ANVIL HOLDINGS INC - 10-Q Quarterly Report

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

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

For the Quarterly Period Ended November 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)

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.

Yes /X/ No / /

At December 12, 2002, there were 290,000 shares of Class A Common Stock, $0.01
par value (the "Class A Common") and 3,592,500 shares of Class B Common Stock,
$0.01 par value (the "Class B Common") of the registrant outstanding.

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FORM 10-Q

ANVIL HOLDINGS, INC.

TABLE OF CONTENTS

2

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

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

See notes to consolidated financial statements.

* Derived from audited financial statements.

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

See notes to consolidated financial statements.

4

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

See notes to consolidated financial statements.

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ANVIL HOLDINGS, INC. AND SUBSIDIARIES FORM 10-Q
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except Share Data)

NOTE 1 - GENERAL

BASIS OF PRESENTATION: The accompanying consolidated financial statements have
been prepared in accordance with accounting principles which are generally
accepted in the United States of America ("Generally Accepted Accounting
Principles" or "GAAP") for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do
not include all the information and footnotes required by GAAP for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the fiscal period ended November 2, 2002
are not necessarily indicative of the results that may be expected for the
fiscal year ending February 1, 2003, or any other period. The balance sheet at
February 2, 2002 has been derived from the audited financial statements at that
date. For further information, refer to the financial statements for the fiscal
year ended February 2, 2002 included in the Company's annual report on Form 10-K
filed with the Securities and Exchange Commission.

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. The Company's operations are on a
"52/53-week" fiscal year ending on the Saturday closest to January 31. The
accompanying consolidated financial statements include the accounts of the
Company, after elimination of significant intercompany accounts and
transactions.

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.

NOTE 2 - CREDIT AGREEMENTS, ETC.

Anvil's Loan and Security Agreement, as amended on May 28, 2002 (the "Loan
Agreement"), provides for a maximum credit facility of $50,000 consisting of a
term loan (the "Term Loan") and a revolving credit facility (the "Revolving
Credit Facility"). The Loan Agreement was for an original term of three years
with automatic one year renewals unless contrary notice is given by either party
at least 60 days prior to the expiration date. The Loan Agreement (as currently
extended) expires March 11, 2003. The Term Loan was in the original principal
amount of $11,725, repayable in quarterly principal installments of $586 through
April 2004, subject to extension of the Loan Agreement. Amounts due under the
Loan Agreement are secured by substantially all the inventory,

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ANVIL HOLDINGS, INC. AND SUBSIDIARIES FORM 10-Q
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
(Amounts in Thousands, Except Share Data)

receivables and property, plant and equipment of Anvil. Amounts due under the
Loan Agreement are guaranteed by Holdings and Cottontops, Inc., a Delaware
corporation ("Cottontops," a wholly-owned subsidiary of Anvil). 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 November 2, 2002,
there were no amounts outstanding under the Revolving Credit Facility.

As required by the Company's Certificate of Designations relating to the 13%
Senior Exchangeable Preferred Stock (the "Preferred Stock"), the Company has
paid stock dividends aggregating 1,075,782 shares ($26,895 liquidation value)
through November 2, 2002. This amount includes all dividends declared and paid
through the March 15, 2002 quarterly dividend payment date. Dividends subsequent
to that date are required to be paid in cash. The Board of Directors of Holdings
has determined not to declare or pay the quarterly dividends of June 15,
September 15, and December 15, 2002. At November 2, 2002, the accrued dividends
amounted to $3,012 (excluding dividends on preferred shares held by the
Company). If the Company fails to make cash dividend payments for four
consecutive quarters, the holders of the Preferred Stock, voting together as a
class, are entitled to elect two additional directors to the Company's Board of
Directors.

Through November 2, 2002, the Company has repurchased 704,334 shares of
Preferred Stock at an aggregate cost of $13,201.

NOTE 3 - INVENTORIES

Inventories at November 2, 2002 and February 2, 2002 consisted of the following:

NOTE 4 - GOODWILL AND OTHER INTANGIBLE ASSETS - ADOPTION OF SFAS NO. 142

Effective at the beginning of the current fiscal year, the Company adopted the
provisions of SFAS No.142, "GOODWILL AND OTHER INTANGIBLE ASSETS." The adoption
of SFAS No. 142 did not require any adjustments to the carrying value of
goodwill or other intangible assets, but did result in the Company's ceasing to
amortize existing goodwill. Previously recorded amortization had amounted to
$719 annually ($187 and $547 for the quarter and nine months ended November 3,
2001, respectively). Goodwill at November 2, 2002 (net of amortization recorded
through the fiscal year ended February 2, 2002) amounted to $19,416.

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ANVIL HOLDINGS, INC. AND SUBSIDIARIES FORM 10-Q
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
(Amounts in Thousands, Except Share Data)

Intangible assets being amortized consist of the following:

Amortization expense relating to the above intangible assets will be as follows
for each of the next five fiscal years, beginning with the year ending February
1, 2003: $619 (including $468 for the nine months ended November 2, 2002), $313,
$286, $286 and $286, respectively.

The following table presents the adjusted amounts for the quarter and Nine
Months ended November 3, 2001 had the Company applied the nonamortization
provisions of SFAS 142 during that period.

NOTE 5 - 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.

8

ANVIL HOLDINGS, INC. AND SUBSIDIARIES FORM 10-Q
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONCLUDED
(Amounts in Thousands, Except Share Data)

NOTE 6 - 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. The amounts presented below for Anvil are consolidated
amounts which include Cottontops.

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 Holdings' 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. 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.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company's significant accounting policies are more fully described in Note 3
to the consolidated financial statements contained in the Company's annual
report on Form 10-K for the year ended February 2, 2002. 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 INTANGIBLE AND LONG-LIVED ASSETS--Long-lived assets, including
intangible assets, are assessed for recoverability whenever events or changes in
circumstances indicate that an asset may have been impaired. In evaluating
assets for recoverability, the Company estimates the fair value of the
respective asset using valuation techniques which may incorporate cash flow
estimates, multiples of earnings, market values and similar criteria.

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 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. The Company generally does not lead its
competitors in pricing, but instead modifies its prices to the extent necessary
to remain competitive with those set by its competitors.

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

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substantially all of its yarn from a number of yarn suppliers, generally placing
orders, as appropriate, depending upon management's expectations regarding
future yarn prices and levels of supply. Yarn prices fluctuate principally as a
result of supply and demand in the yarn market and supply and demand in the raw
cotton market. 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
advantage of price changes. Yarn utilization costs included in the fiscal
quarter just ended reflect the lower prices paid under purchase commitments made
in prior fiscal periods. The Company expects such benefits to continue into the
remainder of the fiscal year.

During the fiscal year ended February 2, 2002, 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 the fiscal year ending January 31, 2004. 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.

The following table sets forth, for each of the periods indicated, certain
statement of operations data, expressed as a percentage of net sales.

(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. 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.

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QUARTER ENDED NOVEMBER 2, 2002 COMPARED TO QUARTER ENDED NOVEMBER 3, 2001

NET SALES for the quarter ended November 2, 2002 amounted to $48.6 million, as
compared to $43.6 million for the third quarter of the prior year, an increase
of $5.0 million, or 11.6%. Total units sold were more than 35% higher for the
current quarter, compared to the prior year's quarter, while the average selling
price declined by approximately 17.5%.

GROSS PROFIT for the quarter ended November 2, 2002 increased approximately $1.5
million (14.7%). Gross margin for the third quarter of the current fiscal year
was slightly higher than the same period in the prior year, improving from 22.8%
to 23.8%. Lower yarn prices and manufacturing efficiencies more than offset
continuing declining prices and unfavorable trends in product mix toward goods
having lower selling prices and profit margins.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (including distribution expense)
increased slightly in the current year's quarter compared to the same period in
the prior year; as a percentage of sales these expenses declined from 13.6% in
the prior year's quarter to 13.3% in the current quarter. The dollar increase is
largely the result of higher advertising expenditures as well as additional
costs incurred in improving product support in the areas of distribution and
information technology.

AMORTIZATION OF INTANGIBLE ASSETS declined by $0.2 million as the result of the
Company's adoption, in the current fiscal quarter, of SFAS No.142, "GOODWILL AND
OTHER INTANGIBLE ASSETS." See, "Recent Accounting Pronouncement," below.

NINE MONTHS ENDED NOVEMBER 2, 2002 COMPARED TO NINE MONTHS ENDED NOVEMBER 3,
2001

NET SALES for the nine months ended November 2, 2002 amounted to $176.5 million,
as compared to $154.4 million for the first nine months of the prior year, an
increase of $22.1 million, or 14.3%. Total units sold are approximately 29%
higher on a year to date basis for the current nine months, compared to the
prior year's nine months, while on the same basis, the average selling price has
declined by approximately 12%.

GROSS PROFIT for the nine months ended November 2, 2002 increased approximately
$9.3 million (25.4%). On a year to date basis, gross margins are slightly higher
for the first nine months of the current fiscal year when compared to the same
period in the prior year (25.9% vs. 23.6%). This improvement occurred mainly in
the second quarter as a result of the high unit sales achieved during that
period. On a year to date basis, lower yarn prices and manufacturing
efficiencies continue to exceed the effects of declining prices and unfavorable
trends in product mix toward goods having lower selling prices and profit
margins.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (including distribution expense)
increased approximately $1.0 million (5.6%) for the nine months ended November
2, 2002, compared to the nine months ended November 3, 2001. This increase is
the result of higher advertising expenditures as well as additional costs
incurred in improving product support in the areas of distribution and
information technology. Distribution expense remained approximately the same
despite an increase of more than 29% in units sold. As a percentage of sales,
total selling, general and administrative expenses declined on a year to date
basis from 11.8% in the prior year's nine months to 10.9% in the current fiscal
nine months.

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INTEREST EXPENSE declined $0.5 million (4.1%) in the current nine months
compared to the same period of the prior year. This decline occurred during the
first two quarters of the current fiscal year when rates were slightly lower
than the same period of the prior year. Also, during the current fiscal nine
months, the Company had no borrowings under its Revolving Credit Facility.

AMORTIZATION OF INTANGIBLE ASSETS declined by $0.6 million as the result of the
Company's adoption, in the current fiscal nine months, of SFAS No.142, "GOODWILL
AND OTHER INTANGIBLE ASSETS." See, "Recent Accounting Pronouncement," below.

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 and $6.2 million in the year
ended February 3, 2001. Historically, the Company's major capital expenditures
have related to the acquisition of machinery and equipment and management
information systems hardware and software.

Management estimates that capital expenditures in the current fiscal year 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's principal working capital requirements are financing accounts
receivable and inventories. The Company has also expended approximately $13.2
million to acquire 704,334 shares of its Redeemable Preferred Stock having a
carrying value of approximately $17.7 million.

At November 2, 2002 the Company had net working capital of approximately $54.4
million, comprised of $18.5 million in cash and cash equivalents, $23.5 million
of accounts receivable, $36.5 million of inventories, $5.8 million of other
current assets, and $29.9 million in accounts payable and other current
liabilities.

Anvil's Loan and Security Agreement, as amended on May 28, 2002 (the "Loan
Agreement"), provides for a maximum credit facility of $50 million, consisting
of a term loan (the "Term Loan") and a revolving credit facility (the "Revolving
Credit Facility"). The Loan Agreement was for an original term of three years
with automatic one year renewals unless contrary notice is given by either party
at least 60 days prior to the expiration date. The Loan Agreement (as currently
extended) expires March 11, 2003. The Term Loan was in the original principal
amount of $11.7 million, repayable in quarterly principal installments of $0.6
million through April 2004, subject to 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,
Inc., a Delaware corporation ("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
November 2, 2002, there were no amounts outstanding under the Revolving Credit
Facility.

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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 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. Anvil Holdings believes that it is in compliance with the covenants of
its debt obligations.

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.

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RECENT ACCOUNTING PRONOUNCEMENTS

During the first quarter of the current fiscal year, the Company adopted the
provisions of Statements of Financial Accounting Standards ("SFAS") No. 141,
"BUSINESS COMBINATIONS." 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. The
Company has not engaged in any business combinations to which SFAS No. 141 would
apply.

During the first quarter of the current fiscal year, the Company adopted the
provisions of SFAS No.142, "GOODWILL AND OTHER INTANGIBLE ASSETS." 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. The adoption of
SFAS No. 142 during the first quarter of the current fiscal year did not require
any adjustments to the carrying value of goodwill or other intangible assets,
but did result in the Company's ceasing to amortize existing goodwill.
Previously recorded amortization had amounted to approximately $0.7 million
annually, or approximately $0.2 million during each fiscal quarter.

During the first quarter of the current fiscal year, the Company adopted the
provisions of SFAS No. 144, "ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF
LONG-LIVED ASSETS," which provides accounting and reporting guidance for the
impairment or disposal of certain long-lived assets. The Company's accounting
treatment for assets related to the consolidation of its textile facility
(discussed above) is in conformity with the requirements of SFAS No. 144. There
have been no other adjustments to the carrying value of long-lived assets.

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. The Company does not expect that the adoption of
SFAS 143 will have a material impact on its financial position and results of
operations.

FORWARD-LOOKING INFORMATION

An industry-wide decline in selling prices of more than 30% over the last two
years has been the chief contributing factoring in reducing the Company's gross
margins during that period. By the end of the prior fiscal year ended February
2, 2002, the Company had fully integrated its cutting and sewing operations
offshore and has realized significant cost reductions as a result. In addition,
manufacturing efficiencies are anticipated from the planned consolidation of the
Company's textile operations. However, if the industry-wide decline in selling
prices for basic T-Shirts were to continue or intensify, it would become more
difficult for the Company to maintain historical profit margins.

The Company is including the following cautionary statement in this Form 10-Q 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-

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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.
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 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company believes that its potential exposure to market and interest rate
risk is not material.

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ITEM 4. CONTROLS AND PROCEDURES.

(a) Evaluation of Disclosure Controls and Procedures

The Company's Chief Executive Officer (who is also the Chief Financial Officer)
has evaluated the Company's disclosure controls and procedures as of December 9,
2002, and concluded that these controls and procedures are effective.

(b) Changes in Internal Controls

There have been no significant changes in internal controls or in other factors
that could significantly affect these controls subsequent to December 9, 2002.

PART II - OTHER INFORMATION

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.

See Note 2 to Financial Statements.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(a) EXHIBITS

99.1 Certification Pursuant to
18 U.S.C. Section 1350
as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

(b) REPORTS ON FORM 8-K

None.

Items 1, 3, 4, and 5 are not applicable and have been omitted.

17

ANVIL HOLDINGS, INC. AND SUBSIDIARIES FORM 10-Q

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 hereunto duly authorized.

ANVIL HOLDINGS, INC.
(Registrant)

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

Dated: December 12, 2002

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CERTIFICATIONS

CERTIFICATION PURSUANT TO SECTION 240.13a-14
OF GENERAL RULES AND REGULATIONS OF THE SECURITIES
EXCHANGE ACT OF 1934

I, Bernard Geller, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Anvil Holdings, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report.

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared.

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified
for the registrant's auditors any material weaknesses in internal
controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.

Date December 12, 2002

/s/ BERNARD GELLER
- ------------------
Chief Executive Officer and
Chief Financial Officer

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