<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                  --------------------------------------------


                                    FORM 10-K
                  --------------------------------------------



                  Annual Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934
                    For the Fiscal Year Ended January 2, 1999
                  --------------------------------------------


                           Commission File No. 0-23234

                             L.A. T SPORTSWEAR, INC.

                              A Georgia Corporation
                  (IRS Employer Identification No. 58-1724902)
                               1200 Airport Drive
                           Ball Ground, Georgia 30107
                                 (770) 479-1877

                 Securities Registered Pursuant to Section 12(b)
                     of the Securities Exchange Act of 1934:

                                      None
                  --------------------------------------------


                 Securities Registered Pursuant to Section 12(g)
                     of the Securities Exchange Act of 1934:

                         Common Stock, without par value
                  --------------------------------------------



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 _

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

The aggregate market value of the Common Stock of the registrant held by
nonaffiliates of the registrant (1,297,002 shares) on March 1, 1999 was
$1,893,623. For the purposes of this response, officers, directors and holders
of 5% or more of the registrant's common stock are considered the affiliates of
the registrant at that date.

The number of shares outstanding of the registrant's Common Stock, without par
value, as of March 1,1999: 4,200,001 shares.

                       DOCUMENTS INCORPORATED BY REFERENCE
                       -----------------------------------

Portions of the Registrant's definitive Proxy Statement for its Annual Meeting
of Stockholders to be held in 1999 are incorporated by reference into Part III
of this Report, with the exception of information regarding executive officers
required under Item 10 of Part III, which information is included in Part I,
Item 1.



<PAGE>   2



                                     PART I

ITEM 1.  BUSINESS.

         L.A. T Sportswear, Inc. (the "Company") is a national distributor and
manufacturer of quality imprintable and decorable knitted sportswear. Through
its distribution operations which are carried out under the name Full Line
Distributors, the Company is a national distributor of undecorated garments for
the imprinted sportswear industry, carrying one of the broadest product lines in
the industry, including basic t-shirts and sweatshirts, golf shirts, baseball
and golf caps, athletic jackets, athletic jerseys and shorts, bags and aprons.
The Company carries the products and brands of nationally recognized
manufacturers, including Fruit of the Loom(R), Hanes(R), Russell(R) and Jonathan
Corey(R), as well as its own line of manufactured apparel. In addition, in 1998
and 1997 approximately 20% (24% in 1996) of the Company's revenues were sales of
self-manufactured products. Under the name L.A. T Sportswear, the Company
designs and manufactures decorable sportswear, primarily for the infant and
toddler, youth and fashion adult markets. The Company's manufactured products,
which include basic t-shirts and sweatshirts, one-piece rompers, dresses and
fashion coordinates, are marketed under the following brand names: Rabbit
Skins(R) (infant and toddler wear); L.A. T For Kids(R) (youth wear, ages five to
ten); and L.A. T Sportswear(R) (adult fashion wear).

         As a national sportswear distributor, the Company targets the small
independent imprinter and decorator and seeks to provide that customer with one
of the broadest product offerings in the industry, carried in-depth at multiple
locations to ensure that the customer's order is filled and received on a "just
in time" basis. The Company manufactures product for market niches, such as
infant and toddler sportswear and fashion adult sportswear.

OPERATIONS

         The Company is a national distributor of decorable sportswear and
accessories. The imprinted sportswear industry is highly fragmented and includes
a wide variety of businesses such as screen printers, embroiderers, advertising
specialty companies, crafters and sporting goods and uniform companies. The
majority of the Company's distribution customers are small, independent
companies that lack the capitalization and space requirements to warehouse their
product needs, instead relying on distributors such as the Company to supply
their products. The Company believes that for these customers, breadth of
product line, immediate availability of product and superior customer service
are as important as price. For these reasons, the Company's distribution
operations are geared to breadth of product line, depth of inventory and prompt
order filling, as well as competitive pricing. While management believes that
most of its competitors carry only basic items such as t-shirts and sweatshirts,
the Company carries these items as well as a wide variety of specialty products
from bags and aprons to golf shirts in over 300 colors and sizes ranging from
extra-small to quadruple-extra large.

         The Company designs and manufactures its own lines of imprintable and
decorable sportswear for the infant and toddler, youth and fashion adult markets
for sale to mass merchants and specialty retailers and private label garments
for selected distributors, screen printers and retailers. The Company
manufactures product for market niches in the imprinted sportswear industry
where it has a competitive advantage by virtue of its ability to manufacture on
a shorter product run basis than fully integrated mills, and where innovative
product design or fabric introductions can differentiate it from its
competitors.



<PAGE>   3



  Products

         The Company's distribution philosophy is to provide its customers the
broadest selection of imprintable sportswear in the industry, carried in depth
in inventory, and available to the customer within the most responsive time. To
accomplish this goal, the Company avoids duplicating the product offerings of
multiple manufacturers, and instead, generally carries the garment of only one
or two manufacturers in any given product. By not carrying the same product of
multiple manufacturers, the Company is able to carry deeper inventories and a
broader selection of products as a whole.

         At January 2, 1999, the Company's inventory included approximately 463
styles of products from 17 garment and accessories manufacturers. This inventory
included approximately 9,300 individual items (SKUs) including all color and
size variations. The Company's primary suppliers are Fruit of the Loom(R),
Hanes(R) and Russell(R) (t-shirts and sweatshirts), Print-Ons(R) and Jonathan
Corey(R) (golf shirts and sports shirts), Auburn Sportswear(R) (athletic
jackets), Yupoong(R) (baseball and golf caps), Augusta(R) Sportswear (athletic
jerseys, shorts, aprons and bags), Rabbit Skins(R) (toddler and infant wear),
and L.A.T For Kids(R) and L.A. T Sportswear(R) (youth and adult sportswear).
Product offerings are reviewed annually in connection with the preparation of
customer catalogs, new and expanded lines are routinely added and slow moving or
discontinued products are deleted.

         The Company generally enters into non-exclusive oral distribution
agreements with the vendors of the products it distributes which are cancelable
by either party upon notice. Management believes that the current relationship
with its vendors is satisfactory.

  Distribution and Warehousing

         The Company operates six distribution centers located in the
metropolitan areas of Atlanta, Cleveland, Houston, Los Angeles, Miami and St.
Louis. Each distribution center is leased and ranges from approximately 41,000
to 59,000 square feet. Each facility is supervised by a location manager and
includes a support staff of office and warehouse personnel.

         A customer order entered by a customer service representative on the
centralized inventory control computer system automatically generates a picking
ticket in the warehouse. Each customer order is then hand picked, checked and
packed, and the shipment staged in the warehouse for customer pick-up or
shipment by UPS or other carrier. In the event the order-entering distribution
center is out of stock on all or any portion of a customer's order, the order
may be completed for same day shipment from any of the Company's other
distribution centers.

  Customers and Customer Service

         The Company's customers are predominantly small independent imprinters,
embroiderers, advertising specialty companies, crafters and sporting goods and
uniform companies which purchase their requirements on an as needed basis for
immediate delivery. At January 2, 1999, the Company had an active customer list
of over 26,000 customers (customers who had placed an order within the preceding
year). In 1998, the largest customer accounted for less than 2% of the Company's
$81.9 million in sales and the Company's ten largest customers accounted for
less than 7% of sales. By contrast, approximately 80% of sales were to customers
who purchased less than $100,000 worth of merchandise during the year. All
credit decisions are handled by the Company's centralized credit staff at its
Atlanta facility. For 1998, the Company experienced credit losses of 0.5% of
sales.


                                       -2-

<PAGE>   4



         The Company has a centralized customer service department located in
Atlanta. Customer service lines are answered Monday through Friday from 8:00
a.m. to 9:00 p.m., Eastern Time. The distribution operations offer same day
shipping on all orders placed before 4:00 p.m. local time, and 24-hour shipping
on all other orders.

         Customer service representatives are required to be familiar with the
entire product line and able to answer customer questions concerning the
Company's product offerings. The Company utilizes a comprehensive training
program for new customer service representatives. Each service representative
spends time training in the warehouse, pulling customer orders and learning the
product lines. Trainees are provided with a training manual which details each
style with complete line sketches of each product highlighting all features and
detailing all colors and sizes, dimensions and fabric content. The manual also
outlines telephone and order entry procedures, both computerized and manual, and
provides tests to ensure that service representatives are trained to the
Company's standards.

         The Company also has its own sales staff to sell its blank products to
distributors in the imprintable sportswear industry, to larger screen printers,
craft chain stores and to retailers who buy direct and perform their own screen
printing.

  Marketing and Advertising

         The Company primarily markets its products through its catalog, trade
shows, major trade magazines, direct mail flyers and mass facsimiles. The
Company produces and distributes approximately 200,000 catalogs annually. The
advertisements and flyers are designed to educate the customer about the
Company's business by highlighting its multiple locations, extended operating
hours, excellent service and product availability.

         The Company exhibited at 10 industry trade shows in 1998. The
participation in these trade shows provides the Company with opportunities to
display its collection of imprintable apparel and solicit new customers.

   Manufacturing Operations

         The Company manufactures imprintable knitted sportswear products
(blanks) focused in the areas of infant and toddler, youth and fashion adult
sportswear.

           Under its label Rabbit Skins(R), the Company produces a full line of
activewear for infants and toddlers, including basic t-shirts and sweatshirts,
one-piece rompers, dresses and fashion coordinates. The Company's 1999 Rabbit
Skins(R) line consists of approximately 54 styles and 746 SKUs including all
color and size variations. Rabbit Skins(R) infant and toddler wear was the first
product line developed by the Company and the Company believes it is a major
manufacturer in this category of imprintable garments. For 1998, sales of Rabbit
Skins(R) products accounted for 9.3% of the Company's net sales.

         The Company also produces a line of imprintable youth garments under
the label L.A. T For Kids(R) (ages five to ten years) with product offerings
such as basic t-shirts, dresses, fashion coordinates and shorts. For 1999, the
youth line consists of approximately 15 styles and 125 SKUs including all color
and size variations.

         The Company designs and manufactures a line of adult activewear under
the label L.A. T Sportswear(R). Offerings in this line consist of shorts,
fashion t-shirts and tops, and cover-ups. The adult line consists of
approximately 45 styles and 459 SKUs. The L.A. T Sportswear(R) line tends to be
more


                                       -3-

<PAGE>   5



upscale and fashion oriented, avoiding the commodity-type garment offerings.
Although all L.A. T Sportswear(R) garments are sold as separates, the Company
makes available many products in the line as top/bottom coordinates.

         Product development and new product design are the primary
responsibility of the Company's merchandising department, with new product ideas
and proposals subject to review by the Company's marketing personnel and
executive officers at regularly scheduled meetings. The Company considers itself
an innovator in new product style development.

         The Company's product lines are manufactured at three facilities in
Georgia. Management believes that the manufacturing of its products domestically
permits it to have greater control over production, enhances the quality of the
finished product and facilitates greater responsiveness to its customers' needs.
Management also believes that the Company's ability to accommodate orders in
varying quantities while controlling production costs and maintaining consistent
quality provides it with a competitive advantage.

  Raw Materials and Supplies

         The primary raw materials used in the Company's manufacturing
operations are cotton and synthetic yarns which are purchased on a contractual
basis (usually 12 months in advance) from a small number of suppliers. The
Company also contracts for the conversion of its yarn to finished fabric,
primarily through a single knitting source and two contract finishing houses.
Approximately 10% of the Company's total fabric needs is purchased from a small
number of outside sources. The Company currently utilizes limited supply sources
on the theory that the loyalty and commitment generated by the long standing
business relationship between supplier and customer outweigh the risk inherent
in dependency on limited sources of supply. At the same time, the Company
believes that alternative sources of supply, both for raw materials and
conversion services, are readily available at competitive prices and its
reliance on limited supply sources causes no significant risk to the business.

  Backlog

         As of January 2, 1999 and December 27, 1997, the Company had a backlog
of orders believed to be firm of approximately $1,125,584 and $1,905,404,
respectively, for products to be delivered during the following fiscal year.

  Competition

         Competition in the screen print garment distribution business is
intense and is based primarily on product line quality, availability and prompt
delivery of products, price, level of customer support and the ability to offer
a wide selection of products. Some of the Company's competitors have
substantially greater financial resources and larger staffs. Principal
competitors include national distributors such as Broder Brothers, Staton
Wholesale, California Shirt Sales and South Carolina Tees, as well as regional
distributors such as San Mar, Alpha Shirts and Stardust.

         In some cases, the Company also competes with manufacturers that sell
directly to screen printers, sometimes at prices below those charged by the
Company for similar products. Most manufacturers, however, limit their direct
sales only to large resellers because of the costs associated with dealing with
a large number of small volume customers.


                                       -4-

<PAGE>   6



         The imprinted sportswear segment of the apparel industry is highly
fragmented and includes several companies that have substantially greater
financial resources and manufacturing capabilities than the Company. The Company
believes that the primary competition for the manufacturing operations' products
comes from two brands in the infant and toddler market (Hanes(R) and Gerber(R))
and ten to fifteen companies in the youth and adult fashion markets. Competition
from imported products is generally not a significant factor in the imprinted
knitwear industry, since labor is a lesser component of the total cost of the
finished goods than in more complicated garments. The Company competes in this
aspect of its business primarily based on product design, quality and
responsiveness to customer service needs. In addition, price is a significant
competitive factor in the imprintable garment industry.

EMPLOYEES

         At January 2, 1999, the Company employed approximately 402 full time
employees, of which 49 were salaried, 202 were paid on an hourly basis and 151
were paid on an incentive piece work basis. None of the Company's employees is
covered by a collective bargaining agreement and the Company believes that its
employee relations are satisfactory.

EXECUTIVE OFFICERS

         The executive officers of the Company are as follows:

<TABLE>
<CAPTION>
             Name                           Position with Company
             ----                           ---------------------
         <S>                                <C>
         Isador E. Mitzner                  Chairman of the Board and Chief Executive Officer

         J. David Keller                    President and Secretary

         John F. Hankinson                  Vice President, Chief Financial Officer and Treasurer

         Gina Watson-McElroy                Executive Vice President-Operations
</TABLE>

         ISADOR E. MITZNER, age 46, founded the Company and its predecessors,
and has served as its Chairman and Chief Executive Officer since its inception
in 1978.

         J. DAVID KELLER, age 51, joined the Company in March 1981 and has
served as President of the L.A. T Sportswear operations since 1987. Mr. Keller
has served as a director of the Company since 1986, as President since October
1993, and as Secretary of the Company since March 1994. For three years prior to
joining the Company, Mr. Keller worked for Hanes Activewear as a sales
representative in the Southeast United States and the Caribbean.

         JOHN F. HANKINSON, age 45, joined the Company in August 1988 and has
served as Vice President, Chief Financial Officer and Treasurer since May 1997.
Mr. Hankinson served as Accounting Manager of the Manufacturing Division from
August 1988 through June 1989, Controller of the Manufacturing Division from
July 1989 through December 1995 and Company Controller from January 1996 through
May 1997.

         GINA WATSON-MCELROY, age 36, joined the Company in December 1991 and
has served as Executive Vice President-Operations since July 1998. Ms.
Watson-McElroy served as Merchandising Manager from December 1991 through June
1994, Vice President of Product Development from June

                                       -5-

<PAGE>   7



1994 through December 1995, and Vice President of Manufacturing Operations from
December 1995 through July 1998.

TRADEMARKS

         The Company believes its trademarks have significant value and are
important to its marketing efforts. The Company has registered the trademarks
Rabbit Skins(R), L.A. T For Kids(R) and L.A. T Sportswear(R) with the United
States Patent and Trademark office. The Company's policy is to pursue
registration of its marks whenever possible and to oppose vigorously any
infringement of its marks.

         The Company sells products under various trademarks and trade names
used in this Annual Report that are the property of owners other than the
Company. The following is a list of such trademarks and tradenames that are used
in this Annual Report: Fruit of the Loom(R); Hanes(R); Russell(R); Jonathan
Corey(R); Print-Ons(R); Auburn Sportswear(R); Yupoong(R); and Augusta(R).

ITEM 2.  PROPERTIES.

         The following table presents information as to the real properties and
facilities of the Company as of March 1, 1999:

<TABLE>
<CAPTION>
FACILITY AND LOCATION                            PRIMARY UTILIZATION        SQUARE FOOTAGE      NATURE OF OWNERSHIP
---------------------                            -------------------        --------------      -------------------
<S>                                              <C>                        <C>                 <C>
Ball Ground, Georgia........................     Administration,
                                                 Sewing, Purchasing,
                                                 and Centralized
                                                 distribution                    68,000         Owned

Ball Ground, Georgia........................     Production planning,
                                                 Centralized cutting
                                                 and Raw materials
                                                 warehousing                     46,000         Owned

Roberta, Georgia............................     Sewing                          22,000         Leased through
                                                                                                January 2003

Atlanta, Georgia............................     Administration and              70,000         Leased through
                                                 Distribution                                   December 1999

Cleveland, Ohio.............................     Distribution                    49,700         Leased through
                                                                                                April 2000

Fullerton, California.......................     Distribution                    43,200         Leased through
                                                                                                April 2000

Houston, Texas..............................     Distribution                    59,000         Leased through
                                                                                                December 2002

Miami, Florida..............................     Distribution                    41,000         Leased through
                                                                                                December 1999

St. Louis, Missouri.........................     Distribution                    44,200         Leased through
                                                                                                March 2000
</TABLE>



                                       -6-

<PAGE>   8



ITEM 3.  LEGAL PROCEEDINGS.

         There are no material legal proceedings to which the Company is a party
or to which its properties are subject.

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

         No matters were submitted to a vote of security holders of the Company
during the fourth quarter ended January 2, 1999.


                                     PART II

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

         The Company's Common Stock currently trades on the OTC Bulletin Board
under the symbol LATS. From January 25, 1994 through February 20, 1997, the
Common Stock traded on the Nasdaq National Market. The following table sets
forth, by fiscal quarter, the high and low bid prices of the Common Stock
reported by The Nasdaq Stock Market on the OTC Bulletin Board during the most
recent two fiscal years. Quotations from the OTC Bulletin Board reflect
inter-dealer prices, without retail mark-up, mark-down or commission and may not
necessarily represent actual transactions.


<TABLE>
<CAPTION>
Fiscal Year Ended December 27, 1997                                          High                    Low
-----------------------------------                                         ------                 -------
<S>                                                                          <C>                   <C>
First Quarter ended March 29, 1997                                             7/8                    5/16

Second Quarter ended June 28, 1997                                             5/8                   11/32

Third Quarter ended September 27, 1997                                         3/4                    1/2

Fourth Quarter ended December 27, 1997                                         7/8                    1/2


Fiscal Year Ended January 2, 1999
---------------------------------
First Quarter ended April 4, 1998                                              5/8                    9/16

Second Quarter ended July 4, 1998                                            1 5/16                   9/16

Third Quarter ended October 3, 1998                                          1 1/8                    7/8

Fourth Quarter ended January 2, 1999                                         1 5/16                1
</TABLE>

         As of March 1, 1999, the number of shareholders of record of the
Company's Common Stock was approximately 56 and the number of beneficial holders
of the Company's Common Stock was approximately 344. The Company has not
declared or paid any cash dividends on its Common Stock. The policy of the Board
of Directors of the Company is to retain earnings, if any, for the expansion and
development of the Company's business. Future dividend policy and the payment of
dividends, if any, will be determined by the Board of Directors in light of
circumstances then existing, including the Company's earnings, financial
condition, bank and other contractual restrictions and other factors deemed
relevant by the Board.



                                       -7-

<PAGE>   9





ITEM 6.  SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                                                                  FISCAL YEAR(1)
                                                               1998           1997         1996          1995          1994
                                                             --------------------------------------------------------------
                                                                          (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                          <C>           <C>           <C>          <C>           <C>
OPERATIONS STATEMENT DATA:
     Net sales                                               $81,874       $72,608       $94,834      $124,897      $100,356
     Cost of goods sold                                       68,570        60,732        79,136       104,941        81,279
                                                             -------       -------       -------       -------       -------

     Gross profit                                             13,304        11,876        15,698        19,956        19,077
     Operating expenses                                       10,784        11,038        16,147        21,006        13,015
     Restructuring charge(2)                                      --            --            --         1,700            --
                                                             -------       -------       -------       -------       -------
     Operating profit (loss)                                   2,520           838          (449)       (2,750)        6,062
     Other income (expense):
     Interest expense                                         (1,125)       (1,582)       (2,047)       (2,364)         (962)
         Other (expense) income                                 (110)           19             4          (266)          (15)
                                                             -------       -------       -------       -------       -------
     Income (loss) before income tax and extraordinary
         item                                                  1,285          (725)       (2,492)       (5,380)        5,085
     (Provision) benefit for income taxes                        (76)          (21)         (172)        1,787        (2,089)(3)
                                                             -------       -------       -------       -------       -------
     Net income (loss) before extraordinary item               1,209          (746)       (2,664)       (3,593)        2,996
     Extraordinary loss on prepayment of line of
         credit, net of income tax benefit of $40 (1994)(4)       --            --            --            --           (60)
                                                             -------       -------       -------       -------       -------

     Net income (loss)                                       $ 1,209       $  (746)      $(2,664)      $(3,593)      $ 2,936
                                                             =======       =======       =======       =======       =======

     Basic and Diluted Net Income (Loss) Per Share           $  0.29       $ (0.18)      $ (0.63)      $ (0.86)




     Basic Weighted Average shares outstanding                 4,200         4,200         4,200         4,200
     Avg shares outstanding assuming dilution                  4,214         4,200         4,200         4,200

     Distributions declared(5)                                    --            --            --            --       $ 5,550

PRO FORMA DATA:

      Pro forma net income per share:(6)
      Income before extraordinary item                                                                               $  0.72
      Extraordinary loss on prepayment of line of
         credit, net of income tax benefit                                                                             (0.01)
                                                                                                                     -------

      Pro forma net income                                                                                           $  0.71
                                                                                                                     =======

      Pro forma weighted average shares outstanding(6)                                                                 4,150
                                                                                                                     =======


BALANCE SHEET DATA (AT END OF YEAR):
      Working capital                                        $18,620       $18,282       $25,802       $ 9,011       $30,624
      Property, plant and equipment, net                       3,201         3,749         4,315         5,841         5,008
      Total assets                                            34,463        28,739        36,519        57,032        44,567
      Short-term borrowings                                       30            23            22        30,328           372
      Long-term debt, net of current portion                  10,162        11,732        18,929           821        18,391
      Stockholders' equity                                    11,444        10,235        10,981        13,645        17,238
</TABLE>

                           footnotes on following page



                                       -8-

<PAGE>   10



(1)      Prior to fiscal year 1998, the Company's year end was the last Saturday
         in December. Beginning in fiscal year 1998, the Company modified its
         operating year to end on the Saturday closest to December 31st.

(2)      In December 1995, the Company decided to streamline operations by
         closing certain of its facilities and discontinuing certain product
         lines during 1996. The Company recorded a charge in the fourth quarter
         of 1995 of approximately $1,700,000 related to this restructuring.

(3)      As a result of its election through January 1994 to be treated as an S
         Corporation for income tax purposes, the Company was not subject to
         federal and most state income taxes. Accordingly, the provision for
         income taxes in January 1994 included income taxes only for those
         jurisdictions that do not recognize S Corporation status. The Company
         terminated its S Corporation status during January 1994. A pro forma
         provision for income taxes to reflect provisions that would have been
         recorded had the Company been a C Corporation for income tax purposes
         for fiscal year 1994 would not be materially different than the
         historical amount.

(4)      In July 1994, the Company completed a new line of credit agreement and,
         as a result, repaid borrowings under all of its previous lines of
         credit and terminated such agreements. The Company incurred termination
         costs under one of its previous credit agreements of $100,000 ($60,000
         after tax).

(5)      Prior to the Company's initial public offering in January 1994,
         distributions (in the form of dividends) were principally to assist the
         stockholders with their income tax obligations arising from the
         Company's S Corporation status. However, from the proceeds of the
         offering, the Company distributed to its S Corporation stockholders
         previously undistributed S Corporation earnings of $5,550,000. The
         Company does not anticipate paying any cash dividends in the
         foreseeable future.

(6)      Pro forma net income per share is computed by dividing pro forma net
         income by pro forma weighted average shares outstanding. Pro forma
         weighted average shares outstanding include the actual weighted average
         shares outstanding plus the number of shares sold by the Company in its
         initial public offering (at the price of $10.00 per share) necessary to
         fund the $5,550,000 distribution to stockholders declared in January
         1994.



                                       -9-

<PAGE>   11



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

         The Private Securities Litigation Reform Act of 1995 provides a safe
harbor to encourage companies to provide prospective information so long as it
is identified as forward-looking and accompanied by meaningful cautionary
statements identifying important factors that could cause actual results to
differ materially from those discussed. Forward-looking statements are related
to the plans and objectives of management for the future operations, economic
performance, of projections of revenues, income, earnings per share, capital
expenditures, dividends, capital structure, or other financial items. In the
following discussion and elsewhere in this report, statements containing words
such as "expect," "anticipate," "believe," "goal," "objective," or similar words
are intended to identify forward-looking statements. The Company undertakes no
obligation to update such forward-looking statements, and it wishes to identify
important factors that could cause actual results to differ materially from
those projected in the forward-looking statements contained in the following
discussion and elsewhere in this report. The risks and uncertainties that may
affect the operations, performance, development, and results of the Company's
business include but are not limited to the following: (1) heightened
competition, particularly intensified price competition; (2) general economic
and business conditions which are less favorable than expected; (3)
unanticipated changes in industry trends; and (4) other risks detailed herein
and from time to time in the Company's other reports.


                                      -10-

<PAGE>   12



RESULTS OF OPERATIONS

         During 1996, the Company streamlined operations by closing certain of
its facilities and discontinuing certain product lines. The Company closed two
distribution facilities in January 1996 and closed one of its sewing operations
in April 1996. Additionally, the Company discontinued its screen printed
operations in mid-1996. The Company recorded a charge in 1995 of $1.7 million
related to this restructuring. In December 1997, the Company closed its
distribution center in Hartford, Connecticut, at the expiration of its facility
lease.

         The following table sets forth, for the years indicated, the components
of the Company's statements of operations expressed as a percentage of net sales


<TABLE>
<CAPTION>
                                                     FISCAL YEAR
                                          ----------------------------------
                                           1998           1997          1996
                                          -----          -----         -----
<S>                                       <C>            <C>           <C>
Net sales                                 100.0%         100.0%        100.0%

Cost of goods sold                         83.8           83.6          83.4
                                          -----          -----         -----
Gross profit                               16.2           16.4          16.6

Operating expenses                         13.1           15.2          17.0

Restructuring charge                         --             --            --
                                          -----          -----         -----
Operating profit (loss)                     3.1            1.2          (0.4)

Other expense:

     Interest expense                      (1.4)          (2.2)         (2.2)

     Other, net                            (0.1)            --            --
                                          -----          -----         -----
                                                                           
Income (Loss) before income taxes           1.6           (1.0)         (2.6)

(Provision) benefit for income taxes      (0.01)            --          (0.2)
                                          -----          -----         -----



Net Income (Loss)                           1.5%          (1.0)%        (2.8)%
                                          =====          =====         =====
</TABLE>



                                      -11-

<PAGE>   13





Comparison of 1998 to 1997

         The Company's net sales increased approximately $9.3 million, or 12.8%,
to $81.9 million in 1998 from $72.6 million in 1997. The increase in net sales
was primarily attributable to an intensified sales effort.

         The Company's gross profit increased approximately $1.4 million, or
12%, to $13.3 million for 1998 from $11.9 million in 1997. The increase in gross
profit is attributable to the increase in net sales. As a percentage of net
sales, gross profit margin decreased to 16.2% in 1998 from 16.4% in 1997. The
decrease in gross profit margin is due principally to intensified competition.

         Operating expenses decreased approximately $254,000, or 2.3%, to $10.8
million in 1998 from $11.0 million in 1997. The decrease in operating expenses
is due primarily to operational streamlining. As a percentage of net sales,
operating expenses decreased to 13.1% in 1998 from 15.2% in 1997.

         As a result of the increase in net sales and the decrease in operating
expenses, operating profit increased approximately $1.7 million, or 200.3% to
$2.5 million in 1998 from $838,000 in 1997. As a percentage of net sales,
operating profit increased to 3.1% in 1998 from 1.2% in 1997.

         Interest expense decreased approximately $457,000, or 28.9%, to $1.1
million in 1998 from $1.6 million in 1997, primarily due to reduced borrowings
under the Company's line of credit, which resulted from increased inventory
turns and taking advantage of deferred datings from major vendors, and lower
interest rates.

         Income before income taxes increased approximately $2.0 million to $1.3
million in 1998 from a loss of $725,000 in 1997. Income before income taxes as a
percentage of net sales increased to 1.6% in 1998 from (1.0)% in 1997.

         The provision for income taxes increased $55,000 to $76,000 in 1998
from $21,000 in 1997. The provision for both years was computed based upon
applying federal and state income tax rates to taxable income or loss and
offsetting the provision or benefit with changes in valuation allowances
associated with deferred tax assets.

         As a result of the factors described above, net income increased
approximately $1.9 million to $1.2 million in 1998 from a net loss of $746,000
in 1997. Net income as a percentage of net sales increased to 1.5% in 1998 from
(1.0)% in 1997.

Comparison of 1997 to 1996

         The Company's net sales decreased approximately $22.2 million, or
23.4%, to $72.6 million in 1997 from $94.8 million in 1996. The decrease in net
sales was primarily attributable to sluggishness in the industry and to the
impact of the Company's 1995 restructuring in which its screen print operations
were shut down during the 1996 third quarter.

         The Company's gross profit decreased approximately $3.8 million, or
24.3%, to $11.9 million for 1997 from $15.7 million in 1996. The decline in
gross profit is attributable to both the decrease in net sales and stiff
competition in the industry. Gross profit margin was further impacted by the
fact that sales of the Company's manufactured products, which have a higher
gross margin, decreased to 20.0%

                                      -12-

<PAGE>   14



of net sales in 1997 from 24.3% of net sales in 1996. As a percentage of net
sales, gross profit margin decreased to 16.4% in 1997 from 16.6% in 1996.

         Operating expenses decreased approximately $5.1 million, or 31.7%, to
$11.0 million in 1997 from $16.1 million in 1996. The decrease in operating
expenses is due primarily to the Company's closing of its screen print
operations in the third quarter of 1996, as part of a restructuring plan
implemented during the 1995 fourth quarter, and to additional operational
streamlining. As a percentage of net sales, operating expenses decreased to
15.2% in 1997 from 17.0% in 1996.

         As a result of the decrease in operating expenses, operating profit
increased approximately $1.3 million, or 286.6% to $838,000 in 1997 from an
operating loss of $449,000 in 1996. As a percentage of net sales, operating
profit increased to 1.2% in 1997 from (0.4)% in 1996.

         Interest expense decreased approximately $465,000, or 22.7%, to $1.6
million in 1997 from $2.0 million in 1996, primarily due to reduced borrowings
under the Company's line of credit, which resulted from carrying lower accounts
receivable and inventory balances, and taking advantage of deferred datings from
major vendors.

         Loss before income taxes decreased approximately $1.8 million to
$(725,000) in 1997 from $(2.5) million in 1996. Loss before income taxes as a
percentage of net sales decreased to (1.0)% in 1997 from (2.6)% in 1996.

         The provision for income taxes decreased $151,000 to $21,000 in 1997
from $172,000 in 1996. The provision for both years was computed based upon
applying federal and state income tax rates to taxable income or loss and
offsetting the provision or benefit with changes in valuation allowances
associated with deferred tax assets.

         As a result of the factors described above, net loss decreased
approximately $1.9 million to $(746,000) in 1997 from $(2.7) million in 1996.
Net loss as a percentage of net sales decreased to (1.0)% in 1997 from (2.8)% in
1996.

LIQUIDITY AND CAPITAL RESOURCES

         Net cash provided by operating activities was $1.9 million, $6.5
million and $10.5 million in 1998, 1997 and 1996, respectively. In 1998 cash
provided by operating activities was primarily generated by an increase of
approximately $6.1 million in accounts payable. Cash generated by operating
activities in 1998, 1997 and 1996 was primarily used to repay borrowings under
the Company's credit facilities.

         In April 1996, the Company entered into a new credit facility (the
"Credit Facility"). The Credit Facility was subsequently amended in November
1996, March 1997, November 1997 and March 1998. The Credit Facility, as amended,
(i) provides for maximum borrowings of $15 million (subject to certain
collateral restrictions based on eligible receivables, inventories and fixed
assets), (ii) expires on March 31, 2001, (iii) bears interest at prime plus
1.00%, and (iv) is secured by principally all the Company's assets. As of
February 4, 1999, the Company had borrowings totaling $10.2 million outstanding
under the Credit Facility and availability to borrow $4.5 million.

         In May 1998 the Company had an irrevocable letter of credit issued for
$250,000, which expires in May 1999.

         The Company has planned capital expenditures of approximately $1.2
million for fiscal 1999. The Company is in the process of modernizing its
distribution facilities in Atlanta and Houston at an aggregate

                                      -13-

<PAGE>   15



cost of approximately $545,000. In addition, the Company will complete two major
computer projects at a cost of approximately $655,000. The Company has a
commitment from its current lender to finance the capital expenditures either
through an increase in the line of credit or through the lender's leasing
department. The Company has also received financing commitments from other
lenders.

         The Company's ability to fund its working capital and capital
expenditure requirements, make interest payments and meet its other cash
requirements depends, among other things, on internally generated funds and the
continued availability of and compliance with the terms of its credit facility.
Management believes that internally generated funds and funds available from the
Company's line of credit will be sufficient to meet the Company's capital
requirements and operating needs in fiscal 1999. However, if there is a
significant reduction of internally generated funds or the Company is unable to
meet financial covenants in the credit facility, the Company may require
additional funds from outside financing sources. In such event, there can be no
assurance that the Company will be able to obtain such funding as and when
required or on acceptable terms.

YEAR 2000 READINESS

         The Company's distribution division (which accounted for approximately
80% of the sales volume in 1998) utilizes a distribution package known as VICS
(Vertically Integrated Computer Systems) which runs on an IBM RS6000 computer.
The distribution division's package is year 2000 compliant according to
certifications by both IBM and the VICS software vendor. However, the company is
doing basic tests of its own to assure itself that mission critical features are
in fact year 2000 compliant. The Company expects to complete these basic tests
by April 30, 1999. The cost of the basic tests are considered to be immaterial
as they only involve weekend time spent by salaried personnel.

         The Company's manufacturing division (which accounted for approximately
20% of the sales volume in 1998) utilizes a manufacturing software package known
as AIC (Applied Intelligence Corporation) that runs on a Wang computer. The AIC
software is not year 2000 compliant on the Wang computer. The Company is
purchasing a new manufacturing software package, which is year 2000 compliant
according to a certification by the software vendor. The new manufacturing
software package will operate on a new IBM AS400 computer. A separate
certification for the AS400 will be obtained from IBM. The total cost of the new
system, including hardware and software, is expected to be approximately
$500,000, which includes the Company's commitment of internal resources. As of
March 3, 1999 the Company has incurred approximately $83,000 of the $500,000
cost. The IBM AS400 computer has been delivered and the Company's information
technology personnel have begun training. The manufacturing software package is
available to the Company now, however substantial custom modifications have been
planned for the software. The Company has a target date of June 1, 1999 for
completion and installation of the software package, and a target date of July
1, 1999 as a go live date. In the event that the customized software is not
completed by the year 2000, the Company's contingency plan is to operate with
the generic package until such customized modifications can be completed.

         Other items which include non-information technology systems are being
tested and upgraded as needed. Included in the non-information technology
systems are the Company's personal computers and applications, telephone
systems, manufacturing equipment, security systems, and other non-crucial items.

         The Company has a substantial amount of personal computers and software
applications throughout the company. In order to bring the personal computers
and software applications year 2000 compliant, the Company will install a new
network communication package which will tie all of the Company's personal
computers and software applications together. The Company will replace all non-
compliant personal computers and install the latest versions of year 2000
compliant applications available on the network. Specialized applications not
used company wide will be upgraded as necessary. The



                                      -14-
<PAGE>   16



estimated cost of the network is $155,000. As of March 3, 1999 the Company has
incurred approximately $15,000 of the estimated cost. The Company has an
estimated completion date of April 15, 1999 for the network.

         The Company has received certification that its primary telephone
systems are year 2000 compliant, with the exception of the voice mail and call
accounting applications for the manufacturing division. The Company plans to
upgrade the voice mail and call accounting applications of the manufacturing
division. However, no time frame or estimated cost has been established.

         The manufacturing division utilizes a computerized Lectra Systems(R)
marking and grading system which is crucial to the manufacturing operations. The
current version of Lectra Systems(R) is not year 2000 compliant. Lectra
Systems(R) expects to complete its year 2000 compliant version by April 30, 1999
and have it out to its customers by June 30, 1999. Since the Company has a
maintenance agreement with Lectra Systems(R), there will be no charge for the
upgrade. No contingency plan has been established in the event that Lectra
Systems(R) does not complete the year 2000 compliant upgrade. However, Lectra
Systems(R) does have current versions of the software that are year 2000
compliant. The Company will monitor the progress of the year 2000 upgrade and
make a decision to convert to a new system if necessary.

         Other non-information technology systems such as security systems,
copiers and other nonessential items are being assessed for year 2000
compliance. The Company is contacting vendors of these items either by mail or
through internet access to determine their compliance status. No time frame or
estimated cost has been established to bring these non-essential items year 2000
compliant.

         The costs of major year 2000 projects have been included in the current
operating budget. The majority of the costs will be capitalized with the
exception of software data conversion costs and training costs. The funds to
finance these projects will come from the Company's current lender or other
outside lenders. There can be no assurance that the Company will not encounter
unanticipated delays with the implementations or that costs of such
implementations will not exceed management's current estimates.

         The Company has issued certification requests to all major vendors and
customers as well as to its main bank seeking assurance that they will be year
2000 compliant. The Company continues to monitor the progress of these third
party entities in becoming year 2000 compliant. At this time the Company has no
contingency plans to address problems if third party entities are not compliant.



                                      -15-
<PAGE>   17



EFFECTS OF INFLATION

         The Company does not believe inflation has materially impacted earnings
during the past three years. Substantial increases in costs could have a
significant impact on the Company and the industry. If operating expenses
increase, management believes it can recover increased costs by increasing
prices but there is no assurance of such.

ITEM 7A  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         No Response is required to this item.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         The following financial statements are filed with this report:

         Independent Auditors' Report

         Balance Sheets as of January 2, 1999 and December 27, 1997

         Statements of Operations for the years ended January 2, 1999,
                           December 27, 1997 and December 28, 1996

         Statements of Stockholders' Equity for the years ended January
                           2, 1999, December 27, 1997 and December 28, 1996

         Statements of Cash Flows for the years ended January 2, 1999,
                           December 27, 1997 and December 28, 1996

                                      -16-

<PAGE>   18


INDEPENDENT AUDITORS' REPORT


Board of Directors and Stockholders
L.A. T Sportswear, Inc.:

We have audited the accompanying balance sheets of L.A. T Sportswear, Inc. (the
"Company") as of January 2, 1999 and December 27, 1997 and the related
statements of operations, changes in stockholders' equity, and cash flows for
each of the three years in the period ended January 2, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of January 2, 1999 and
December 27, 1997 and the results of its operations and its cash flows for each
of the three years in the period ended January 2, 1999 in conformity with
generally accepted accounting principles.


DELOITTE & TOUCHE LLP

Atlanta, Georgia
February 5, 1999


                                      -17-

<PAGE>   19



L.A. T SPORTSWEAR, INC.

BALANCE SHEETS
(In thousands, except share information)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                    JANUARY 2,    DECEMBER 27,
ASSETS                                                1999           1997
<S>                                                 <C>            <C>
CURRENT ASSETS:
  Cash                                              $    407       $    177
  Accounts receivable, net of allowance
    for doubtful accounts of $1,162 and $1,133         6,115          5,523
  Inventories                                         23,665         18,329
  Other current assets                                   919            495
                                                    --------       --------

     Total current assets                             31,106         24,524

PROPERTY, PLANT AND EQUIPMENT - Net                    3,201          3,749

OTHER ASSETS                                             156            466
                                                    --------       --------

                                                    $ 34,463       $ 28,739
                                                    ========       ========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable                                  $ 11,647       $  5,524
  Current portion of long-term debt                       30             23
  Accrued expenses                                       809            695
                                                    --------       --------

    Total current liabilities                         12,486          6,242

LONG-TERM DEBT                                        10,162         11,732

OTHER LONG TERM LIABILITIES                              371            530

COMMITMENTS (Note 8)

STOCKHOLDERS' EQUITY:
  Preferred stock, 5,000,000 shares
    authorized; no shares issued
  Common Stock, no par value; 25,000,000
    shares authorized; 4,200,001 shares
    issued and outstanding                            10,825         10,825
  Paid in capital                                      3,304          3,304

  Accumulated deficit                                 (2,685)        (3,894)
                                                    --------       --------

  Total stockholders' equity                          11,444         10,235
                                                    --------       --------

                                                    $ 34,463       $ 28,739
                                                    ========       ========
</TABLE>

See notes to financial statements


                                      -18-

<PAGE>   20



L.A. T SPORTSWEAR, INC.

STATEMENTS OF OPERATIONS
(In thousands, except per share data)
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                       YEAR ENDED
                                       -----------------------------------------
                                         JAN 2,          DEC 27,        DEC 28,
                                          1999            1997           1996
                                       (53 WEEKS)      (52 WEEKS)     (52 WEEKS)
<S>                                      <C>            <C>            <C>
NET SALES                                $81,874        $72,608        $94,834
COST OF GOODS SOLD                        68,570         60,732         79,136
                                         -------        -------        -------
     Gross Profit                         13,304         11,876         15,698
OPERATING EXPENSES                        10,784         11,038         16,147
                                         -------        -------        -------
OPERATING PROFIT (LOSS)                    2,520            838           (449)
OTHER (EXPENSES) INCOME:
  Interest expense                        (1,125)        (1,582)        (2,047)
  Other, net                                (110)            19              4
                                         -------        -------        -------
     Total other expenses                 (1,235)        (1,563)        (2,043)
                                         -------        -------        -------
INCOME (LOSS) BEFORE INCOME TAXES          1,285           (725)        (2,492)
PROVISION FOR INCOME TAXES                   (76)           (21)          (172)
                                         -------        -------        -------
NET INCOME (LOSS)                        $ 1,209        $  (746)       $(2,664)
                                         =======        =======        =======
BASIC AND DILUTED NET INCOME (LOSS)
PER SHARE                                $  0.29        $ (0.18)       $ (0.63)

BASIC WEIGHTED AVERAGE SHARES
OUTSTANDING                                4,200          4,200          4,200

AVERAGE SHARE OUTSTANDING                  4,214          4,200          4,200
ASSUMING DILUTION
</TABLE>


See notes to financial statements.


                                      -19-
<PAGE>   21


L.A. T SPORTSWEAR, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(In thousands)
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                         RETAINED
                                                                         EARNINGS
                                      COMMON STOCK          PAID-IN    (ACCUMULATED
                                  --------------------
                                  SHARES        AMOUNT      CAPITAL      DEFICIT)
<S>                               <C>          <C>          <C>        <C>
BALANCE - December 30, 1995        4,200       $10,825      $ 3,304      $  (484)
  Net loss                                                                (2,664)
                                   -----       -------      -------      -------
BALANCE - December 28, 1996        4,200        10,825        3,304       (3,148)
  Net loss                                                                  (746)
                                   -----       -------      -------      -------
BALANCE - December 27, 1997        4,200        10,825        3,304       (3,894)
  Net income                                                               1,209
                                   -----       -------      -------      -------
BALANCE - January 2, 1999          4,200       $10,825      $ 3,304      $(2,685)
                                   =====       =======      =======      =======
</TABLE>

See notes to financial statements.


                                      -20-

<PAGE>   22


L.A. T SPORTSWEAR, INC.

STATEMENTS OF CASH FLOW
(In thousands)
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                      YEAR ENDED
                                                      -----------------------------------------
                                                         JAN 2,         DEC 27,       DEC 28,
                                                          1999           1997          1996
                                                       (53 WEEKS)     (52 WEEKS)     (52 WEEKS)
<S>                                                    <C>            <C>            <C>
OPERATING ACTIVITIES:
  Net income (loss)                                     $ 1,209        $  (746)       $(2,664)
  Adjustments to reconcile net income (loss) to
  Net cash provided by operating activities:
  Depreciation and amortization                             646            625            750
  Provision for doubtful accounts                           368            391            688
  Loss (gain) on sale or write-off of fixed assets          113            (18)           949
  Changes in assets and liabilities providing
  (Using) cash:
    Accounts receivable                                    (960)         1,685          3,661
    Inventories                                          (5,336)         2,232         12,193
    Accounts payable                                      6,123            387         (3,217)
    Accrued expenses                                         81            (33)          (783)
    Restructuring reserve                                   (19)          (106)        (1,575)
    Other                                                  (347)         2,059            523
                                                        -------        -------        -------
        Net cash provided by operating activities         1,878          6,476         10,525

INVESTING ACTIVITIES:
  Purchase of property, plant and equipment                (108)           (86)          (193)
  Proceeds from sale of assets                               23             44             20
                                                        -------        -------        -------
        Net cash used in investing activities               (85)           (42)          (173)

FINANCING ACTIVITIES:
  Borrowings under line of credit, net                   (1,540)        (7,177)       (10,426)
  Repayments of long term borrowings                        (23)           (18)        (1,772)
                                                        -------        -------        -------
        Net cash used in financing activities            (1,563)        (7,195)       (12,198)
                                                        -------        -------        -------

NET CHANGE IN CASH                                          230           (761)        (1,846)

CASH:
  Beginning of year                                         177            938          2,784
                                                        -------        -------        -------
  End of year                                           $   407        $   177        $   938
                                                        =======        =======        =======

SUPPLEMENTAL INFORMATION:
Cash paid during the year for:
  Interest                                              $ 1,158        $ 1,613        $ 2,058
                                                        =======        =======        =======
  Income taxes                                          $    91        $   156        $    32
                                                        =======        =======        =======
</TABLE>


SEE NOTES TO FINANCIAL STATEMENTS.


                                      -21-

<PAGE>   23



L.A. T SPORTSWEAR, INC.

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         L.A. T Sportswear, Inc. (The "Company") distributes and manufactures
         sportswear principally for the imprinted garment industry. The Company
         self-manufactures certain of its products and also purchases
         merchandise from national sportswear manufacturers for distribution
         currently through six distribution facilities across the United States.
         The Company's customers are principally domestic retailers in the
         imprintable and decorable sportswear industry. Accordingly, the Company
         operates in one business segment.

         Prior to 1998, the Company's year ended on the last Saturday in
         December. The years ended December 27, 1997 (fiscal 1997) and December
         28, 1996 (fiscal 1996) each contained approximately 52 weeks. The
         company modified its operating year in 1998 to end on the Saturday
         closest to December 31. Due to the change, the year ended January
         2, 1999 (fiscal 1998) contained 53 weeks.

         Use of Estimates - The preparation of financial statements in
         conformity with generally accepted accounting principles requires
         management to make 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.

         Inventories - Inventories are stated at the lower of cost (first-in
         first-out method) or market.

         Property, Plant and Equipment - Property, plant and equipment are
         stated at cost and are depreciated principally using the straight-line
         method over the estimated asset lives. Buildings and improvements are
         depreciated over 40 years, while machinery and equipment and furniture
         and fixtures are depreciated over periods ranging principally from five
         to ten years.

         The Company periodically evaluates assets for possible impairment. In
         the event that facts and circumstances indicate that the carrying value
         of assets may be impaired, an evaluation of recoverability is
         performed. Such evaluation would compare the estimated future
         undiscounted cash flows associated with the asset to the asset's
         carrying amount to determine if a write down to market value is
         required.

         Income Taxes - Deferred income tax assets and liabilities are computed
         annually for differences between the financial statement and tax bases
         of assets and liabilities that will result in taxable or deductible
         amounts in the future based on enacted tax laws and rates applicable to
         the periods in which the differences are expected to affect taxable
         income. Valuation allowances are established when necessary to reduce
         deferred tax assets to the amount expected to be realized. The
         provision for income taxes is the tax payable or refundable for the
         period plus or minus the change during the period in deferred tax
         assets and liabilities.

         Basic and Diluted Net Income (Loss) Per Share -Basic and diluted net
         income (loss) per share is calculated by dividing net income (loss) by
         the weighted average shares outstanding. Stock options outstanding have
         not been included as common stock equivalents in 1997 or 1996 as they
         are antidilutive. In fiscal year 1998 diluted net income per share
         includes the dilutive effect of 14,000 stock options to purchase common
         stock.


                                      -22-

<PAGE>   24



         Fair Value of Financial Instruments - The carrying value of the
         Company's financial instruments approximate fair values.

         Accounting for Derivative Instruments and Hedging Activities - SFAS
         133, entitled Accounting for Derivative Instruments and Hedging
         Activities, was issued in June 1998. This standard is effective for all
         fiscal quarters of all fiscal years beginning after June 15, 1999. The
         Company has not yet completed its evaluation of the effect of this
         standard on its financial statements.

2.       RESTRUCTURING CHARGE

         During December 1995, the Company adopted a plan to streamline
         operations by closing certain of its facilities and discontinuing
         certain product lines during 1996. The Company closed two distribution
         facilities in January 1996 and closed one of its sewing operations in
         April 1996. Additionally, the Company discontinued its screen print
         operations in the third quarter of 1996. The Company recorded a charge
         in 1995 of $1,700,000 related to this restructuring.

         The following table presents the activity of this restructuring
         reserve:


<TABLE>
         <S>                                                           <C>                <C>
         Restructuring reserve at December 30, 1995                                       $1,700,000

             Fiscal 1996 activity:

               Lease payments and other related charges                $  706,848
               Severance payments                                         156,455
               Loss on sale of property, plant and equipment              563,387
               Other                                                      148,310
                                                                       ----------
             Total 1996 activity                                                           1,575,000
                                                                                          ----------
         Restructuring reserve at December 28, 1996                                          125,000

              Fiscal 1997 activity:

               Lease payments and other related charges                    16,003
               Severance payments                                          21,142
               Loss on sale of property, plant and equipment               42,063
               Other                                                       27,214
                                                                       ----------
             Total 1997 activity                                                             106,422
                                                                                          ----------
         Restructuring reserve at December 27, 1997                                           18,578

             Fiscal 1998 activity:

               Write-off of remaining unused balance                                          18,578
                                                                                          ----------

         Restructuring reserve at January 2, 1999                                         $       --
                                                                                          ==========
</TABLE>



                                      -23-

<PAGE>   25



3.       INVENTORIES

<TABLE>
<CAPTION>
                             JANUARY 2,     DECEMBER 27,
                               1999            1997
                                 (In thousands)
         <S>                  <C>            <C>
         Raw materials        $   952        $ 1,087

         Work-in-process          476            415

         Finished Goods        23,745         18,167

         Reserves              (1,508)        (1,340)
                              -------        -------

                              $23,665        $18,329
                              =======        =======
</TABLE>

4.       PROPERTY , PLANT AND EQUIPMENT

<TABLE>
<CAPTION>
                                          JANUARY 2,  DECEMBER 27,
                                             1999        1997
                                               (In thousands)
         <S>                                <C>         <C>
         Land                               $  140      $  140

         Buildings and improvements          2,558       2,538

         Machinery and equipment             3,780       4,165

         Furniture and fixtures                358         517
                                            ------      ------
                                             6,836       7,360
         Less accumulated depreciation       3,635       3,611
                                            ------      ------
                                            $3,201      $3,749
                                            ======      ======
</TABLE>



                                      -24-
<PAGE>   26


5.       LONG-TERM DEBT

         A summary of long-term debt is as follows:


<TABLE>
<CAPTION>
                                              JANUARY 2,  DECEMBER 27,
                                                1999          1997
                                                  (In thousands)
         <S>                                   <C>          <C>
         Line of credit                        $ 9,537      $11,077
         Notes payable                             655          678
                                               -------      -------
                                                10,192       11,755
         Less amounts due within one year           30           23
                                               -------      -------
                                               $10,162      $11,732
                                               =======      =======
</TABLE>

         In April 1996, the Company entered into a new credit facility (the
         "Credit Facility"). The Credit Facility was subsequently amended in
         November 1996, March 1997, November 1997 and March 1998. The Credit
         Facility, as amended (i) provides for maximum borrowings of $15 million
         (subject to certain collateral restrictions based on eligible
         receivables, inventories and fixed assets), (ii) expires on March 31,
         2001, (iii) bears interest at prime plus 1.00%, and (iv) is secured by
         principally all the Company's assets. As of January 2, 1999, the
         Company had borrowings totaling $9.5 million outstanding under the
         Credit Facility and availability to borrow an additional $2.8 million.

         Maturities of long-term debt at January 2, 1999 are as follows (in
         thousands):


<TABLE>
         <S>                                   <C>
         Fiscal

         1999                                       30

         2000                                       33

         2001                                    9,573

         2002                                       40

         2003                                       44

         Thereafter                                472
                                               -------

                                               $10,192
                                               =======
</TABLE>


                                      -25-
<PAGE>   27


6.       LEASE OBLIGATIONS

         The Company leases a plant facility and certain of its distribution
         facilities under operating leases. The Company can, at its option,
         renew most of these leases at the then fair rental value. Future
         minimum rental payments under such operating leases at January 2, 1999
         are as follows (in thousands):

<TABLE>
         <S>                              <C>
         Fiscal Year
         1999                             $1,089
         2000                                370
         2001                                212
         2002                                215
         2003                                  2
                                          ------
                                          $1,888
                                          ======
</TABLE>

         Rent expense was $1,191,000, $1,307,000 and $1,377,000 for fiscal 1998,
         1997 and 1996, respectively.

7.       INCOME TAXES

         The provision for income taxes includes the following (in thousands):



<TABLE>
<CAPTION>
                                        FISCAL YEAR
                              ---------------------------------
                              1998         1997          1996
         <S>                  <C>          <C>         <C>
         Current:
           Federal            $44          $--         $(1,306)
           State               32           21            (411)
                              ---          ---         -------
                               76           21          (1,717)
         Deferred:
           Federal             --           --           1,478
           State               --           --             411
                              ---          ---         -------
                               --           --           1,889
                              ---          ---         -------
         Total Provision      $76          $21         $   172
                              ===          ===         =======
</TABLE>



                                      -26-
<PAGE>   28



         The provision for income taxes differs from amounts computed by
         applying the federal statutory rate to income before income taxes as
         follows (in thousands):


<TABLE>
<CAPTION>
                                                                            Fiscal Year
                                                                -----------------------------------
                                                                 1998          1997           1996
         <S>                                                    <C>           <C>           <C>
         Tax provision (benefit) at federal statutory rate      $ 437         $(246)        $ (847)

         State taxes, net of federal benefit                       72            33           (141)

         Change in valuation allowance                           (458)          130          1,309

         Other                                                     25           104           (149)
                                                                -----         -----         ------

         Total provision                                        $  76         $  21         $  172
                                                                =====         =====         ======
</TABLE>

         The tax effects of temporary differences at January 2, 1999 and
         December 27, 1997 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                   Assets (Liabilities)
                                                                --------------------------
                                                                January 2,    December 27,
                                                                    1999          1997
         <S>                                                    <C>           <C>
         Accounts receivable                                     $   533       $   521

         Inventory                                                   818           758

         Other                                                       178           182

         Valuation allowance                                      (1,183)       (1,166)
                                                                 -------       -------

              Current deferred tax asset                         $   346       $   295
                                                                 =======       =======
         Depreciation                                            $  (420)      $  (478)

         Deferred compensation                                       169           169

         Federal and state net operating loss carryforwards          130           621

         AMT credit carryforward                                      24           117

         Other                                                         2             2

         Valuation allowance                                        (251)         (726)
                                                                 -------       -------

              Long-term deferred tax liability                   $  (346)      $  (295)
                                                                 =======       =======
</TABLE>


         At January 2, 1999, the Company has an AMT credit carryforward
         available to offset future federal taxes of $24,000 which does not
         expire and state net operating loss carryforwards aggregating $2.2
         million which begin to expire in 2001.


                                      -27-
<PAGE>   29


8.       RELATED PARTY TRANSACTIONS

         The Company purchases certain merchandise for its distribution business
         from businesses affiliated with a former director and current
         stockholder of the Company. These purchases aggregated $9,414,000,
         $11,973,000, and $8,315,000 during fiscal 1998, 1997 and 1996,
         respectively. Included in accounts payable at January 2, 1999 and
         December 27, 1997 are amounts due to these businesses of $1,489,000 and
         $871,000, respectively.


         A business owned by one of the Company's stockholders received
         commissions of approximately $94,000, $29,000, and $156,000 on the
         Company's purchases of certain merchandise for its distribution
         business during fiscal 1998, 1997 and 1996, respectively. These
         commissions generally average 4% of dollar purchases.

9.       EMPLOYEE INCENTIVE PLAN AND OUTSIDE DIRECTORS INCENTIVE PLAN

         In early 1992, the Company's Chairman granted an option to an officer
         of the Company to purchase 97,500 shares of the Company's common stock
         owned by the Chairman for $1.21 per share. The officer resigned in
         early 1995. During March 1995 and April 1996, the Chairman purchased
         option rights covering 33,000 and 45,000 shares under this option
         agreement for approximately $150,000 and $54,800, respectively. As a
         result, 19,500 shares remain outstanding under this option agreement.
         The remaining option is currently exercisable and expires on March 1,
         2002.

         The Company has established the L.A. T Sportswear, Inc. 1993 Employee
         Incentive Plan (the "Incentive Plan"). Awards under this plan may be
         represented by (i) incentive or nonqualified stock options, (ii) stock
         appreciation rights, (iii) restricted stock, or (iv) performance awards
         of stock, cash or a combination of stock and cash. Stock options
         granted under the Incentive Plan are nontransferable, have an exercise
         price of not less than 100% of the fair market value of the stock on
         the date of the grant, and may have a term of no longer than ten years.
         The Company has reserved 475,000 shares of common stock for issuance
         under the Incentive Plan. As of January 2, 1999, 139,550 options to
         acquire shares (which vest over one to four years) were outstanding
         under this plan.

         During 1994, the Company approved an Outside Directors Incentive Plan
         and reserved 40,000 shares for plan issuances. Awards under this plan
         may be represented by (i) nonqualified stock options, (ii) stock
         appreciation rights, (iii) restricted stock, or (iv) performance awards
         of stock, cash or a combination of stock and cash. Stock options
         granted under the Outside Directors Incentive Plan are nontransferable,
         have an exercise price of not less than 100% of the fair market value
         of the stock on the date of the grant, and may have a term of no longer
         than ten years. As of January 2, 1999, 26,000 options to acquire shares
         (which vest over three to four years) were outstanding under this plan.

         During 1998, the Company granted its Chief Executive Officer a
         non-qualified stock option (outside of the Incentive Plan) to purchase
         125,000 shares of the Company's common stock. The options were granted
         at the fair market value of the stock on the date of grant ($1.0625 per
         share), vest over three years and expire in May, 2008. As of January 2,
         1999, the option to acquire 125,000 shares was outstanding.


                                      -28-
<PAGE>   30

 Activity for all stock options is as follows:


<TABLE>
<CAPTION>
                                            1998                     1997                     1996
                                    ---------------------    ---------------------     ---------------------
                                                 Weighted                 Weighted                  Weighted
                                                  Average                  Average                   Average
                                                 Exercise                 Exercise                  Exercise
                                     Shares       Price       Shares       Price        Shares       Price

         <S>                        <C>          <C>        <C>           <C>          <C>          <C>
         Options outstanding,
           beginning of year         94,800       $2.32      382,950       $2.62        95,800       $10.00

         Grants                     201,000        0.99                                343,000         1.76

         Forfeitures                 (5,250)       3.39     (288,150)       2.72       (55,850)       10.00
                                    -------                 --------                   -------
         Options outstanding,
           end of year              290,550        1.38       94,800        2.32       382,950         2.62
                                    =======                 ========                   =======
         Options exercisable,                      
          end of year                53,050        3.29       36,550        4.18        22,450        10.00
                                    =======                 ========                   =======
</TABLE>


         The Company applies Accounting Principle Board Opinion 25 and related
         interpretations in accounting for stock options. Accordingly, no
         compensation costs have been recognized for these grants. Had
         compensation cost for the Company's grants been determined based on the
         fair value at the grant dates consistent with the method of FASB
         Statement 123, "Accounting for Stock-Based Compensation," the Company's
         net income (loss) and net income (loss) per share for the years ended
         January 2, 1999, December 27, 1997 and December 28, 1996 would have
         changed to the pro forma amounts indicated below:


<TABLE>
<CAPTION>
                                                                               Fiscal Year
                                                             --------------------------------------------
                                                               1998               1997              1996
         <S>                                                 <C>                <C>               <C>
         Net income (loss) (in thousands):

           As reported                                       $1,209             $ (746)           $(2,664)
                                                             ======             ======            =======
           Pro forma                                         $  889             $ (638)           $(2,797)
                                                             ======             ======            =======

         Basic and diluted net income (loss) per share:

           As reported                                       $ 0.29             $(0.18)           $ (0.63)
                                                             ======             ======            =======
           Pro forma                                         $ 0.21             $(0.15)           $ (0.67)
                                                             ======             ======            =======
</TABLE>


                                      -29-
<PAGE>   31


The fair value of each option grant has been estimated on the date of grant
using the Black-Scholes option-pricing model with the following weighted average
assumptions for grants in 1998 and 1996 respectively, (no grants were made in
1997): (i) a weighted average risk-free interest rate of 5.6% and 5.9%,
respectively (ii) expected lives of five to ten years, (iii) expected volatility
of approximately 77% and 48%, respectively, and (iv) no expected dividends. The
weighted average fair value of options granted was $1.06 and $1.14 for fiscal
years 1998 and 1996, respectively.

The following table summarizes information about stock options outstanding at
January 2, 1999:


<TABLE>
<CAPTION>
                               OPTIONS OUTSTANDING
         ----------------------------------------------------
                                      AVERAGE
         EXERCISE     NUMBER OF      REMAINING       OPTIONS
           PRICE       OPTIONS      LIFE (YEARS)  EXERCISABLE
         <S>          <C>           <C>           <C>
         $10.0000       14,550          5.1         14,550

         $ 1.0625      125,000          9.3

         $ 0.8750       66,000          9.6

         $ 0.7500       10,000          9.3

         $ 0.7500       75,000          7.7         38,500
                       -------                      ------

                       290,550                      53,050
                       =======                      ======
</TABLE>


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

         There has been no occurrence requiring a response to this item.


                                      -30-

<PAGE>   32


                                    PART III

         Except as to information with respect to executive officers which is
contained in a separate heading under Item 1 to this Form 10-K, the information
required by Part III of Form 10-K is, pursuant to General Instruction G(3) of
Form 10-K, incorporated by reference from the Company's definitive proxy
statement to be filed pursuant to Regulation 14A for the Company's Annual
Meeting of Stockholders to be held in 1999 (the "Proxy Statement"). The Company
will, within 120 days of the end of its fiscal year, file with the Securities
and Exchange Commission a definitive proxy statement pursuant to Regulation 14A.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

         The information concerning directors and executive officers of the
Registrant is set forth in the Proxy Statement under the headings "Election of
Directors" and "Compliance with Section 16(a) of the Securities Exchange Act of
1934," which information is incorporated herein by reference. The name, age and
position of each executive officer of the Company is set forth under the heading
"Executive Officers" in Item 1 of this Report.

ITEM 11. EXECUTIVE COMPENSATION.

         The information concerning executive compensation is set forth in the
Proxy Statement under the heading "Executive Compensation," which information is
incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The information concerning security ownership of certain beneficial
owners and management is set forth in the Proxy Statement under the heading
"Security Ownership of Certain Beneficial Owners and Management," which
information is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         The information concerning certain relationships and related
transactions is set forth in the Proxy Statement under the headings "Certain
Transactions" and "Compensation Committee Interlocks and Insider Participation,"
which information is incorporated herein by reference.


                                      -31-

<PAGE>   33



                                     PART IV

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

         (a)(1).  Financial Statements and Auditors' Report.

         The following financial statements and auditors' report are included in
         Item 8 of this Report:

         Report of Independent Auditors

         Balance Sheets as of January 2, 1999 and December 27, 1997

         Statements of Operations for fiscal years ended January 2, 1999,
                           December 27, 1997 and December 28, 1996

         Statements of Cash Flows for fiscal years ended January 2, 1999,
                           December 27, 1997 and December 28, 1996

         Statements of Stockholders' Equity for fiscal years ended January 2,
                           1999, December 27, 1997 and December 28, 1996

         Notes to Financial Statements

         (2).     Financial Statement Schedules.

         All financial statement schedules of the Registrant have been omitted
as the required information is inapplicable or the information is presented in
the financial statements or related notes.

         (3).     Exhibits.

         The exhibits listed below are filed with or incorporated by reference
into this Report. The exhibits which are denominated with an asterisk (*) were
previously filed as part of, and are hereby incorporated by reference from
either (i) the Company's Registration Statement on Form S-1, Registration Number
33-60452, declared effective by the Securities and Exchange Commission on
January 25, 1994 (the "S-1"); (ii) the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1994 (the "1994 10-K"); (iii) the Company's
Quarterly Report on Form 10-Q for the quarter ended March 30, 1996 (the "3/30/96
10-Q"); (iv) the Company's Annual Report on Form 10-K for the fiscal year ended
December 28, 1996 ("1996 10-K"); or (v) The Company's Annual Report on Form 10-K
for the fiscal year ended December 27, 1997 ("1997 10-K"). Unless otherwise
indicated, the exhibit number corresponds to the exhibit number in the
referenced document.


                                      -32-

<PAGE>   34



<TABLE>
<CAPTION>
EXHIBIT
NUMBER                     DESCRIPTION OF EXHIBIT
------                     ----------------------
<S>              <C>   <C>
       *3(i)     --    Form of Amended and Restated Articles of Incorporation of L.A. T Sportswear, Inc.
                       (included in Exhibit 2) (S-1)

       *3(ii)    --    Form of Amended and Restated Bylaws of L.A. T Sportswear, Inc. (S-1)

       *4        --    Specimen Certificate of Common Stock (S-1)

      *10.1      --    1993 Employee Incentive Plan (S-1)

   *10.15.1      --    Lease Agreement dated February 1, 1998 between L.A. T Sportswear, Inc. and The
                       Development Authority of Crawford County. (1997 10-K)

   *10.16.1      --    Relocation and Modification Agreement dated November 25, 1997 between L.A. T
                       Sportswear, Inc. and Security Capital Industrial Trust. (1997 10-K)

      *10.30     --    Outside Directors Incentive Plan (1994 10-K)

      *10.40     --    Loan and Security Agreement, dated April 29, 1996, by
                       and among the Company, Mellon Bank, N.A., as Agent, and
                       Mellon Bank, N.A., as Lender (3/30/96 10-Q)

   *10.40.1      --    First Amendment to Loan and Security Agreement, dated November 11, 1996, by
                       and between the Company and Mellon Bank, N.A. (1996 10-K)

   *10.40.2      --    Second Amendment to Loan and Security Agreement, dated March 21, 1997, by and
                       between the Company and Mellon Bank, N.A. (1996 10-K)

   *10.40.3      --    Amendment to reduce line of credit dated November 28, 1997, by and between the
                       Company and Mellon Bank, N.A. (1997 10-K)

  * 10.40.4      --    Third Amendment to Loan and Security Agreement, dated March 26, 1998 by and
                       between the Company and Mellon Bank, N.A. (1997 10-K)

       23.1      --    Consent of Deloitte & Touche LLP

       27        --    Financial Data Schedule (for SEC use only)
</TABLE>


         (b)      Reports on Form 8-K.

         No reports on Form 8-K were filed during the fourth quarter ended
January 2, 1999.


                                      -33-

<PAGE>   35



                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) 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.

                                    L.A. T SPORTSWEAR, INC.

Dated: March 22, 1999               By:  /s/ Isador E. Mitzner
                                       -----------------------------------------
                                         ISADOR E. MITZNER
                                         Chairman of the Board and Chief
                                         Executive Officer
                                         (principal executive officer)



Dated: March 22, 1999               By:  /s/ John F. Hankinson
                                       -----------------------------------------
                                         JOHN F. HANKINSON
                                         Chief Financial Officer
                                         (principal financial and accounting
                                         officer)


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


March 22, 1999                      By:  /s/ Isador E. Mitzner
                                       -----------------------------------------
                                         ISADOR E. MITZNER, Chairman of the
                                         Board and Chief Executive Officer


March 22, 1999                      By:   /s/ J. David Keller
                                       -----------------------------------------
                                          J. DAVID KELLER, President,
                                          Secretary and Director


March 22, 1999                      By:  /s/ Kenneth L. Bernhardt
                                       -----------------------------------------
                                         KENNETH L. BERNHARDT, Director


March 22, 1999                      By:  /s/ Irwin Lowenstein
                                       -----------------------------------------
                                         IRWIN LOWENSTEIN, Director



<PAGE>   36


                                  EXHIBIT INDEX


<TABLE>
<CAPTION>
Exhibit
Number                              Description
------                              -----------
<S>                                 <C>
23.1                                Consent of Deloitte & Touche LLP

27                                  Financial Data Schedule (for SEC use only)
</TABLE>