")
is dependent upon the earnings of Anvil and its subsidiaries and their ability
to declare dividends or make other intercompany transfers to Holdings. Under the
terms of the Senior Indenture, Anvil may incur certain indebtedness pursuant to
agreements that may restrict its ability to pay such dividends or other
intercompany transfers necessary to service Holdings' obligations, including its
obligations under the terms of the Senior Preferred Stock and, if issued, the
Exchange Debentures. The Senior Note Indenture restricts, among other things,
Anvil's and certain of its subsidiaries' ability to pay dividends or make
certain other "restricted" payments (except to the extent, among other things,
the restricted payments are less than 50% of the Consolidated Net Income of
Anvil [as defined therein]), to incur additional indebtedness, to encumber or
sell assets, to enter into transactions with affiliates, to enter into certain
guarantees of indebtedness, to make certain investments, to merge or consolidate
with any other entity and to transfer or lease all or substantially all of their
assets. Neither the Senior Note Indenture nor the Loan Agreement restricts
Anvil's subsidiaries from declaring dividends or making other intercompany
transfers to Anvil.

The Company's ability to satisfy its debt obligations, including, in the case of
Anvil, to pay principal and interest on the Senior Notes and, in the case of
Holdings, to pay principal and interest on the Exchange Debentures, if issued,
to perform its obligations under its guarantees and to pay cash dividends on the
Senior Preferred Stock, will depend upon the Company's future operating
performance, which will be affected by prevailing economic conditions and
financial, business and other factors, certain of which are beyond its control,
as well as the availability of revolving credit borrowings under the Loan
Agreement. However, the Company may be required to refinance a portion of the
principal of the Senior Notes and, if

17

issued, the Exchange Debentures prior to their maturity and, if the Company is
unable to service its indebtedness, it will be forced to take actions such as
reducing or delaying capital expenditures, selling assets, restructuring or
refinancing its indebtedness, or seeking additional equity capital. There can be
no assurance that if any of these remedies are necessary, they could be effected
on satisfactory terms, if at all.

The Company believes that, based upon current and anticipated levels of
operations, funds generated from operations, together with other available
sources of liquidity, including borrowings under the Loan Agreement, will be
sufficient over the next twelve months for the Company to fund its normal
working capital requirements and satisfy its debt service requirements.

SEASONALITY

The Company's business is not significantly seasonal as it manufactures and
sells a wide variety of activewear products that may be worn throughout the
year.

EFFECT OF INFLATION

Inflation generally affects the Company by increasing the interest expense of
floating rate indebtedness and by increasing the cost of labor, equipment and
raw materials. The Company does not believe that inflation has had any material
effect on the Company's business during the periods discussed herein.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statements of Financial Accounting Standards ("SFAS") No. 141, "BUSINESS
COMBINATIONS," and SFAS No.142, "GOODWILL AND OTHER INTANGIBLE ASSETS." SFAS
No.141 requires that all business combinations be accounted under the
purchase method and that certain intangible assets acquired in a business
combination be recognized as assets apart from goodwill. SFAS No. 142
prohibits ratable periodic amortization of goodwill and indefinite-lived
intangibles and requires that they be reduced in value only when periodic
tests for impairment indicate that such reduction in value is appropriate.
Other intangible assets are to be amortized over their useful lives. SFAS No.
141 is effective for all business combinations initiated after June 30, 2001
and for all business combinations accounted for by the purchase method for
which the date of acquisition is after June 30, 2001. The provisions of SFAS
No. 142 are effective for fiscal years beginning after December 15, 2001.

The Company has not engaged in any business combinations to which SFAS No. 141
would apply. The Company will adopt SFAS Nos. 142 during the first quarter of
its fiscal year ending February 1, 2003, but has not yet evaluated what effect
the adoption of this statement will have on its financial statements. However,
the company will no longer record amortization of goodwill which amounted to
$726,000 for the year ended February 2, 2002.

In June 2001, the FASB issued SFAS No. 143, "ACCOUNTING FOR ASSET RETIREMENT
OBLIGATIONS." This Statement establishes accounting standards for recognition
and

18

measurement of a liability for an asset retirement obligation and the associated
asset retirement costs. SFAS No. 143 is effective for fiscal years beginning
after June 15, 2002.

In August 2001, the FASB issued SFAS No. 144, "ACCOUNTING FOR THE IMPAIRMENT OR
DISPOSAL OF LONG-LIVED ASSETS" which supersedes SFAS No. 121 and provides
accounting and reporting guidance for the impairment or disposal of certain
long-lived assets. SFAS No. 144 is effective for fiscal years beginning after
December 15, 2001.

The Company has not yet assessed what impact, if any, the adoption of SFAS Nos.
143 and 144 will have on its financial position and results of operations.

STATEMENT REGARDING FORWARD-LOOKING INFORMATION

The Company is including the following cautionary statement in this Form 10-K to
make applicable and take advantage of the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995 for any forward-looking statements made
by, or on behalf of, the Company. Forward-looking statements include statements
concerning plans, objectives, goals, strategies, future events or performance,
and underlying assumptions and other statements which are other than statements
of historical facts. From time to time, the Company may publish or otherwise
make available forward-looking statements of this nature. All such subsequent
forward-looking statements, whether written or oral and whether made by or on
behalf of the Company, are also expressly qualified by these cautionary
statements. Certain statements contained herein are forward-looking statements
and accordingly involve risks and uncertainties which could cause actual results
or outcomes to differ materially from those expressed in the forward-looking
statements. The forward-looking statements contained herein are based on various
assumptions, many of which are based, in turn, upon further assumptions. The
Company's expectations, beliefs and projections are expressed in good faith and
are believed by the Company to have a reasonable basis, including without
limitation, management's examination of historical operating trends, data
contained in the Company's records and other data available from third parties,
but there can be no assurance that management's expectation, beliefs or
projections will result or be achieved or accomplished. In addition to the other
factors and matters discussed elsewhere herein, the following factors are
important factors that, in the view of the Company, could cause actual results
to differ materially from those discussed in the forward-looking statements:

1. Changes in economic conditions, in particular those which affect the
activewear market.
2. Changes in the availability and/or price of yarn, in particular, if
increases in the price of yarn are not passed along to the Company's
customers.
3. Changes in senior management or control of the Company.
4. Inability to obtain new customers or retain existing ones.
5. Significant changes in competitive factors, including product pricing
conditions, affecting the Company.
6. Governmental/regulatory actions and initiatives, including, those affecting
financings.
7. Significant changes from expectations in actual capital expenditures and
operating expenses.
8. Occurrences affecting the Company's ability to obtain funds from
operations, debt or equity to finance needed capital expenditures and other
investments.
9. Significant changes in rates of interest, inflation or taxes.

19

10. Significant changes in the Company's relationship with its employees and
the potential adverse effects if labor disputes or grievances were to
occur.
11. Changes in accounting principles and/or the application of such principles
to the Company.

The foregoing factors could affect the Company's actual results and could cause
the Company's actual results during fiscal 2002 and beyond to be materially
different from any anticipated results expressed in any forward-looking
statement made by or on behalf of the Company.

The Company disclaims any obligation to update any forward-looking statements to
reflect events or other circumstances after the date hereof.

ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company believes that its potential exposure to market risk is not material.
The Company eliminated its interest rate swap agreements in June 2000.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See page F-1, Index to Financial Statements, included elsewhere herein.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

With respect to the directors of the Company, the information required by Item
10 of Form 10-K appears on pages 1 through 4 of the Information Statement, and
is incorporated herein by reference.

Pursuant to General Instruction G to Form 10-K, the following information is
furnished concerning the executive officers and key employees of the Company.

20

EXECUTIVE OFFICERS AND
CERTAIN KEY EMPLOYEES OF ANVIL

The following sets forth certain information with respect to the executive
officers and certain key employees of Anvil.

- ----------
(1) All ages are as of December 31, 2001.

BERNARD GELLER has served as the Chief Executive Officer of Anvil, President of
Holdings, and has been a Director of Anvil and Holdings since February 1995.
Since March 1997, Mr. Geller has served as Chairman of the Board of Anvil and
Holdings and from July 1997 to February 28, 2001, as President of Anvil. From
1989 to 1995, Mr. Geller served as Chairman of Anvil's predecessor. From 1986 to
1989, Mr. Geller served as President of Anvil's predecessor and from 1975 to
1986, as Controller. Before joining Anvil's predecessor, Mr. Geller was with
Union Underwear Co., Inc., a subsidiary of Fruit of the Loom, Inc., where he
worked for 14 years, principally as that company's controller.

ANTHONY CORSANO has served as President and Chief Operating Officer Anvil since
February 28, 2001. Prior thereto, he served as Executive Vice President of Sales
and Marketing of Anvil for more than five years. From 1993 to 1995, Mr. Corsano
served as Vice President of Sales and Marketing of Anvil's predecessor. From
1988 to 1993, Mr. Corsano served as Vice President--Sales of Anvil's predecessor
and from 1985 to 1988 Mr. Corsano served as National Sales Manager of Anvil's
predecessor.

JACOB HOLLANDER has served as Executive Vice President, Chief Administrative
Officer, Secretary and General Counsel of Anvil and Vice President, Secretary
and General Counsel of Holdings since February, 1995. Since March, 1997, Mr.
Hollander has served as a Director of Anvil and Holdings. From 1991 to 1995, Mr.
Hollander served as Vice President and General Counsel of Astrum International
Corp. From 1985 to 1990, Mr. Hollander served as Vice President and General
Counsel of McGregor Corporation and Faberge, Incorporated, and from 1987 to
1989, Mr. Hollander also served as Vice President and General Counsel of
Elizabeth Arden, Inc. During 1990, Mr. Hollander provided legal consulting
services to the Unilever group of companies and to McGregor. Prior to its
acquisition by McGregor, Mr. Hollander was Vice President of Faberge,
Incorporated.

21

WILLIAM H. TURNER has served as Executive Vice President of Manufacturing of
Anvil since February, 1995. From 1992 to 1995, Mr. Turner served as Executive
Vice President of Manufacturing of Anvil's predecessor. From 1985 to 1992, Mr.
Turner held the position of Vice President of Manufacturing (Cut and Sew) of
Anvil's predecessor and from 1982 to 1985 he was Plant Manager for Anvil's
predecessor.

PASQUALE BRANCHIZIO has served as Vice President of Finance of Anvil and
Holdings since 1995. From 1986 until 1995, Mr. Branchizio served as Vice
President of Finance of Anvil's predecessor. From 1981 to 1986, Mr. Branchizio
served as the Controller of Anvil's predecessor. Prior thereto, Mr. Branchizio
served as Senior Accountant for Anvil's predecessor.

ITEM 11. EXECUTIVE COMPENSATION

The information required by Item 11 of Form 10-K appears on pages 5 through 8 of
the Information Statement, and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by Item 12 of Form 10-K appears on pages 8 through 10
of the Information Statement, and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by Item 13 of Form 10-K appears on page 11 of the
Information Statement and is incorporated herein by reference.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) 1. Financial Statements - See Page F-1 for index to Financial
Statements

2. Financial Statement Schedules - Schedule II--Valuation and Qualifying
Accounts

All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions, are inapplicable or not material, or the information
called for thereby is otherwise included in the financial statements and
therefore has been omitted.

(b) Reports on Form 8-K

None.

22

(c) Exhibits

NO. DESCRIPTION

2.1 Recapitalization Agreement, dated as of February 12, 1997, by and among
Citicorp Venture Capital, Ltd., BRS,, Holdings, Anvil VT, Inc. and the
stockholders and voting trust certificate holders named on the signature
pages thereto, as amended by the certain Amendment and Consent to
Assignment dated as of February 21, 1997 and that Waiver and Second
Amendment to the Recapitalization Agreement dated as of March 13, 1997.(1)

3.1 Certificate of Incorporation of Anvil.(1)

3.2 Restated Certificate of Incorporation of Holdings.(4)

3.3 Certificate of Incorporation of Cottontops.(1)

3.4 By-Laws of Anvil.(1)

3.5 By-Laws of Holdings.(1)

3.6 By-Laws of Cottontops.(1)

4.1 Certificate of Designation of Holdings.(1)

4.2 Certificate of Designation of Holdings relating to Series B 13% Senior
Exchangeable Preferred Stock due 2009.(2)

4.3 Purchase Agreement, dated as of March 14, 1997, by and among Donaldson,
Lufkin & Jenrette Securities Corporation ("DLJ"), Wasserstein Perella
securities, Inc. ("Wasserstein"), NationsBanc Capital Markets, Inc.
("NationsBanc"), Anvil and Holdings.(1)

4.4 Senior Indenture, dated as of March 14, 1997, by and among the Anvil,
Holdings, Cottontops and the other Subsidiary Guarantors and United States
Trust Company of New York, as trustee. (1)

4.5 10-7/8% Senior Notes and Guarantees.(1)

4.6 Series B 10-7/8% Senior Notes and Guarantees.(2)

4.7 Registration Rights Agreement, dated as of March 14, 1997, by and among
Anvil, Holdings, Cottontops and DLJ, Wasserstein and NationsBanc, as
Initial Purchasers.(1)

4.8 Loan and Security Agreement dated March 11, 1999 by and among Congress
Financial Corporation, Anvil, Holdings and Cottontops. (5)

4.9 Term Promissory Note of Anvil dated March 11, 1999 payable to Congress

23

Financial Corporation.(5)

4.10 Pledge and Security Agreement dated March 11, 1999 between Congress
Financial Corporation and Holdings.(5)

4.11 Pledge and Security Agreement dated March 11, 1999 between Congress
Financial Corporation and Anvil.(5)

10.1 Employment Agreement, dated as of January 30, 2001, by and between Anvil
and Bernard Geller.(6)

10.2 Employment Agreement, dated as of January 30, 2001 by and between Anvil and
Anthony Corsano.(6)

10.3 Employment Agreement, dated as of January 30, 2001, by and between Anvil
and Jacob Hollander.(6)

10.4 Employment Agreement, dated as of January 30, 2001 by and between Anvil and
William H. Turner.(6)

10.5 Exchange Debenture Indenture, dated as of March 14, 1997, by and between
Holdings and United States Trust Company of New York, as trustee.(1)

10.6 Registration Rights Agreement, dated as of March 14, 1997, by and between
Holdings and DLJ, as the Initial Purchaser.(1)

10.7 Registration Rights and Securityholders Agreement, dated as of March 14,
1997, by and among Holdings, BRS, 399 Venture CCT II Partners, L.P. "CCT")
and DLJ.(1)

10.8 Registration Rights Agreement, dated as of March 14, 1997, by and among
Holdings, BRS, 399 Venture, CCT, Bernard Geller, Anthony Corsano, William
Turner, Jacob Hollander and each other executive of Holdings or its
subsidiaries who acquires common stock from Holdings after the date thereof
and executes a joinder thereto, the persons set forth on the signature
pages thereto and DLJ.(1)

10.9 Stockholders Agreement, dated as of March 14, 1997, by and among Holdings,
BRS, 399 Venture, CCT, Bernard Geller, Anthony Corsano, William Turner,
Jacob Hollander and each other person who acquires common stock of Holdings
after the date thereof and executes a joinder thereto.(1)

10.10 2002 Stock Option Plan

10.11 Amendment No. 1 dated as of December 27, 1997 to Stockholders Agreement by
and among Holdings, BRS, 399 Venture, CCT, Bernard Geller,
Anthony Corsano, William Turner, Jacob Hollander and each other person who
acquires common stock of Holdings after the date thereof and

24

executes a joinder thereto.(3)

10.12 Management Agreement dated November 3, 1998 among Anvil, Holdings, and
BRS.(5)

21 Subsidiaries of Holdings.

(1) Previously filed with the Company's Registration Statement and Amendments
thereto on Form S-4 (SEC file No. 333-26999) and is incorporated herein by
reference.

(2) Previously filed with the Company's Form 10-Q for the Quarter ended
August 2, 1997, and is incorporated herein by reference.

(3) Previously filed with the Company's Form 10-K for the Year ended
January 31, 1998, and is incorporated herein by reference.

(4) Previously filed with the Company's Form 10-Q for the Quarter ended
October 31, 1998, and is incorporated herein by reference.

(5) Previously filed with the Company's Form 10-K for the Year ended
January 30, 1999, and is incorporated herein by reference.

(6) Previously filed with the Company's Form 10-K for the Year ended
February 3, 2001 and is incorporated herein by reference.

25

SIGNATURES

Pursuant to the requirements of section 13 or 15(d) of the Securities Exchange
Act of 1934, Anvil Holdings, Inc. has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

ANVIL HOLDINGS, INC.

By: /s/ JACOB HOLLANDER
--------------------------------
Jacob Hollander
Vice President and Secretary

Pursuant to the requirements of the Securities Act of 1934, this report has been
signed by the following persons in the capacities and on the dates indicated:

Signature Capacity Date
--------- -------- ----

/s/ BERNARD GELLER Chairman of the Board , APRIL 24, 2002
- ---------------------------- and Director
Bernard Geller (Principal Executive
And Financial Officer)

/s/ JACOB HOLLANDER Vice President, Secretary APRIL 24, 2002
- ---------------------------- and Director
Jacob Hollander

/s/ PASQUALE BRANCHIZIO Vice President of Finance APRIL 24, 2002
- ------------------------ (Principal Accounting Officer)
Pasquale Branchizio

/s/ BRUCE C. BRUCKMANN Director APRIL 24, 2002
- -----------------------
Bruce C. Bruckmann

/s/ STEPHEN F. EDWARDS Director APRIL 24, 2002
- ------------------------
Stephen F. Edwards

/s/ DAVID WAGSTAFF III Director APRIL 24, 2002
- ----------------------------
David Wagstaff III

/s/ JOHN D. WEBER Director APRIL 24, 2002
- -----------------------------
John D. Weber

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT
TO SECTION 15(D) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED
SECURITIES PURSUANT TO SECTION 12 OF THE ACT:

The Registrant has not sent an annual report or proxy material to its security
holders during the period covered by this report.

26

ANVIL HOLDINGS, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND
CONSOLIDATED FINANCIAL STATEMENT SCHEDULES

PAGE
----

Independent Auditors' Report .............................................................F-2

Consolidated Balance Sheets at February 3, 2001 and February 2, 2002......................F-3

Consolidated Statements of Operations for the years ended January 29, 2000,
February 3, 2001 and February 2, 2002...............................................F-4

Consolidated Statements of Stockholders' Deficiency for the
years ended January 29, 2000, February 3, 2001 and February 2, 2002...................F-5

Consolidated Statements of Cash Flows for the years ended January 29, 2000,
February 3, 2001 and February 2, 2002................................................F-6

Notes to Consolidated Financial Statements................................................F-8

Schedule II --Valuation and Qualifying Accounts...........................................S-1

F-1

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
Anvil Holdings, Inc.
New York, New York

We have audited the accompanying consolidated balance sheets of Anvil
Holdings, Inc. and subsidiaries as of February 2, 2002 and February 3, 2001,
and the related consolidated statements of operations, stockholders'
deficiency, and cash flows for each of the three fiscal years in the period
ended February 2, 2002. Our audits also included the financial statement
schedule listed in the index at Item 14(a)(2). These financial statements and
financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Anvil Holdings, Inc. and subsidiaries as
of February 2, 2002 and February 3, 2001, and the results of their operations
and their cash flows for each of the three fiscal years in the period ended
February 2, 2002 in conformity with accounting principles generally accepted
in the United States of America. Also, in our opinion, such financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.

/s/ Deloitte & Touche LLP
New York, New York
April 15 , 2002

F-2

ANVIL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Data)

See notes to consolidated financial statements.

F-3

ANVIL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Share Data)

See notes to consolidated financial statements.

F-4

ANVIL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY

(In Thousands)

See notes to consolidated financial statements.

F-5

ANVIL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Continued)

See notes to consolidated financial statements.

F-6

ANVIL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS-CONCLUDED

(In Thousands)

See notes to consolidated financial statements.

F-7

ANVIL HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT SHARE DATA)

1. THE COMPANY

As used herein, the "Company" refers to Anvil Holdings, Inc. ("Holdings"),
including, in some instances, its wholly owned subsidiary, Anvil Knitwear, Inc.,
a Delaware corporation ("Anvil"), and its other subsidiaries, as appropriate to
the context. The Company is engaged in the business of designing, manufacturing
and marketing high quality activewear for men, women and children, supplemented
with caps, towels, robes and bags. The Company markets and distributes its
products, under its brand names and private labels, primarily to wholesalers and
screen printers, principally in the United States. The Company reports its
operations in one segment in accordance with Statement of Financial Accounting
Standards No. 131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED
INFORMATION.

2. RECAPITALIZATION AND REFINANCING

The Company's current capital structure is the result of a March 1997
recapitalization (the "Recapitalization") pursuant to which: (i) the Company
redeemed or repurchased a substantial portion of its outstanding shares of
capital stock; (ii) Bruckmann, Rosser, Sherrill & Co., L.P. and certain of its
employees and affiliates (collectively, "BRS") contributed $13,063 for the
purchase of new common stock; (iii) 399 Venture Partners, Inc. and certain of
its employees and affiliates (collectively, "399 Venture") and certain
management investors reinvested a portion of their shares of capital stock of
the Company in exchange for newly issued common stock; and (iv) 399 Venture
exchanged a portion of its capital stock for Senior Exchangeable Preferred Stock
and new common stock.

Concurrently with the Recapitalization, the Company sold 30,000 Units consisting
of (i) $30,000, 13% Senior Exchangeable Preferred Stock due 2009 and (ii)
390,000 shares of Class B common stock (the "Units Offering"). The Senior
Exchangeable Preferred Stock was recorded at $27,656 representing the proceeds
of $30,000, less $390 allocated to the Class B common stock and $1,954 of
expenses attributable to the Units Offering. Additionally, on March 14, 1997,
Anvil sold $130,000 of 10-7/8% Senior Notes due 2007 ("Senior Notes") in
connection with the Recapitalization.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION-- The accompanying consolidated financial statements have
been prepared in accordance with accounting principles generally accepted in the
United States of America ("Generally Accepted Accounting Principles" or "GAAP").
Such financial statements include the accounts of the Company and its
wholly-owned subsidiaries, after elimination of significant intercompany
accounts and transactions.

F-8

FISCAL YEAR--The Company's operations are on a "52/53-week" fiscal year ending
on the Saturday closest to January 31. The fiscal year ended February 3, 2001
contains 53 weeks.

USE OF ESTIMATES--The preparation of financial statements in conformity with
GAAP requires management to make certain estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.

CASH AND CASH EQUIVALENTS--Cash and cash equivalents include all highly liquid
investments with an original maturity of 90 days or less.

FAIR VALUE OF FINANCIAL INSTRUMENTS--The carrying amounts of financial
instruments reported in the accompanying consolidated balance sheets approximate
their fair value. Considerable judgment is required in interpreting certain
market data to develop estimated fair values for certain financial instruments.
Accordingly, the estimates presented herein are not necessarily indicative of
the amounts that the Company could realize in a current market exchange.

PROPERTY, PLANT AND EQUIPMENT--Property, plant and equipment is being
depreciated for financial reporting purposes using the straight-line method over
the estimated useful lives of the assets. Leasehold improvements are amortized
over the lesser of the estimated useful life or the term of the lease.
Depreciable lives are generally as follows:

Buildings and Improvements.................... 20-25 years
Machinery, Equipment, Furniture
And Fixtures.............................. 4-10 years

INVENTORIES--Inventories are stated at the lower of cost or market, with cost
being determined by the first-in, first-out (FIFO) method.

INTANGIBLE ASSETS--Intangible assets of the Company consist of trademarks,
goodwill and a covenant not to compete. Trademarks are being amortized over
their estimated useful life of 17 years; goodwill was being amortized over the
periods of expected benefit ranging from 10 to 35 years; and the covenant not to
compete is being amortized over its three year term.

EVALUATION OF LONG-LIVED ASSETS--Long-lived assets are assessed for
recoverability whenever events or changes in circumstances indicate that an
asset may have been impaired. In evaluating an asset for recoverability, the
Company estimates the future cash flows expected to result from the use of the
asset and eventual disposition. If the sum of the expected future cash flows
(undiscounted and without interest charges) is less than the carrying amount of
the asset, an impairment loss, equal to the excess of the carrying amount over
the fair value of the asset, is recognized. Pursuant to SFAS No. 121, through
February 2, 2002, there were no adjustments to the carrying amount of long-lived
assets resulting from the Company's evaluation for any periods presented in the
accompanying financial statements.

DEFERRED FINANCING FEES--Included in other assets are deferred financing fees
($2,800 and $2,100 at February 3, 2001 and February 2, 2002, respectively) which
are being amortized over the term of the applicable obligations.

F-9

REVENUE RECOGNITION--Revenue is recognized at the time merchandise is shipped
and title has passed. Allowances for sales returns and discounts are provided
when sales are recorded.

INCOME TAXES--Income taxes have been accounted for in accordance with Statement
of Financial Accounting Standards ("SFAS") No. 109, ACCOUNTING FOR INCOME TAXES,
which requires the use of an asset and liability approach for financial
accounting and reporting of income taxes.

EARNINGS PER SHARE--Basic and diluted income (loss) per share is computed based
upon the average outstanding shares of Class A and Class B common stock.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statements of Financial Accounting Standards ("SFAS") No. 141, "BUSINESS
COMBINATIONS," and SFAS No.142, "GOODWILL AND OTHER INTANGIBLE ASSETS." SFAS
No.141 requires that all business combinations be accounted under the
purchase method and that certain intangible assets acquired in a business
combination be recognized as assets apart from goodwill. SFAS No. 142
prohibits ratable periodic amortization of goodwill and indefinite-lived
intangibles and requires that they be reduced in value only when periodic
tests for impairment indicate that such reduction in value is appropriate.
Other intangible assets are to be amortized over their useful lives. SFAS No.
141 is effective for all business combinations initiated after June 30, 2001
and for all business combinations accounted for by the purchase method for
which the date of acquisition is after June 30, 2001. The provisions of SFAS
No. 142 are effective for fiscal years beginning after December 15, 2001.

The Company has not engaged in any business combinations to which SFAS No. 141
would apply. The Company will adopt SFAS Nos. 142 during the first quarter of
its fiscal year ending February 1, 2003, but has not yet evaluated what effect
the adoption of this statement will have on its financial statements. However,
the company will no longer record amortization of goodwill which amounted to
$726 for the year ended February 2, 2002.

In June 2001, the FASB issued SFAS No. 143, "ACCOUNTING FOR ASSET RETIREMENT
OBLIGATIONS." This Statement establishes accounting standards for recognition
and measurement of a liability for an asset retirement obligation and the
associated asset retirement costs. SFAS No. 143 is effective for fiscal years
beginning after June 15, 2002.

In August 2001, the FASB issued SFAS No. 144, "ACCOUNTING FOR THE IMPAIRMENT OR
DISPOSAL OF LONG-LIVED ASSETS" which supersedes SFAS No. 121 and provides
accounting and reporting guidance for the impairment or disposal of certain
long-lived assets. SFAS No. 144 is effective for fiscal years beginning after
December 15, 2001.

The Company has not yet assessed what impact, if any, the adoption of SFAS Nos.
143 and 144 will have on its financial position and results of operations.

F-10

4. INVENTORIES

Inventories consist of the following:

5. PROPERTY, PLANT AND EQUIPMENT- NET

Property plant and equipment consists of the following:

During the fourth quarter of fiscal 2001, the Company announced its intention to
consolidate its textile operations into a single expanded facility located in
Asheville, North Carolina. Such consolidation and expansion is expected to be
completed during fiscal 2003. As a result, the useful life of certain production
equipment was adjusted as of the beginning of the fourth quarter of fiscal 2001,
and certain other assets were written off. The necessary adjustments were
recorded in the fourth quarter of the fiscal year ended February 2, 2002, and
resulted in additional depreciation of $336 and a direct write-off of assets of
$433, both of which were charged to cost of goods sold. The additional
depreciation charges of approximately $336 will continue during each of the four
quarters of the fiscal year ending February 1, 2003.

Depreciation expense for the fiscal years ended January 29, 2000, February 3,
2001,and February 2, 2002 was $6,420, $6,547, and $7,068, respectively.

6. INTANGIBLE ASSETS-NET

Intangible assets consist of the following:

F-11

7. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:

8. CREDIT AGREEMENT

On March 11, 1999, Anvil entered into a Loan and Security Agreement (the "Loan
Agreement") providing for a maximum credit facility of $60,000 consisting of a
term loan (the "Term Loan") and a revolving credit facility (the "Revolving
Credit Facility"). The Term Loan was in the principal amount of $11,725,
repayable in quarterly principal installments of $586, which commenced on July
1, 1999. The Loan Agreement is for an original term of three years with
automatic one year renewals unless contrary notice is given by either party
within 60 days of the expiration date. The Loan Agreement (as currently
extended) expires March 11, 2003, and amounts due under it are secured by
substantially all the inventory, receivables and property, plant and equipment
of Anvil. Holdings and Cottontops, Inc., a Delaware corporation ("Cottontops")
guarantee amounts due under the Loan Agreement. Interest on the Term Loan and
the Revolving Credit Facility are at prime plus one-quarter percent or LIBOR
plus 2-1/4%, at the Company's option. At February 2, 2002 there were no amounts
outstanding under the Revolving Credit Facility. The weighted average interest
rate on borrowings under the Loan Agreement during the years ended January 29,
2000, February 3, 2001 and February 2, 2002 was 8.3%, 9.5% and 7.3%,
respectively. Interest on the Term Loan borrowings at February 2, 2002 was
payable at the rate of 5.25%

9. 10-7/8% SENIOR NOTES

On March 14, 1997, Anvil issued $130,000 of 10-7/8% Senior Notes (the "Senior
Notes") due March 15, 2007 and received proceeds of $126,100 net of debt
discount of $3,900. Interest on the notes is payable semiannually on March 15
and September 15. The Company may redeem the Senior Notes at a redemption price
of 105.438%, 103.625%, and 101.813% at any time during the 12-month period
beginning on March 15, 2002, 2003 and 2004, respectively, and at 100%
thereafter.

The Senior Notes are guaranteed by the Company and Cottontops, are senior
unsecured obligations of the Company and rank senior in right of payment to all
subordinated indebtedness of the Company and PARI PASSU in right of payment with
all existing and future senior indebtedness, including borrowings under the Loan
Agreement. The indenture relating to the Senior Notes contains certain
covenants, including restrictions on additional indebtedness, certain asset
sales, and the payment of dividends.

F-12

10. EXTRAORDINARY ITEM

The Company recorded an extraordinary charge of $627 (net of taxes) during the
year ended January 29, 2000, in connection with the signing of the Loan
Agreement and concurrent repayment of an existing credit agreement. Such amount
represents the write off of deferred financing fees and other costs related
thereto.

11. INCOME TAXES

The provision (benefit) for income taxes consists of the following:

The Company's consolidated pre-tax income of $6,851 includes pre-tax losses of
$454 attributable to foreign sources.

A reconciliation of the statutory Federal tax rate and the effective rate is as
follows:

F-13

The tax effects of temporary differences that give rise to deferred tax assets
and liabilities are presented below:

12. INCOME (LOSS) PER SHARE

Net income (loss) per share as presented in the accompanying statements of
operations is computed by dividing net income (loss) applicable to each class of
Common Stock by the average number of shares of such stock outstanding.
Dividends and accretion on the Company's redeemable preferred stock (net of
treasury shares) are deducted, and gains on repurchase of preferred stock
(credited directly to the stockholders' deficiency) are added in arriving at
income (loss) attributable to the Company's two classes of common stock. The
12.5% liquidation preference relating to the Company's Class A Common Stock is
considered as per share earnings of that class only. Following is the
computation of the per share amounts as presented in the Statement of
Operations:

13. EMPLOYEE SAVINGS AND INVESTMENT PLAN

The Company has a savings and investment plan under which eligible employees may
contribute up to 16% of their compensation, subject to certain limitations. The
Company matches 100% of pre-tax contributions up to the first 3% and 50% of the
next 3%. During the years ended January 29, 2000, February 3, 2001 and February
2, 2002, the Company made cash contributions to the plan aggregating $689, $806
and $783, respectively.

F-14

14. CAPITAL STRUCTURE

REDEEMABLE PREFERRED STOCK

In connection with the Units Offering, in March 1997, the Company issued
1,200,000 shares of 13% Senior Exchangeable Preferred Stock ("Redeemable
Preferred Stock") due 2009. Total shares authorized are 2,300,000. Dividends
accrue quarterly at 13% on the sum of the liquidation value ($25 per share) plus
accumulated and unpaid dividends thereon.

As required by the Certificate of Designations relating to the Redeemable
Preferred Stock, the Company has paid stock dividends aggregating 1,004,147
shares ($25,104 liquidation value) through the year ended February 2, 2002.
Dividends in the form of additional fully paid and non-assessable shares of
Redeemable Preferred Stock in lieu of cash are permitted through the quarterly
dividend declaration date of March 15, 2002. Thereafter, the Company is
obligated to pay such dividends in cash, if and when declared. If the Company
fails to make dividend payments for four consecutive quarters, the holders of
the Redeemable Preferred Stock, voting together as a class, are entitled to
elect two additional directors to the Company's Board of Directors.

On any scheduled dividend payment date, the Company may, at its option, but
subject to certain conditions, exchange all but not less than all of the shares
of Redeemable Preferred Stock then outstanding for the Company's 13%
Subordinated Exchange Debentures due 2009 ("Exchange Debentures"). The
Redeemable Preferred Stock or the Exchange Debentures, if issued, will be
redeemable at the option of the Company, in whole or in part, at any time on or
after March 15, 2002, at the redemption price of 101% of the liquidation
preference or aggregate principal amount thereof (as the case may be), plus, in
the case of the Redeemable Preferred Stock, an amount equal to all accumulated
and unpaid dividends per share to the date of redemption, or in the case of the
Exchange Debentures, an amount equal to all accumulated and unpaid interest
thereon to the date of redemption. On March 15, 2009, the Company is required to
redeem all outstanding shares of the Redeemable Preferred Stock at an amount
equal to the liquidation preference and all accumulated and unpaid dividends.
The Redeemable Preferred Stock was recorded at an amount equal to the proceeds
(net of discounts) less an amount attributable to the Class B Common Stock
issued in Connection with the Units Offering.

On December 31, 2001, the Company repurchased from an unrelated third party
146,711 shares of Redeemable Preferred Stock for an aggregate cost of $1,852
(approximately $12.62 per share). The carrying value of such shares at the time
of purchase was $3,578 (approximately $24.39). The difference of $1,726 between
the aggregate cost and the carrying value has been credited to stockholders'
deficiency.

COMMON STOCK

The Class A Common Stock accretes liquidation preference at the rate of 12.5%
per annum, compounded quarterly, which is payable prior to distribution of
dividends on Common Stock.

Holders of Class B Common Stock are entitled to one vote per share on all
matters to be voted on by stockholders, while holders of Class A Common Stock
and Class C Common Stock have no right to vote on any matters except in special
circumstances, such as a merger, consolidation, recapitalization or
reorganization of the Company.

F-15

15. STOCK OPTION PLAN

Effective January 1, 2002, the Company adopted a stock option plan (the "2002
Stock Option Plan") which authorizes the granting of options for approximately
5.0% of the outstanding Class B Common Stock on a fully diluted basis. The 2002
Stock Option Plan may be terminated by the Company at any time. The options may
be granted to certain members of management and key employees and are subject to
time vesting as well as vesting provisions relating to the sale or
recapitalization of the Company, as defined. The exercise price of such options
is the fair market value of the Common Stock as of the date of grant. Options to
purchase 90,000 shares were granted to certain members of management and key
employees on January 1, 2002 at an exercise price of $1 per share, the fair
value at date of grant. The 2002 Stock Option Plan replaced an existing plan
pursuant to which options to purchase shares (none of which were exercisable)
were cancelled. At February 2, 2002, options to purchase 90,000 shares (22,500
of which are exercisable) were outstanding. The weighted average fair value of
options granted in fiscal 2001 was $1.00. The fair value of each stock option
grant is estimated on the date of grant using the Black-Scholes option pricing
model with the following weighted average assumptions used for grants in fiscal
2001: risk-free interest rate of 5.75%; expected dividend yield of 0%; expected
life of 10 years; and expected volatility of 0%.

The Company accounts for its stock option plans in accordance with Accounting
Principles Board Opinion No. 25, under which no compensation cost is recognized
for stock option awards. Had compensation cost been determined consistent with
Statement of Financial Accounting Standards No. 123, ACCOUNTING FOR STOCK-BASED
COMPENSATION ("SFAS 123"), the effect on the Company's results of operations
would have been immaterial.

16. COMMITMENTS AND CONTINGENCIES

LEASES--The Company is obligated under various leases for equipment, office
space and distribution facilities which expire at various dates through 2008.
Future minimum rental commitments under noncancelable operating leases, with
terms in excess of one year, are as follows:

Rental expense for the years ended January 29, 2000, February 3, 2001 and
February 2, 2002 was $1,143, $1,834 and $2,441, respectively.

LITIGATION-- The Company is party to various litigation matters incidental to
the conduct of its business. The Company does not believe that the outcome of
any of the matters in which it is currently involved will have a material
adverse effect on the financial condition, liquidity, business or results of
operations of the Company.

F-16

LETTERS OF CREDIT--At February 2, 2002, the Company was party to open letters of
credit in the amount of $1,108, expiring through December 2002.

ENVIRONMENTAL MATTERS--Prior to the Acquisition, groundwater contamination was
discovered at the Asheville, North Carolina facility. In 1990, Winston Mills,
Inc., a subsidiary of McGregor Corporation ("McGregor"), entered into an
Administrative Order on Consent ("AOC") with the North Carolina Department of
Environment, Health and Natural Resources ("DEHNR") concerning such
contamination. Since that time, McGregor, through Culligan International Company
("Culligan"), a former affiliate, has been conducting investigative and
corrective action under DEHNR oversight and has remained responsible to DEHNR
with respect to contamination that is subject to the AOC. While the total cost
of the cleanup at the facility will depend upon the extent of contamination and
the corrective action approved by the DEHNR, preliminary cleanup cost estimates
range from $1.0 to $4.0 million. McGregor continues to be a party to the
Asheville, North Carolina facility's hazardous waste permit and Culligan has
guaranteed McGregor's obligations under the AOC. McGregor also contractually
agreed to fully indemnify the Company with respect to the contamination as part
of the terms of the acquisition of the Anvil business (the "Acquisition"). This
indemnity is guaranteed by Culligan and by Astrum International Corp. (now known
as Samsonite Corporation), an affiliate of McGregor, in the event Culligan is
unable to perform its guarantor obligations. The Company could be held
responsible for the cleanup of this contamination if McGregor, Culligan and
Samsonite were all to become unable to fulfill their obligations to DEHNR.
McGregor also agreed to fully indemnify the Company for any costs associated
with certain other environmental matters identified at the time of the
Acquisition. The Company believes that, even if McGregor were unable to fulfill
its indemnification obligations, these other matters would not have a material
adverse effect on the financial condition or results of operations of the
Company. McGregor also agreed to indemnify the Company, subject to certain
limitations, with respect to environmental liabilities that arise from events
that occurred or conditions in existence prior to the Acquisition. Culligan and
Samsonite have also guaranteed McGregor's obligations under these indemnities.

17. SUMMARIZED FINANCIAL DATA OF CERTAIN WHOLLY-OWNED SUBSIDIARIES

Following is the summarized balance sheet data of Anvil and Cottontops.
Cottontops is a wholly-owned subsidiary of Anvil, which is a wholly-owned
subsidiary of Holdings.

F-17

Following is the summarized statement of operations data of Anvil and Cottontops
for the periods indicated:

Holdings and Cottontops have fully and unconditionally, jointly and severally
guaranteed the Senior Notes. Complete financial statements and other
disclosures concerning Anvil and Cottontops are not presented because
management has determined they are not material to investors. Holdings has no
independent operations apart from its wholly-owned subsidiary, Anvil, and its
sole asset is the capital stock of Anvil. Anvil is Holding's only direct
subsidiary. In addition to Cottontops, Anvil has five other non-guarantor
direct subsidiaries: A.K.H., S.A., Estrella Mfg. Ltda. and Star, S.A.,
organized in Honduras; Livna, Limitada, organized in El Salvador; and CDC
GmbH, organized in Germany. Cottontops owns 100% of the stock of ISP Honduras
Limitada, S.A., organized in Honduras. Other than as stated herein, there are
no other direct or indirect subsidiaries of the Company. Management believes
the Non-Guarantor Subsidiaries are inconsequential both individually and in
the aggregate.

18. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Anvil, Holdings and Cottontops have entered into a management agreement with BRS
(the "Management Agreement"), effective as of the Recapitalization, whereby BRS
is to provide certain advisory and consulting services in relation to the
affairs of Anvil, Holdings and Cottontops, including services in connection with
strategic financial planning, and the selection, retention and supervision of
investment bankers or other financial advisors or consultants. Annual fees under
the Management Agreement are $250.

Holdings' Articles of Incorporation provide for dividends on its Series
1-Class A Common Stock, all of which is held by 399 Venture and its
affiliates. Holdings has agreed to pay 399 Venture financing fees in the
aggregate annual amount of $250 from the date of the Recapitalization.

BRS and 399 Venture are significant stockholders of the Company and each have
two designees on the Company's Board of Directors.

F-18

19. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

F-19

SCHEDULE II

ANVIL HOLDINGS, INC. AND SUSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS

- ----------
(a) Accounts written off or collected - net

S-1