UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended January 3, 2004 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ____________________________ to _______________________________ Commission File Number 0-23161 Tropical Sportswear Int'l Corporation (Exact name of registrant as specified in its charter) Florida 59-3424305 (State or other jurisdiction of I.R.S. Employer incorporation or organization) Identification No. 4902 W. Waters Avenue Tampa, FL 33634-1302 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (813) 249-4900 - ----------------------------------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report.) 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 the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). [X] Yes [ ] No As of February 11, 2004 there were 11,055,042 shares of the registrant's Common Stock outstanding.TROPICAL SPORTSWEAR INT'L CORPORATION FORM 10-Q TABLE OF CONTENTS PART I Financial Information Page No. -------- Item 1 Financial Statements 3 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 13 Item 3 Quantitative and Qualitative Disclosures about Market Risk 19 Item 4 Controls and Procedures 19 PART II Other Information Item 1 Legal Proceedings 19 Item 2 Changes in Securities 20 Item 3 Defaults upon Senior Securities 20 Item 4 Submission of Matters to a Vote of Security Holders 20 Item 5 Other Information 20 Item 6 Exhibits and Reports on Form 8-K 20 PART I FINANCIAL INFORMATION Item 1. Financial Statements TROPICAL SPORTSWEAR INT'L CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In thousands, except per share amounts) Fourteen Thirteen Weeks Ended Weeks Ended January 3, December 28, 2004 2002 ---------------- ------------------ Net sales $ 77,327 $ 99,041 Cost of goods sold 65,916 78,247 ---------------- ------------------ Gross profit 11,411 20,794 Selling, general and administrative expenses 17,913 22,304 Other charges - 3,752 ---------------- ------------------ Operating loss (6,502) (5,262) Other (income) expense: Interest expense, net 3,437 2,889 Other, net 228 (91) ---------------- ------------------ 3,665 2,798 Loss before income taxes (10,167) (8,060) Provision (benefit) for income taxes 264 (3,042) ---------------- ------------------ Net loss (10,431) (5,018) Foreign currency translation and other 1,367 222 ---------------- ------------------ Comprehensive loss $ (9,064) $ (4,796) ================ ================== Net loss per common share: Basic $ (0.94) $ (0.45) ================ ================== Diluted $ (0.94) $ (0.45) ================ ================== See accompanying notes. TROPICAL SPORTSWEAR INT'L CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) January 3, September 27, 2004 2003 ----------------- ------------------ ASSETS (unaudited) (audited) Current Assets: Cash and cash equivalents $ 7,974 $ 4,485 Accounts receivable, net 41,512 64,355 Inventories, net 66,384 73,293 Prepaid expenses and other current assets 10,534 11,001 Assets held for sale 5,509 6,597 ----------------- ------------------ Total current assets 131,913 159,731 Property and equipment, net 34,040 34,902 Trademarks, net 12,925 12,936 Other assets 5,719 6,710 ----------------- ------------------ Total assets $ 184,597 $ 214,279 ================= ================== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable and accrued expenses $ 32,015 $ 48,522 Revolving credit line 22,633 25,685 Current portion of long-term debt and capital leases 1,825 1,964 ----------------- ------------------ Total current liabilities 56,473 76,171 Long-term debt and capital leases 107,208 107,772 Other non-current liabilities 7,229 7,585 ----------------- ------------------ Total liabilities 170,910 191,528 Shareholders' Equity: Preferred stock - - Common stock 111 111 Additional paid in capital 88,575 88,575 Retained earnings (deficit) (69,048) (58,617) Accumulated other comprehensive loss (5,951) (7,318) ----------------- ------------------ Total shareholders' equity 13,687 22,751 ----------------- ------------------ Total liabilities and shareholders' equity $ 184,597 $ 214,279 ================= ================== See accompanying notes. TROPICAL SPORTSWEAR INT'L CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) Fourteen Thirteen Weeks Ended Weeks Ended January 3, December 28, 2004 2002 ------------------- ------------------ OPERATING ACTIVITIES Net loss $ (10,431) $ (5,018) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 1,496 1,665 Deferred income taxes and other (80) (180) Changes in operating assets and liabilities: Accounts receivable 22,843 10,803 Inventories 6,909 (13,431) Prepaid expenses and other current assets 2,462 (1,220) Accounts payable and accrued expenses (16,756) (5,006) ------------------ ----------------- Net cash provided by (used in) operating activities 6,443 (12,387) ------------------ ----------------- INVESTING ACTIVITIES Capital expenditures (452) (5,813) Sale of marketable securities - 11,100 Other, net 59 43 ------------------ ----------------- Net cash provided by (used in) investing activities (393) 5,330 ------------------ ----------------- Financing activities: Net change in debt and capital leases (3,755) (318) ------------------ ----------------- Net cash used in financing activities (3,755) (318) ------------------ ----------------- Change in currency translation 1,194 171 Net increase (decrease) in cash and cash equivalents 3,489 (7,204) Cash and cash equivalents at beginning of period 4,485 28,284 ------------------ ----------------- Cash and cash equivalents at end of period $ 7,974 $ 21,080 ================== ================= See accompanying notes. TROPICAL SPORTSWEAR INT'L CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Fourteen weeks ended January 3, 2004 (In thousands, except share and per share amounts) 1. BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements of Tropical Sportswear Int'l Corporation (the "Company") include the accounts of Tropical Sportswear Int'l Corporation and its subsidiaries. These financial statements have been prepared in accordance with the instructions for Form 10-Q and, therefore, do not include all information and footnotes required by generally accepted accounting principles. The unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and related notes included in the Company's Annual Report on Form 10-K for the year ended September 27, 2003. In the opinion of management, the unaudited condensed consolidated financial statements contain all necessary adjustments (which include only normal, recurring adjustments) for a fair presentation of the interim periods presented. Operating results for the fourteen weeks ended January 3, 2004 are not necessarily indicative of results that may be expected for the entire fiscal year ending October 2, 2004. 2. INVENTORIES Inventories consist of the following: January 3, September 27, 2004 2003 ------------------- ------------------- Raw materials $8,165 $6,939 Work in process 4,224 6,947 Finished goods 65,929 71,479 Reserve for excess and slow moving inventory (11,934) (12,072) ------------------- ------------------- $66,384 $73,293 =================== =================== 3. DEBT AND CAPITAL LEASES Debt and capital leases consist of the following: January 3, September 27, 2004 2003 ------------------- ------------------- Revolving credit line $22,633 $25,685 Real estate loan 7,600 8,000 Senior subordinated notes 100,000 100,000 Other 1,433 1,736 ------------------- ------------------- 131,666 135,421 Less current maturities 24,458 27,649 ------------------- ------------------- Long-term debt $107,208 $107,772 =================== =================== On June 6, 2003, the Company renewed its revolving credit line (the "Facility"). The Facility provided for borrowings of up to $95.0 million, subject to certain borrowing base limitations. Borrowings under the Facility bear variable rates of interest based on LIBOR plus an applicable margin (4.2% at January 3, 2004), and are secured by substantially all of the Company's domestic assets. The Facility matures in June 2006. The Facility contains significant financial and operating covenants if availability under the Facility falls below $20 million. These covenants include a consolidated fixed charge ratio of at least .90x and a ratio of consolidated funded debt to consolidated EBITDA of not more than 5.25x. The Facility also includes prohibitions on the Company's ability to incur certain additional indebtedness or to pay dividends, and restrictions on its ability to make capital expenditures. The Facility contains both a subjective acceleration clause and a requirement to maintain a lock-box arrangement, whereby remittances from customers reduce borrowings outstanding under the Facility. In accordance with Emerging Issues Task Force 95-22, "Balance Sheet Classification of Borrowings Outstanding under Revolving Credit Agreements That Include Both a Subjective Acceleration Clause and a Lock-Box Arrangement", outstanding borrowings under the revolving credit line of $22.6 million have been classified as short-term as of January 3, 2004. On December 15, 2003, the Company paid the semi-annual interest payment of $5.5 million to the holders of its senior subordinated notes. On December 16, 2003, availability under the Facility fell below $20 million, triggering financial covenants, which were violated. This caused the Company to be in technical default under the Facility. As of January 3, 2004, $13.5 million was available for borrowings under the Facility. On January 12, 2004, the Company amended the Facility (the "Amended Facility") with Fleet Capital, which among other things reduces aggregate borrowings to $70 million. The default under the Facility was waived on January 12, 2004 by the terms of the Amended Facility. Although the Amended Facility provides for borrowings of up to $70 million, the amount that can be borrowed at any given time is based upon a formula that takes into account, among other things, eligible accounts receivable and inventory, which can result in borrowing availability of less than the full amount. Additionally, the Amended Facility also contains a $10 million availability reserve base and higher rates of interest than the Facility. The $10 million availability reserve base is currently being met. The Amended Facility contains monthly financial covenants of minimum EBITDA levels, which begin February 2004 and a consolidated fixed charge coverage ratio and consolidated EBIT to consolidated interest expense ratio which begin March 2005. The fiscal 2004 minimum EBITDA levels are cumulative month amounts beginning in the second quarter of fiscal 2004. The minimum EBITDA threshold for fiscal 2004 ranges from $1.8 million for the two months ending February 29, 2004 to $11.8 million for the nine months ending October 2, 2004. While the Company believes its operating plans, if met, will be sufficient to assure compliance with the terms of the Amended Facility, there can be no assurances that the Company will be in compliance through fiscal 2004. Borrowings under the Company's Real Estate Loan bear variable rates of interest based on LIBOR plus an applicable margin (5.2% at January 3, 2004). The Real Estate Loan requires quarterly principal payments of $200,000, which commenced October 1, 2003, and monthly interest payments. As of January 3, 2004, the Real Estate Loan had a balance of $7.6 million. The cross default provision on the Real Estate Loan was triggered by the default on the Facility. This default was waived on January 12, 2004 concurrent with the Amended Facility. On January 12, 2004, the Real Estate Loan was amended (the "Amended Real Estate Loan") to increase the loan by $2.0 million, to increase the interest rate, and to require additional quarterly principal payments of $50,000, which commence April 1, 2004. The $2.0 million of additional borrowings was used to pay down borrowings under the Facility. 4. LOSS PER SHARE Basic and diluted net loss per share are computed as follows: Fourteen Thirteen Weeks ended Weeks ended January 3, December 28, 2004 2002 --------------- --------------- Numerator for basic and diluted net loss per share: Net loss $ (10,431) $(5,018) Denominator for basic net loss per share: Weighted average shares of common stock outstanding 11,055,042 11,040,452 Effect of dilutive stock options using the treasury stock method - - --------------- --------------- Denominator for diluted net loss per share 11,055,042 11,040,452 =============== =============== Net loss per common share: Basic $(0.94) $(0.45) =============== =============== Diluted $(0.94) $(0.45) =============== =============== 5. RESTRUCTURING OF SAVANE INTERNATIONAL CORP. On April 18, 2002, the Company announced a plan to consolidate the administrative, cutting and related functions of the Savane division in El Paso, Texas into the Tampa, Florida facility. The Company completed the physical consolidation in the second fiscal quarter ending March 2003. As part of the consolidation, the Company vacated its El Paso, Texas administration building and terminated the associated lease obligation, and vacated its El Paso, Texas cutting facility. As a result of these initiatives (internally referred to as "Project Synergy"), the Company recorded a pre-tax charge totaling approximately $16.1 million in fiscal 2002 for severance ($3.1 million), relocation (recognized as incurred) ($2.5 million), lease terminations ($2.8 million), asset write-downs ($5.7 million) and other related costs ($2.0 million) included in other charges in the accompanying statements of operations. As of January 3, 2004, the Company has approximately $831,000 remaining of the accrual, related to lease termination costs. The activity in the exit accruals related to Project Synergy during the fourteen weeks ended January 3, 2004 were as follows: Fourteen weeks ended January 3, 2004 ----------------------- Beginning balance $ 2,739 Cash payments (1,908) ----------------------- Ending balance $ 831 ======================= The Company has remaining accrued liabilities related to the 1998 acquisition of Savane International Corp. The exit costs consist of lease termination costs. The activity in the exit accruals related to this acquisition during the fourteen weeks ended January 3, 2004 were as follows: Fourteen weeks ended January 3, 2004 ----------------------- Beginning balance $ 437 Cash payments (385) ----------------------- Ending balance $ 52 ======================= 6. RECENT ACCOUNTING PRONOUNCEMENTS In December 2002, the FASB issued Statement of Financial Accounting Standards Statement No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure" (Statement No. 148), which is effective for fiscal years beginning after December 31, 2002. Statement No. 148 amends FASB Statement No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition to the fair value method of accounting for stock-based employee compensation. In addition, Statement No. 148 amends the disclosure provisions of Statement 123 to require disclosure in the summary of significant accounting policies of the effects of an entity's accounting policy with respect to stock-based employee compensation on reported net income and earnings per share in annual and interim financial statements. The adoption of Statement No. 148 has not had a material impact on the Company's financial position and results of operations. In November 2002, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" ("FIN 45"). FIN 45 elaborates on the existing disclosure requirements for most guarantees, including loan guarantees such as standby letters of credit. It also clarifies that at the time a company issues a guarantee, the company must recognize an initial liability for the fair value, or market value, of the obligations it assumes under that guarantee and must disclose that information in its interim and annual financial statements. FIN 45 is effective on a prospective basis to guarantees issued or modified after December 31, 2002. The requirements of FIN 45 are effective for financial statements of interim or annual periods ending after December 15, 2002. The Company adopted the accounting and disclosure requirements of FIN 45, which resulted in no material impact on the financial statements. In January 2003, the FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities, an interpretation of Accounting Research Bulletin No. 51" (the "Interpretation"). The Interpretation requires the consolidation of entities in which an enterprise absorbs a majority of the entity's expected losses, receives a majority of the entity's expected residual returns, or both, as a result of ownership, contractual or other financial interests in the entity. Currently, entities are generally consolidated by an enterprise when it has a controlling financial interest through ownership of a majority voting interest in the entity. The Company does not expect the Interpretation to have any impact on its consolidated financial statements. The Interpretation is effective for the Company in the period ending after March 15, 2004. 7. STOCK OPTION PLAN PRO FORMA INFORMATION The Company has elected to follow Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25) and related interpretations in accounting for its employee stock options because the alternative fair value accounting provided for under FASB Statement 123, "Accounting for Stock Based Compensation," (Statement No. 123) requires the use of option valuation models that were not developed for use in valuing employee stock options. Under APB 25, because the exercise price of the Company's employee stock options equal the market price of the underlying stock on the date of grant, no compensation expense is recognized. As discussed in Note 6, the interim information regarding pro forma net income and earnings per share is required by Statement No. 123 and Statement No. 148. For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options' vesting period. The Company's pro forma information is as follows (in thousands except for net loss per share information): Fourteen Thirteen Weeks ended Weeks ended January 3, December 28, 2004 2002 --------------- --------------- Net loss $(10,431) $(5,018) Pro forma compensation expense, net of tax (360) (209) --------------- --------------- Pro forma net loss $(10,791) $(5,227) =============== =============== Net loss per share-basic $(0.94) $(0.45) Net loss per share-diluted $(0.94) $(0.45) Pro forma net loss per share-basic $(0.98) $(0.47) Pro forma net loss per share-diluted $(0.98) $(0.47) 8. SUPPLEMENTAL COMBINING CONDENSED FINANCIAL STATEMENTS The Company's Senior Subordinated Notes, due 2008 (the "Notes") are jointly and severally guaranteed fully and unconditionally by the Company's domestic subsidiaries which are 100% owned by Tropical Sportswear Int'l Corporation (the "Parent"). The Company's wholly-owned foreign subsidiaries are not guarantors with respect to the Notes and do not have any credit arrangements senior to the Notes except for their local overdraft facilities and capital lease obligations. The following is the unaudited supplemental combining condensed statement of operations for the fourteen weeks ended January 3, 2004 and the thirteen weeks ended December 28, 2002, the supplemental combining condensed balance sheet as of January 3, 2004 and September 27, 2003, and the supplemental combining condensed statement of cash flows for the fourteen weeks ended January 3, 2004, and the thirteen weeks ended December 28, 2002. The only intercompany eliminations are the normal intercompany sales, borrowings and investments in wholly-owned subsidiaries. Separate complete financial statements of the guarantor subsidiaries are not presented because management believes that they are not material to investors. Fourteen Weeks Ended January 3, 2004 ----------------------------------------------------------------------------- Statement of Operations Parent Guarantor Non-Guarantor Only Subsidiaries Subsidiaries Eliminations Consolidated ----------- ------------ ------------- ------------ ------------- Net sales $ 31,204 $ 32,952 $ 13,341 $ (170) $ 77,327 Gross profit 5,564 1,476 4,466 (95) 11,411 Operating income (loss) (3,714) (3,170) 382 - (6,502) Interest, income taxes and other, net 1,086 2,718 125 - 3,929 Net income (loss) (4,800) (5,888) 257 - (10,431) Thirteen Weeks Ended December 28, 2002 ----------------------------------------------------------------------------- Statement of Operations Parent Guarantor Non-Guarantor Only Subsidiaries Subsidiaries Eliminations Consolidated ----------- ------------ ------------- ------------- -------------- Net sales $ 46,756 $ 39,728 $ 12,835 $ (278) $ 99,041 Gross profit 8,649 7,865 4,354 (74) 20,794 Operating income (loss) (7,109) 995 852 - (5,262) Interest, income taxes and other, net (2,369) 1,944 181 - (244) Net income (loss) (4,740) (949) 671 - (5,018) As of January 3, 2004 ------------------------------------------------------------------------------ Balance Sheet Parent Guarantor Non-Guarantor Only Subsidiaries Subsidiaries Eliminations Consolidated ----------- ------------- ------------- ------------- -------------- ASSETS Cash and cash equivalents $ 883 $ 1,012 $6,079 $ - $ 7,974 Accounts receivable, net 23,384 11,515 6,613 - 41,512 Inventories 33,972 23,348 9,064 - 66,384 Other current assets 8,338 4,617 3,088 - 16,043 ----------- ------------- ------------- ------------- -------------- Total current assets 66,577 40,492 24,844 - 131,913 Property and equipment, net 27,027 4,893 2,120 - 34,040 Investment in subsidiaries and other assets 138,167 22,166 (10,657) (131,032) 18,644 ----------- ------------- ------------- ------------- -------------- Total assets $231,771 $67,551 $16,307 $(131,032) $184,597 =========== ============= ============= ============= ============== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable and accrued liabilities $ 23,476 $2,662 $ 5,877 $ - $ 32,015 Current portion of revolving credit line, long-term debt and capital leases 23,681 761 16 - 24,458 ----------- ------------- ------------- ------------- -------------- Total current liabilities 47,157 3,423 5,893 - 56,473 Long-term debt and noncurrent portion of capital leases 107,125 - 83 - 107,208 Other noncurrent liabilities 8 7,104 117 - 7,229 Stockholders' equity 77,481 57,024 10,214 (131,032) 13,687 ----------- ------------- ------------- ------------- -------------- Total liabilities and stockholders' equity $231,771 $67,551 $16,307 $(131,032) $184,597 =========== ============= ============= ============= ============== As of September 27, 2003 ------------------------------------------------------------------------------ Balance Sheet Parent Guarantor Non-Guarantor Only Subsidiaries Subsidiaries Eliminations Consolidated ----------- ------------- ------------- ------------- -------------- ASSETS Cash and cash equivalents $218 $ 440 $ 3,827 $ - $ 4,485 Marketable securities - - - - - Accounts receivable, net 33,740 22,174 8,441 - 64,355 Inventories 31,945 30,818 10,530 - 73,293 Other current assets 9,703 4,903 2,992 - 17,598 ----------- ------------- ------------- ------------- -------------- Total current assets 75,606 58,335 25,790 - 159,731 Property and equipment, net 27,627 5,318 1,957 - 34,902 Investment in subsidiaries and other assets 157,597 6,706 (14,071) (130,586) 19,646 ----------- ------------- ------------- ------------- -------------- Total assets $260,830 $70,359 $ 13,676 $(130,586) $214,279 =========== ============= ============= ============= ============== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable and accrued liabilities $ 38,036 $ 5,480 $ 5,006 - $48,522 Current portion of revolving credit line, long-term debt and capital leases 26,738 892 19 - 27,649 ----------- ------------- ------------- ------------- -------------- Total current liabilities 64,774 6,372 5,025 - 76,171 Long-term debt and noncurrent portion of capital leases 107,590 87 95 - 107,772 Other noncurrent liabilities 510 6,968 107 - 7,585 Stockholders' equity 87,956 56,932 8,449 (130,586) 22,751 ----------- ------------- ------------- ------------- -------------- Total liabilities and stockholders' equity $260,830 $70,359 $13,676 $(130,586) $214,279 =========== ============= ============= ============= ============== Fourteen Weeks Ended January 3, 2004 ------------------------------------------------------------------------------ Statement of Cash Flows Parent Guarantor Non-Guarantor Only Subsidiaries Subsidiaries Eliminations Consolidated ----------- ------------- ------------- -------------- ------------- Net cash provided by (used in) operating activities $ 4,405 $ 764 2,974 $ (1,700) $ 6,443 Net cash provided by (used in) investing activities (311) 15 (97) - (393) Net cash provided by (used in) financing actvities (3,521) (207) (27) - (3,755) Other 92 - (598) 1,700 1,194 Net increase in cash and cash equivalents 665 572 2,252 - 3,489 Cash and cash equivalents, beginning of period 218 440 3,827 - 4,485 Cash and cash equivalents, end of period 883 1,012 6,079 - 7,974 Thirteen Weeks Ended December 28, 2002 ------------------------------------------------------------------------------ Statement of Cash Flows Parent Guarantor Non-Guarantor Only Subsidiaries Subsidiaries Eliminations Consolidated ----------- ------------- ------------- -------------- ------------- Net cash provided by (used in) operating activities $(14,961) $ 866 1,708 $ - $ (12,387) Net cash provided by (used in) investing activities 5,842 (432) (80) - 5,330 Net cash provided by (used in) financing activities (82) (335) 99 - (318) Other - - 171 - 171 Net increase (decrease) in cash and cash equivalents (9,201) 99 1,898 - (7,204) Cash and cash equivalents, beginning of period 24,274 167 3,843 - 28,284 Cash and cash equivalents, end of period 15,073 266 5,741 - 21,080 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis of the Company's results of operations is based upon our unaudited consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements in conformity with generally accepted accounting principles requires that we make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. These estimates and assumptions are based on historical and other facts believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions. We have chosen accounting policies that we believe are appropriate to accurately and fairly report our operating results and financial position, and we apply those accounting policies in a consistent manner. We have identified the policies below as critical to our business operations and the understanding of our results of operations. Critical Accounting Policies Inventories - Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out method. We evaluate our inventory by style, color and size to determine excess or slow moving product based on projected sales. We record provisions for markdowns and losses on excess and slow-moving inventory to the extent the cost of inventory exceeds estimated net realizable value. If actual market conditions or competitive pressures change, the level of inventory reserves would change. Reserve for Allowances and Doubtful Accounts - Accounts receivable consists of amounts due from our customers from our normal business activities. We maintain a reserve for allowances and doubtful accounts, which is based on historical collection and deduction write-off experience, and an estimate of potential sales returns. Estimates for sales returns include provision for order shortages, purchase order variances and other customer discrepancies. For fiscal 2002, we did not provide a reserve for credit losses as substantially all of our receivables were assigned under factoring agreements, without recourse, except for credit losses on the first 0.10% of amounts factored. During fiscal 2003, we discontinued factoring of our receivables, but maintained credit insurance for those accounts which we deemed necessary. Effective the first quarter of fiscal 2004, we now maintain credit insurance for all eligible customer accounts. This credit insurance includes a deductible of $100,000 per year. We will continue to assess the adequacy of our reserves based on qualitative and quantitative measures. Long-Lived Assets - We estimate the depreciable lives of our property, plant and equipment and review them for impairment when events or circumstances indicate that their carrying amounts may be impaired. Most of our property, plant and equipment is used in our cutting and distribution processes. We periodically evaluate the carrying value of assets which are held for sale to determine if, based on market conditions, the values of these assets should be adjusted. Although we believe we have appropriately recorded our assets held for sale at their estimated realizable value, net of estimated disposal costs, the actual sale of these assets could result in gains or losses which could differ from our estimated amounts. To assess the recoverability of intangible assets, we make assumptions regarding estimated future cash flows and other factors to determine whether the carrying values are recoverable from operations. If these assumptions or estimates change, we may be required to record impairment charges to reduce the value of these assets. Valuation Allowances for Deferred Tax Assets - Valuation allowances are recorded to reduce deferred tax assets if, based on the weight of the evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The evidence considered in making that determination includes, offsetting deferred tax liabilities, future taxable income, as well as prudent tax planning strategies. We have recorded deferred income tax assets related to state net operating loss carryforwards, foreign net operating loss carryforwards, foreign tax credit carryforwards and certain other accruals. We have recorded valuation allowances to reduce the deferred tax assets relating to these operating loss carryforwards and accruals based on an evaluation of the benefits expected to be realized. If we determine that we would be able to realize more of our net deferred tax assets than we currently expect, we would reduce the valuation allowance, which would have the effect of increasing income in the period that we make the determination. Conversely, if we determine that we will not be able to realize all or part of our net deferred tax assets in the future, we will increase the valuation allowance, which would have the effect of reducing income in the period that we make the determination. Contingencies - We accrue for contingent obligations when the obligations are probable and the amount is reasonably estimable. As facts concerning contingencies become known, we reassess our estimates and make appropriate adjustments to the financial statements. Estimates that are particularly sensitive to future changes include tax, legal and other regulatory matters such as imports and exports, which are subject to change as events evolve and as additional information becomes available during the administrative and litigation process. Results of Operations On April 18, 2002, we announced a plan to consolidate the administrative, cutting and related functions of our Savane division in El Paso, Texas into our Tampa, Florida facility. This initiative was internally referred to as Project Synergy. We completed the physical consolidation in the second fiscal quarter ended March 29, 2003. As part of the consolidation, we vacated our El Paso, Texas administration building and cutting facility. We experienced delays and difficulties in consolidating our El Paso, Texas cutting functions into our Tampa, Florida facilities that resulted in delays in delivering products to our customers and lost sales during fiscal 2003. During the second half of fiscal 2003, our inventories grew, requiring us to sell higher than normal levels of excess inventories at closeout prices, which reduced our average selling price and our gross margins. Higher than normal levels of sales returns and allowances also contributed to reduced gross margins. We still have excess inventory which we expect to sell at discounted prices during the first half of fiscal 2004. Gross margins for the first quarter of fiscal 2004 were reduced due to the continued selling of excess inventory, particularly for sales of the Savane(R)branded product. In May 2003, we transitioned our Victorinox(R)apparel division to Swiss Army Brands, Inc. In connection with the transition of our Victorinox(R)apparel division to Swiss Army Brands, Inc. ("Swiss Army"), Swiss Army is currently disputing certain aspects of the transition agreement and have not paid us approximately $4.8 million, which we believe is due to us under the transition agreement. On June 3, 2003, we filed a declaratory judgment action against Swiss Army, seeking judicial interpretation of the agreement. We and Swiss Army agreed to mediation in an attempt to resolve the issue, which resulted in an impasse. There can be no assurance that all or any part of the $4.8 million will be collected in its entirety. In June 2003, we sold our Duck Head(R)trademarks to Goody's Family Clothing, Inc. ("Goody's") for $4.0 million in cash. Under the purchase agreement, we continued to sell Duck Head(R)branded products through the end of fiscal 2003. Goody's also assumed all licenses associated with the Duck Head(R)trademarks. In connection with the sale, we recorded a net gain of $3.7 million, which was net of expenses related to the sale and reduction of certain of the remaining assets, including inventory. In connection with the sale of our Duck Head(R)trademarks, all of our Duck Head(R)retail outlet stores were closed in September 2003. The cash used in connection with the closure of the retail outlet stores was approximately $0.7 million. The Duck Head(R)and Victorinox(R) businesses represented less than 5% of our total fiscal 2003 net sales. We believe that exiting these businesses will free up valuable resources that can be devoted to our core business. We completed the transition of the majority of our Mexico production to the Dominican Republic during the fourth quarter of fiscal 2003. We reduced selling, general and administrative expenses by approximately $12 million during fiscal 2003, which was primarily due to successful cost cutting measures resulting from the consolidation of our El Paso, Texas operations to Tampa, Florida and to other discretionary spending reductions. Significant areas of cost reduction included salaries, co-op advertising and tradeshow costs. During the first quarter of fiscal 2004, we set certain plans in motion to further reduce overhead. A reduction in personnel from November to January is expected to lower employee-related costs by approximately $6.4 million per annum. The full effect of this reduction should occur during the third quarter of this fiscal year. In addition, we have decided to transition our Tampa, Florida cutting operations to contractors in the Dominican Republic and Honduras. The phase out of our Tampa, Florida cutting operations is expected to be completed during March 2004. In January 2004, we engaged Alvarez & Marsal LLC, a global turn-around and restructuring firm with experience in the textile and apparel industries, as advisors to management and our board of directors. Alvarez & Marsal will assist us in the evaluation of our current business plan and in the identification of cost reductions and operations improvement opportunities. This engagement satisfies a requirement that was part of our Amended Facility with Fleet Capital that was executed in January 2004. The following table sets forth, for the periods indicated, selected items in the Company's consolidated statements of income expressed as a percentage of net sales: Fourteen Thirteen Weeks ended Weeks ended January 3, December 28, 2004 2002 -------------- --------------- Net sales 100.0% 100.0% Cost of goods sold 85.2 79.0 -------------- --------------- Gross profit 14.8 21.0 Selling, general and administrative expenses 23.2 22.5 Other charges - 3.8 -------------- --------------- Operating loss (8.4) (5.3) Interest expense, net (4.4) (2.9) Other, net (0.3) 0.1 -------------- --------------- Loss before income taxes (13.1) (8.1) Provision (benefit) for income taxes 0.4 (3.0) -------------- --------------- Net loss (13.5)% (5.1)% ============== =============== Fourteen weeks ended January 3, 2004 compared to the thirteen weeks ended December 28, 2002 Net Sales. Net sales decreased to $77.3 million for the first quarter of fiscal 2004 from $99.0 million in the comparable prior year quarter. The decrease was primarily due to a 5% decrease in average selling prices and a 18% decrease in units shipped. During the first quarter of fiscal 2004, we shipped fewer full priced units than the first quarter of fiscal 2003. In addition, the average selling price was impacted by a change in the product mix as the higher average selling priced Savane(R)products experienced declines in unit volume. Due to higher levels of inventory, which resulted from production difficulties associated with Project Synergy during fiscal 2003, we continued to sell excess inventory at discounted prices during the first quarter of fiscal 2004. We expect fiscal 2004 sales of Savane(R)and private label products to be slightly below fiscal 2003 levels due to a continuing difficult retail environment. Gross Profit. Gross profit decreased to $11.4 million, or 14.8% of net sales for the first quarter of fiscal 2004 from $20.8 million, or 21.0% of net sales for the comparable prior year quarter. The reduction in the gross margin percentage was due to a decrease in average selling price of 5% and lower gross margins on sales of excess inventory. Sales of branded products, which typically generate higher margins, were a lower portion of sales in the first quarter of fiscal 2004. As excess inventory is sold, we expect to partially reduce inventory reserves during fiscal 2004. To the extent that excess inventory, continues to be sold in fiscal 2004, reduced gross margins could continue to impact fiscal 2004 results. Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased to $17.9 million, or 23.2% of net sales for the first quarter of fiscal 2004, from $22.3 million, or 22.5% of net sales, for the comparable prior year quarter. The decrease in operating expenses was primarily due to cost cutting measures resulting from the consolidation of our El Paso, Texas operations to Tampa, Florida and to other discretionary spending reductions. Significant areas of cost reduction included salaries, co-op advertising and costs related to the Company's lease payments for its corporate aircraft which were terminated during the first quarter of fiscal 2004. As discussed in Liquidity and Capital Resources, we anticipate incurring additional advertising to support the Savane(R)brand in fiscal 2004. Other Charges. Other charges in the first quarter of fiscal 2003 were comprised of a $5.7 million charge related to a separation agreement with our former chief executive officer, offset in part by a $1.9 million reduction of estimated costs for Project Synergy. Interest Expense. Interest expense increased to $3.4 million for the first quarter of fiscal 2004, from $2.9 million for the comparable prior year quarter. The increase was primarily due to higher average outstanding borrowings under the Company's revolving credit line. Income Taxes. We currently have net deferred tax assets primarily comprised of temporary timing differences of future deductible expenses and net operating losses available to offset future taxable income in the United States. We provided a valuation allowance against these assets during fiscal 2003. The use of these deferred tax assets to offset taxable profits in future years would result in a reduction in our effective tax rate in these years. Net Loss. As a result of the above factors, we incurred a net loss of $10.4 million for the first quarter of fiscal 2004 compared to a net loss of $5.0 million in the comparable prior year quarter. Liquidity and Capital Resources On June 6, 2003, we renewed our revolving credit line (the "Facility"). The Facility provides for borrowings of up to $95.0 million, subject to certain borrowing base limitations. Borrowings under the Facility bear variable rates of interest based on LIBOR plus an applicable margin (4.2% at January 3, 2004), and are secured by substantially all of our domestic assets. The Facility matures in June 2006. The Facility contains significant financial and operating covenants if availability under the Facility falls below $20 million. These covenants include a consolidated fixed charge ratio of at least .90x and a ratio of consolidated funded debt to consolidated EBITDA of not more than 5.25x. The Facility also includes prohibitions on our ability to incur certain additional indebtedness or to pay dividends, and restrictions on our ability to make capital expenditures. The Facility contains both a subjective acceleration clause and a requirement to maintain a lock-box arrangement, whereby remittances from customers reduce borrowings outstanding under the Facility. In accordance with Emerging Issues Task Force 95-22, "Balance Sheet Classification of Borrowings Outstanding under Revolving Credit Agreements That Include Both a Subjective Acceleration Clause and a Lock-Box Arrangement", outstanding borrowings under the Facility of $22.6 million have been classified as short-term as of January 3, 2004. On December 15, 2003, we paid the semi-annual interest payment of $5.5 million to the holders of our senior subordinated notes. On December 16, 2003, availability under our Facility fell below $20 million, triggering financial covenants which we violated. This caused us to be in technical default under the Facility. As of January 3, 2004, $13.5 million was available for borrowings under the Facility. On January 12, 2004, we amended the Facility (the "Amended Facility") with Fleet Capital, which among other things reduces aggregate borrowings to $70 million. The default under the Facility was waived on January 12, 2004 by the terms of the Amended Facility. Although our Amended Facility provides for borrowings of up to $70 million, the amount that can be borrowed at any given time is based upon a formula that takes into account, among other things, our eligible accounts receivable and inventory, which can result in borrowing availability of less than the full amount. Additionally, the Amended Facility contains a $10 million availability reserve base and higher rates of interest than the Facility. The $10.0 million availability reserve base is currently being met. The Amended Facility also contains monthly financial covenants of minimum EBITDA levels which begin February 2004, and a consolidated fixed charge coverage ratio and consolidated EBIT to consolidated interest expense ratio which begin March 2005. The fiscal 2004 minimum EBITDA levels are cumulative month amounts beginning in the second quarter of fiscal 2004. The minimum EBITDA threshold for fiscal 2004 ranges from $1.8 million for the two months ending February 29, 2004 to $11.8 million for the nine months ending October 2, 2004. While we believe our operating plans, if met, will be sufficient to assure compliance with the terms of the Amended Facility, there can be no assurances that we will be in compliance through fiscal 2004. Borrowings under our Real Estate Loan bear variable rates of interest based on LIBOR plus an applicable margin (5.2% at January 3, 2004). The Real Estate Loan requires quarterly principal payments of $200,000, which commenced October 1, 2003, and monthly interest payments. As of January 3, 2004, the Real Estate Loan had a balance of $7.6 million. The cross default provision on the Real Estate Loan was triggered by the default on the Facility. This default was waived on January 12, 2004 concurrent with the Amended Facility. On January 12, 2004, the Real Estate Loan was amended (the "Amended Real Estate Loan") to increase the loan by $2.0 million, to increase the interest rate, and to require additional quarterly principal payments of $50,000, which commence April 1, 2004. The $2.0 million of additional borrowings was used to pay down borrowings under the Facility. In addition to the financial covenants discussed above, our Amended Facility and our Amended Real Estate Loan also contain customary events of default, including nonpayment of principal or interest, violation of covenants, inaccuracy of representations and warranties, cross-defaults or other indebtedness, bankruptcy and other insolvency events, material judgments, certain ERISA events, a material adverse change, and certain changes of control at our company. The occurrence of an event of default or a material adverse effect on our company could result in our inability to obtain further borrowings under our Amended Facility and could also result in the acceleration of our obligations under any or all of our credit agreements, each of which could materially and adversely affect our business. Our estimate of capital needs is subject to a number of risks and uncertainties that could result in additional capital needs that have not been anticipated. An important source of capital is our ability to generate positive cash flow from operations. This is dependent upon our ability to increase revenues, to generate adequate gross profit from those sales, to reduce excess inventories and to control costs and expenses. Another important source of capital is our ability to borrow under the Amended Facility. We have historically violated certain covenants in our borrowing agreements, and to this point, we have been able to obtain waivers from our lenders allowing us continued access to this source of capital. However, there can be no assurances that we will be able to obtain waivers from our lenders should a violation occur in the future. If our actual revenues are less than we expect or operating or capital costs are more than we expect, our financial condition and liquidity may be materially adversely affected. We may need to raise additional capital either through the issuance of debt or equity securities or additional credit facilities, and there can be no assurances that we would be able to access the credit or capital markets for additional capital. During fiscal 2003, we completed construction of an administration building in Tampa, Florida. We have decided not to occupy this building and it is being marketed for sale. Proceeds from the sale of this building will be used to pay down borrowings under the Amended Real Estate Loan and the Amended Facility. As a result of our decision to terminate the leases on our corporate aircraft, we paid approximately $4.1 million of cash during the first quarter of fiscal 2004. In connection with the severance of certain executive management, we paid approximately $5.1 million of cash during the first quarter of fiscal 2004. In connection with the termination for the lease on our El Paso, Texas administration building, we paid approximately $2.2 million of cash during the first quarter of fiscal 2004. We received approximately $1.1 million in the first quarter of fiscal 2004 from the sale of a parcel of land in El Paso, Texas. Each of these transactions were accrued in fiscal 2003, therefore the Company did not record income (expense) related to these items in the first quarter of fiscal 2004. We anticipate using cash in fiscal 2004 for advertising programs to support our Savane(R) brand. Although the amounts have not yet been quantified, these programs may include local or national advertising campaigns, point of sale items, new labeling and packaging designs, and the use of in store merchandise coordinators. We believe the use of these funds are necessary to support and promote sales of our Savane(R)brand. Capital expenditures totaled $0.5 million for the fourteen weeks ended January 3, 2004 and are expected to approximate $3.5 million for the entire fiscal year. The expenditures expected for the remainder of the fiscal year primarily relate to the upgrade or replacement of various other equipment and computer systems including hardware and software. During the fourteen weeks ended January 3, 2004, we generated $6.4 million of cash from our operations. This was primarily the result of a decrease in accounts receivable of $22.8 million, a decrease in inventories of $6.9 million, and a decrease in prepaid expenses and other current assets of $2.5 million, offset in part by a decrease in accounts payable and accrued expenses of $16.8 million, and a net loss of $10.4 million (which included non-cash expenses of $1.4 million). Seasonality Historically, our business has been seasonal, with higher sales and income in the second and third fiscal quarters. In addition, certain of our products, such as shorts and corduroy pants, tend to be seasonal in nature. In the event such products represent a greater percentage of our sales in the future, the seasonality of our sales may be increased. Factors Affecting the Company's Business and Prospects This report contains forward-looking statements subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. Management cautions that these statements represent projections and estimates of future performance and involve certain risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors including, without limitation: potential negative effects from the continued sell off of excess inventory at discounted prices; difficulties in achieving operating efficiencies; loss of programs or customers as a result of product delivery problems; disruption in the business associated with changes in management; potential negative effects from the termination of the Victorinox(R)license agreement and the transition of this business to Swiss Army Brands, Inc.; restrictions and limitations placed on us by our debt instruments; potential negative effects of loan agreement covenant violations, should any occur; potential negative effects of transitioning our cutting operations from Tampa, Florida to the Dominican Republic and Honduras; potential negative effects from reducing personnel and not realizing the estimated cost savings; expectations and beliefs with respect to the brand strategy, research, repositioning and creative development for the Savane(R)brand that may not be achieved; expectations and beliefs with respect to the turn-around efforts that may not be achieved; potential negative effects of possible class action lawsuits; potential negative effects of possible shareholder derivative demands; general economic conditions, including but not necessarily limited to, recession or other cyclical effects impacting our customers in the United States or abroad; changes in interest rates or currency exchange rates; potential changes in demand in the retail market; reduction in the level of the consumer spending; customer or consumer rejection or non acceptance of major product initiatives such as our Savane(R)Motion Moves With You(TM)pant; the availability and price of raw materials and global manufacturing costs and restrictions; increases in costs; the continued acceptance of our existing and new products by our major customers; the financial strength of our major customers; our inability to continue to use certain licensed trademarks and tradenames, including Bill Blass(R) and Van Heusen(R); continued pricing pressures on our product line; business disruptions and costs arising from acts of terrorism or other military activities around the globe; and other risk factors listed from time to time in our SEC reports, filings and announcements, including our Annual Report on Form 10-K. In addition, the estimated financial results for any period do not necessarily indicate the results that may be expected for any future period, and we undertake no obligation to update them. Item 3. Quantitative and Qualitative Disclosures about Market Risk Our market risk is primarily limited to fluctuations in interest rates as it pertains to our borrowings under the Amended Facility and the Amended Real Estate Loan. There have been no material changes to the Item 7A disclosure made in our Annual Report on Form 10-K for the fiscal year ended September 27, 2003. Item 4. Controls and Procedures (a) Evaluation of Disclosure Controls and Procedures Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as amended) as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"). Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of the Evaluation Date, our disclosure controls and procedures provide reasonable assurance that they are alerted on a timely basis to material information relating to Tropical Sportswear Int'l Corporation (including its consolidated subsidiaries) required to be included in our reports filed or submitted under the Securities Exchange Act of 1934, as amended. (b) Changes in Internal Controls Since the Evaluation Date, there have not been any changes in our internal controls or other factors that could significantly affect such controls. PART II OTHER INFORMATION Item 1. Legal Proceedings Two lawsuits seeking class action status were filed on September 16, 2003 and October 2, 2003, in the U.S. District Court for the Middle District of Florida, Tampa Division, on behalf of all persons who purchased or otherwise acquired the securities of our company during the period from April 17, 2002 through January 20, 2003 (the "Class Period"). The lawsuits name our company and certain current and former officers and directors of our company as defendants. The lawsuits make a number of allegations against the defendants, including allegations that during the Class Period, the defendants materially misled the investing public by publicly issuing false and misleading statements and omitting to disclose material facts concerning our company's operations and performance and the retail market for its goods. We are reviewing these lawsuits with our attorneys and intend to vigorously defend them. Because these cases are in the early stages of litigation, we are unable to form a reasonable estimate of potential loss, if any, and have not established any reserves related to these cases. On October 30, 2003, a purported shareholder sent us a shareholder derivative demand pursuant to Florida Statute Section 607.07401 demanding, among other things, that we institute litigation against current and former officers and directors Michael Kagan, Eloy Vallina-Laguera and William Compton. The demand contends that we should attempt to recover from these officers and directors their proceeds of certain stock sales in July 2002. The Company is taking steps to investigate the allegations raised in the derivative demand and intends to take appropriate action dependent upon the outcome of such investigation. Other than the items noted above, we are not a party to any other legal proceedings other than various claims and lawsuits arising in the normal course of business. Our management does not believe that any such claims or lawsuits will have a material adverse effect on our financial condition. Item 2. Changes in Securities Not Applicable Item 3. Defaults upon Senior Securities Not Applicable Item 4. Submission of Matters to a Vote of Security Holders Not Applicable Item 5. Other Information Not Applicable Item 6. Exhibits and Reports on Form 8-K a) The Exhibits to this report on Form 10-Q are listed on the Exhibit Index, which immediately follows the signature page hereto. (b) Reports on Form 8-K On October 8, 2003, we filed a Form 8-K to announce that a lawsuit seeking class action status was filed on October 2, 2003, naming the Company and certain current and former officers and directors of the Company as defendants. On December 29, 2003, we filed a Form 8-K to announce that the Company had requested a 15-day extension with the SEC to file its Form 10-K, which was due on December 29, 2003. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TROPICAL SPORTSWEAR INT'L CORPORATION ------------------------------------- (Registrant) /s/ Robin Cohan Robin Cohan Executive Vice President, Chief Financial Officer, and Treasurer (in the dual capacity of duly authorized officer and principal accounting officer) February 11, 2004 Index to Exhibits Exhibit Number Description - ------ ----------- *3.1 Amended and Restated Articles of Incorporation of Tropical Sportswear Int'l Corporation (filed as Exhibit 3.1 to Tropical Sportswear Int'l Corporation's Form 10-Q filed May 14, 2002). *3.2 Amended and Restated By-Laws of Tropical Sportswear Int'l Corporation (filed as Exhibit 3.2 to Tropical Sportswear Int'l Corporation's Form 10-K filed January 3, 2004). *4.1 Specimen Certificate for the Common Stock of Tropical Sportswear Int'l Corporation (filed as Exhibit 4.1 to Amendment No. 1 to Tropical Sportswear Int'l Corporation's Registration Statement on Form S-1 filed October 2, 1997). *4.2 Shareholders' Agreement dated as of September 29, 1997 among Tropical Sportswear Int'l Corporation, William W. Compton, the Compton Family Limited Partnership, Michael Kagan, the Kagan Family Limited Partnership, Shakale Internacional, S.A. and Accel, S.A. de C.V. (filed as Exhibit 4.2 to Amendment No. 1 to Tropical Sportswear Int'l Corporation's Registration Statement on Form S-1 filed October 2, 1997). *4.3 Indenture dated as of June 24, 1998 among Tropical Sportswear Int'l Corporation, the Subsidiary Guarantors named therein, and SunTrust Bank, Atlanta, as trustee (filed as Exhibit 4.4 to Tropical Sportswear Int'l Corporation's Registration Statement on Form S-4 filed August 20, 1998). *4.4 Shareholder Protection Rights Agreement, dated as of November 13, 1998, between Tropical Sportswear Int'l Corporation and Firstar Bank Milwaukee, N.A. (which includes as Exhibit B thereto the Form of Right Certificate) (filed as Exhibit 99.1 of Tropical Sportswear Int'l Corporation's current report on Form 8-K dated November 13, 1998). *4.5 Supplemental Indenture No. 1 dated as of August 23, 2000 among Tropical Sportswear Int'l Corporation, each of the New Subsidiary Guarantors named therein, and SunTrust Bank, Atlanta, as trustee (filed as Exhibit 4.5 to Tropical Sportswear Int'l Corporation's Annual Report on Form 10-K filed December 19, 2000). *10.1 Amended and Restated Loan and Security Agreement with Fleet Capital Corporation dated June 6, 2003 (filed as Exhibit 10.1 of Tropical Sportswear Int'l Corporation's Form 10-Q filed August 8, 2003). *10.2 Amendment No. 1 to Amended and Restated Loan and Security Agreement with Fleet Capital Corporation dated September 9, 2003 (filed as Exhibit 10.38 of Tropical Sportswear Int'l Corporation's Form 10-K filed January 13, 2004). *10.3 Amended and restated Loan and Security Agreement with Fleet Capital Corporation dated September 9, 2003 (filed as Exhibit 10.39 of Tropical Sportswear Int'l Corporation's Form 10-K filed January 13, 2004). *10.4 Second Amended and Restated Loan and Security Agreement with Fleet Capital Corporation dated January 12, 2004 (filed as Exhibit 10.40 of Tropical Sportswear Int'l Corporation's Form 10-K filed January 13, 2004). *10.5 First Amendment to Amended and Restated Loan and Security Agreement with Fleet Capital Corporation dated January 12, 2004 (filed as Exhibit 10.41 of Tropical Sportswear Int'l Corporation's Form 10-K filed January 13, 2004). 31.1 Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14 and 15d-4 as adopted pursuant to section 302 of the Sarbanes-Oxley act of 2002. 31.2 Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14 and 15d-14 as adopted pursuant to section 302 of the Sarbanes-Oxley act of 2002. 32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley act of 2002. 32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley act of 2002. * Incorporated by reference.