UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

            (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                    For the fiscal year ended January 1, 2000

                                       OR

          ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                          Commission file number 1-6666

                               SALANT CORPORATION
             (Exact name of registrant as specified in its charter)

              1114 Avenue of the Americas, New York, New York 10036
                            Telephone: (212) 221-7500

  Incorporated in the State of Delaware Employer Identification No. 13-3402444

           Securities registered pursuant to Section 12(b) of the Act:
                      Common Stock, par value $1 per share,
                    Trading Over-The-Counter - Bulletin Board

        Securities registered pursuant to Section 12(g) of the Act: None

         Indicate by check mark whether the registrant (l) 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.

         Indicate by check mark whether the  registrant  has filed all documents
and reports  required  to be filed by Section 12, 13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court.
Yes X  No __
    -

         As of March 20, 2000,  there were  outstanding  9,901,140 shares of the
Common Stock of the  registrant.  Based on the closing price of the Common Stock
on  such  date,  the  aggregate  market  value  of  the  voting  stock  held  by
non-affiliates  of the registrant on such date was  $8,862,478.  For purposes of
this  computation,  shares held by  affiliates  and by directors  and  executive
officers of the registrant have been excluded.  Such exclusion of shares held by
directors and executive officers is not intended,  nor shall it be deemed, to be
an admission that such persons are affiliates of the registrant.

Documents  incorporated by reference:  The definitive  Proxy Statement of Salant
Corporation to be filed relating to the 2000 Annual Meeting of  Stockholders  is
incorporated by reference in Part III hereof.

                                TABLE OF CONTENTS
PART I

     Item 1.      Business
     Item 2.      Properties
     Item 3.      Legal Proceedings
     Item 4.      Submission of Matters to a Vote of Security Holders

PART II

     Item 5.      Market for Registrant's Common Equity and Related Stockholder
                  Matters
     Item 6.      Selected Consolidated Financial Data
     Item 7.      Management's Discussion and Analysis of Financial Condition
                  and Results of Operations
     Item7A.      Quantitative and Qualitative Disclosures about Market Risk
     Item 8.      Financial Statements and Supplementary Data
     Item 9.      Disagreements on Accounting and Financial Disclosure

PART III

     Item 10.     Directors and Executive Officers of the Registrant
     Item 11.     Executive Compensation
     Item 12.     Security Ownership of Certain Beneficial Owners and Management
     Item 13.     Certain Relationships and Related Transactions

PART IV

     Item 14.     Exhibits, Financial Statement Schedule and Reports on Form 8-K

SIGNATURES

                                     PART I

ITEM 1.  BUSINESS

Introduction.   Salant  Corporation  ("Salant"  or  the  "Company"),  which  was
incorporated in Delaware in 1987, is the successor to a business founded in 1893
and incorporated in New York in 1919. The Company designs, manufactures, imports
and markets to  retailers  throughout  the United  States brand name and private
label menswear  apparel  products.  The Company  currently sells its products to
department and specialty stores, and for a portion of 1999 made limited sales of
certain products to national chains, major discounters and mass volume retailers
throughout  the  United  States.  In June 1997,  the  Company  discontinued  the
operations  of the Made in the  Shade  division,  which  produced  and  marketed
women's  junior  sportswear.   In  December  1998,  the  Company  determined  to
discontinue  and sell its  Salant  Children's  Apparel  Group  (the  "Children's
Group"),   which  manufactured  and  marketed  blanket  sleepers,   pajamas  and
underwear. Also at that time, the Company decided to sell or close its non-Perry
Ellis  menswear  businesses  in order to focus on the Perry Ellis brand.  During
1999,  the  Company  substantially  completed  the process of closing or selling
these  businesses.  (As used  herein,  the  "Company"  includes  Salant  and its
subsidiaries.)

Bankruptcy Court Cases.

On June 27, 1990, Salant and Denton Mills Inc. ("Denton Mills"),  a wholly owned
subsidiary of Salant, each filed with the United States Bankruptcy Court for the
Southern  District  of New York (the  "Bankruptcy  Court") a separate  voluntary
petition for relief (the "1990 Case") under chapter 11 of title 11 of the United
States Code (the  "Bankruptcy  Code").  On July 30, 1993, the  Bankruptcy  Court
issued an order  confirming the Company's  reorganization  plan. On February 25,
2000, the Bankruptcy Court issued an order closing the 1990 Case.

On December 29, 1998 (the  "Filing  Date"),  Salant  filed a voluntary  petition
under chapter 11 of the  Bankruptcy  Code with the  Bankruptcy  Court (the "1998
Case") in order to  implement  a  restructuring  of its 10-1/2 % Senior  Secured
Notes due December 31, 1998 (the "Senior Notes").  Salant also filed its plan of
reorganization  (the  "Plan")  with the  Bankruptcy  Court on the Filing Date in
order to implement its  restructuring.  On April 16, 1999, the Bankruptcy  Court
issued an order  confirming the Plan (the  "Confirmation  Order").  The Plan was
consummated on May 11, 1999 (the "Effective Date").

In  accordance  with the Plan,  Salant's  focus is  primarily on its Perry Ellis
men's  apparel  business  and,  as a result,  has exited  its other  businesses,
including its Children's Group and non-Perry Ellis menswear  divisions.  To that
end, Salant has sold its John Henry and Manhattan  businesses.  These businesses
include the John Henry, Manhattan and Lady Manhattan trade names, the John Henry
and Manhattan  dress shirt  inventory,  the leasehold  interest in a dress shirt
facility  located in Valle  Hermosa,  Mexico,  and the equipment  located at the
Valle Hermosa facility and at Salant's  facility located in Andalusia,  Alabama.
Salant has also sold its Children's Group business.  This sale was primarily for
inventory related to the Children's Group business and the Dr. Denton trademark.

Pursuant  to the Plan (i) all of the  outstanding  principal  amount  of  Senior
Notes, plus all accrued and unpaid interest  thereon,  was converted into 95% of
Salant's  new  Common  Stock,  subject  to  dilution,  and (ii) all of  Salant's
existing old Common Stock was  converted  into 5% of Salant's new Common  Stock,
subject to dilution.  Salant's  general  unsecured  creditors  (including  trade
creditors) were unimpaired  under the Plan and were entitled to be paid in full.
The Plan was  approved by all of the holders of Senior Notes that voted and over
96% of the holders of Salant's old Common Stock that voted.

Salant operates its Perry Ellis  businesses under certain  licensing  agreements
(the "Perry Ellis Licenses") between Salant and Perry Ellis International,  Inc.
("PEI").  During the 1998 Case, Supreme International,  Corporation  ("Supreme")
entered  into  discussions  with PEI to  acquire  PEI and,  thereafter,  Supreme
acquired PEI. Prior to the hearing on the confirmation of the Plan,  Supreme (in
its own  capacity  and on behalf  of PEI  (collectively,  referred  to herein as
"Supreme-PEI"))  filed an objection to the confirmation.  In connection with the
confirmation  of the Plan,  Salant and  Supreme-PEI  settled and resolved  their
differences  and the material terms of such  settlement were set forth in a term
sheet (the "Term  Sheet")  attached to and  incorporated  into the  Confirmation
Order (the "PEI Settlement").

The PEI Settlement. The following is a summary of the material provisions of the
Term  Sheet  setting  forth  the  terms  of the PEI  Settlement.  The  following
description  is qualified in its entirety by the  provisions  of the Term Sheet.
The PEI  Settlement  provided that (i) Salant would return to PEI the license to
sell Perry Ellis  products in Puerto Rico,  the U.S.  Virgin  Islands,  Guam and
Canada  (Salant  retained  the right to sell its  existing  inventory  in Canada
through  January 31, 2000);  (ii) the royalty rate due PEI under  Salant's Perry
Ellis  Portfolio  pants license with respect to regular price sales in excess of
$15.0  million  annually  would be increased  to 5%; (iii) Salant would  provide
Supreme-PEI  with the  option  to take over any real  estate  lease for a retail
store that Salant intends to close;  (iv) Salant would assign to Supreme-PEI its
sublicense with Aris Industries, Inc. for the manufacture, sale and distribution
of  the  Perry  Ellis  America  brand  sportswear  and,   depending  on  certain
circumstances,  Salant would receive certain royalty  payments from  Supreme-PEI
through the year 2005;  (v) Salant  would pay PEI its  pre-petition  invoices of
$616,844 and post-petition invoices of $56,954 on the later of (a) the Effective
Date of the  Plan or (b)  the  due  date  with  respect  to such  amounts;  (vi)
Supreme-PEI  (a) agreed and  acknowledged  that the sales of businesses  made by
Salant  during  the 1998  Case did not  violate  the  terms of the  Perry  Ellis
Licenses and did not give rise to the  termination  of the Perry Ellis  Licenses
and (b) consented to the change of control  arising from the  conversion of debt
into equity under the Plan and acknowledged  that such change of control did not
give  rise to any  right to  terminate  the  Perry  Ellis  Licenses;  and  (vii)
Supreme-PEI  withdrew with prejudice its objection to  confirmation of the Plan,
and supported confirmation of the Plan.

Men's  Apparel.  In fiscal 1999,  the Company's  ongoing  business was primarily
comprised  of Perry Ellis  products.  The  Company  markets  accessories,  dress
shirts, slacks and sportswear under the PERRY ELLIS and PORTFOLIO BY PERRY ELLIS
trademarks  and a limited  amount of private  label  accessories.  The non-Perry
Ellis menswear  divisions,  which were closed or sold during 1999,  consisted of
the Bottoms  division and the Salant  Menswear  Group that marketed dress shirts
and accessories.  The Bottoms division  primarily  manufactured  men's and boys'
jeans,  principally under the Sears,  Roebuck & Co. ("Sears") CANYON RIVER BLUES
trademark,  and men's  casual  slacks  under  Sears'  CANYON  RIVER BLUES KHAKIS
trademark (collectively "Canyon River Blues Product").  Pursuant to an Agreement
dated March 10,  1999,  between the  Company  and Sears,  the Company  agreed to
continue to deliver, in the ordinary course, Canyon River Blues Product to Sears
until the middle of May 1999.  During  the end of May and early  June 1999,  the
Company  delivered  to Sears the  remaining  Canyon  River  Blues  Product  at a
discount to Sears.  The Agreement by its terms was subject to  Bankruptcy  Court
approval, which approval was granted in 1999.

The Salant Menswear Group also marketed dress shirts and accessories,  primarily
under the JOHN HENRY,  MANHATTAN and licensed trademarks.  Pursuant to the Plan,
the  Company  has  sold  or  otherwise  disposed  of  substantially  all  of its
businesses other than the businesses conducted under the Perry Ellis trademarks.
In that  connection,  the  Company  sold its dress shirt  business  and its John
Henry,  Manhattan and related  trademarks to Supreme  pursuant to a Purchase and
Sale Agreement, dated December 28, 1998 (subject to and subsequently approved by
the Bankruptcy Court on February 26, 1999).

Children's Sleepwear and Underwear. The Children's Group conducted the Company's
children sleepwear and underwear business. The Children's Group marketed blanket
sleepers  primarily  using a number of well-known  licensed  cartoon  characters
created by, among  others,  DISNEY and WARNER BROS.  The  Children's  Group also
marketed  pajamas  under  the DR  DENTON  and  OSHKOSH  B'GOSH  trademarks,  and
sleepwear and underwear under the JOE BOXER  trademark.  At the end of the first
quarter of 1998,  the  Company  determined  not to  continue  with its Joe Boxer
sportswear  line for Fall 1998.  Instead,  consistent with the approach that the
Joe Boxer Corporation  (Salant's licensor of the Joe Boxer trademark) had taken,
the  Company  focused  on its core  business  of  underwear  and  sleepwear.  In
connection  with the Plan, the Company  adopted a formal plan to discontinue the
Children's  Group.  Pursuant to a Purchase and Sale Agreement  dated January 14,
1999, the Company sold to the Wormser Company ("Wormser"), all of Salant's right
to, title and interest in, certain assets of the Children's Group. All assets of
the Children's Group not sold to Wormser have been or will be disposed.

Retail Outlet Stores.  The retail outlet stores business of the Company consists
of a chain of outlet  stores (the  "Stores  division"),  through  which it sells
products   manufactured   by  the  Company   and  other  Perry  Ellis   licensed
manufacturers.  In December 1997, the Company announced the restructuring of the
Stores division,  pursuant to which the Company closed all stores other than its
Perry Ellis outlet stores.  This resulted in the closing of 42 outlet stores. At
the end of 1999, Salant operated 28 Perry Ellis outlet stores.

Significant  Customers.  In 1999  approximately  19% of the Company's sales were
made to Federated Department Stores, Inc. ("Federated") and approximately 18% of
the  Company's  sales were made to Dillards  Corporation  ("Dillards").  Also in
1999,  approximately  16% of the  Company's  sales were made to the May  Company
("May")  and  approximately  13% of the  Company's  sales  were made to  Marmaxx
Corporation  ("Marmaxx").  In 1998 and  1997,  approximately  20% and 19% of the
Company's sales were made to Sears,  respectively and  approximately 11% and 10%
of the  Company's  sales were made to Dillards for 1998 and 1997,  respectively.
Also in 1998 and 1997,  approximately  14% and 12% of the  Company's  sales were
made to Federated,  respectively and  approximately 10% and 11% of the Company's
sales were made to Marmaxx for 1998 and 1997, respectively.

No other customer  accounted for more than 10% of the sales during 1997, 1998 or
1999.

Trademarks.  The markets in which the Company  operates are highly  competitive.
The  Company  competes  primarily  on the basis of brand  recognition,  quality,
fashion, price, customer service and merchandising expertise.

Approximately  90.3% of the  Company's net sales for 1999 were  attributable  to
products  sold under  Company owned or licensed  designer  trademarks  and other
internationally  recognized  brand  names and the balance  was  attributable  to
products sold under  retailers'  private labels,  including  Sears' CANYON RIVER
BLUES.

Since the Effective  Date,  substantially  all of the Company's  business is now
conducted under the Perry Ellis Trademarks.  During 1999, 78.8% of the Company's
sales was  attributable  to products sold under the PERRY ELLIS and PORTFOLIO BY
PERRY ELLIS trademarks (the "Perry Ellis  Trademarks");  these products are sold
through  leading  department  and  specialty  stores.  No other line of products
accounted for more than 10% of the Company's sales during 1999.

Trademarks  Licensed to the Company.  The Perry Ellis Trademarks are licensed to
the Company  under the Perry Ellis  Licenses  with PEI.  The license  agreements
contain renewal options,  which,  subject to compliance with certain  conditions
contained  therein,  permit  the  Company  to extend  the terms of such  license
agreements.  Assuming  the  exercise  by the  Company of all  available  renewal
options,  the license  agreements  covering men's apparel and  accessories  will
expire on  December  31,  2015.  The  Company  also has rights of first  refusal
worldwide  for  certain  new  licenses  granted  by PEI for  men's  apparel  and
accessories  through  February  1, 2001.  On January 28,  1999,  PEI and Supreme
announced that they had entered into a definitive  agreement under which Supreme
would  acquire  for cash all of the  stock of PEI for $75  million.  On April 7,
1999,  Supreme  completed the  acquisition of PEI and became  Salant's  licensor
under the Perry Ellis Licenses.

Design and  Manufacturing.  Products sold by the Company's various divisions are
manufactured to the designs and specifications  (including fabric selections) of
designers employed by those divisions. In limited cases, the Company's designers
may  receive  input from the  Company's  licensors  on  general  themes or color
palettes.

During  1999,  approximately  8.0%  of the  products  produced  by  the  Company
(measured in units) were  manufactured  in the United  States,  with the balance
manufactured in foreign countries.  Facilities operated by the Company accounted
for  approximately  56.4%  of  its  domestic-made   products  and  9.3%  of  its
foreign-made products; the balance in each case was attributable to unaffiliated
contract  manufacturers.  In 1999,  approximately 26.2% of the Company's foreign
production was manufactured in Guatemala,  approximately  19.8% was manufactured
in Hong Kong and approximately 15.7% was manufactured in China.

The Company's foreign sourcing  operations are subject to various risks of doing
business  abroad,  including  currency  fluctuations  (although the  predominant
currency  used is the U.S.  dollar),  quotas and, in certain parts of the world,
political   instability.   Although  the  Company's  operations  have  not  been
materially  adversely  affected by any of such factors to date, any  substantial
disruption  of its  relationships  with its foreign  suppliers  could  adversely
affect its operations.  Some of the Company's imported merchandise is subject to
United States Customs  duties.  In addition,  bilateral  agreements  between the
major exporting  countries and the United States impose quotas,  which limit the
amounts of certain  categories  of  merchandise  that may be  imported  into the
United States. Any material increase in duty levels,  material decrease in quota
levels or material  decrease in  available  quota  allocations  could  adversely
affect the Company's operations.

Raw Materials.  The raw materials used in the Company's manufacturing operations
consist principally of finished fabrics made from natural, synthetic and blended
fibers.  These  fabrics  and  other  materials,  such  as  leathers  used in the
manufacture of various accessories, are purchased from a variety of sources both
within and outside the United States. The Company believes that adequate sources
of supply at  acceptable  price  levels are  available  for all such  materials.
Substantially  all of the Company's  foreign  purchases are  denominated in U.S.
currency.  No  single  supplier  accounted  for more  than 10% of  Salant's  raw
material purchases during 1999.

Employees.  As of the  end of  1999,  the  Company  employed  approximately  600
persons,  of whom 200 were engaged in distribution  operations and the remainder
were employed in executive, marketing and sales, product design, engineering and
purchasing  activities  and in the  operation  of the  Company's  retail  outlet
stores.  The  Company  believes  that  its  relations  with  its  employees  are
satisfactory.  Pursuant to the business plan  implemented in connection with the
Plan, the Company no longer engages in  manufacturing  and has closed all of its
distribution  facilities,  except for its Winnsboro,  South  Carolina  facility,
which is covered by a collective bargaining agreement.

Competition. The apparel industry in the United States is highly competitive and
characterized by a relatively small number of multi-line  manufacturers (such as
the Company) and a larger number of specialty  manufacturers.  The Company faces
substantial  competition in its markets from companies in both categories.  Many
of the Company's  competitors have greater financial resources than the Company.
The Company  seeks to maintain its  competitive  position in the markets for its
branded  products on the basis of the strong brand  recognition  associated with
those  products  and,  with  respect  to all of its  products,  on the  basis of
styling, quality, fashion, price and customer service.

Environmental  Regulations.  Current environmental regulations have not had, and
in the opinion of the Company,  assuming the continuation of present conditions,
are  not  expected  to  have  a  material   effect  on  the  business,   capital
expenditures, earnings or competitive position of the Company.

Seasonality  of Business  and Backlog of Orders.  This  information  is included
under Item 7.  Management's  Discussion and Analysis of Financial  Condition and
Results of Operations.

Salant Children's Group - Discontinued  Operation. In December 1998, the Company
determined to restructure and sell its Children's Group,  which manufactured and
marketed  blanket  sleepers  primarily  using a  number  of  well-known  cartoon
characters created by, among others, DISNEY and WARNER BROTHERS.  The Children's
Group also marketed  pajamas under the DR DENTON and OSHGOSH  B'GOSH  trademarks
and  sleepwear  and  underwear  under the JOE  BOXER  trademark.  The  financial
statements of the Company  included in this report treat the Children's Group as
a discontinued operation.

Made  in  the  Shade  -  Discontinued  Operation.  In  June  1997,  the  Company
discontinued  the operations of the Made in the Shade  division,  which produced
and marketed  women's junior  sportswear under the Company owned trademarks MADE
IN THE SHADE and PRIME TIME. The financial statements of the Company included in
this report treat the Made in the Shade division as a discontinued operation.

ITEM 2.  PROPERTIES

The  Company's  principal  executive  offices  are located at 1114 Avenue of the
Americas,  New York, New York 10036. The Company's principal  properties consist
of a distribution  center in South Carolina and two buildings held for sale, one
in  Alabama  and one in Texas.  During  1999,  the  Company  sold or closed  all
manufacturing and distribution facilities,  except for the distribution facility
in South Carolina.  The Company owns approximately  360,179 square feet of space
devoted to distribution.  The Company leases approximately 87,374 square feet of
combined office, design and showroom space. As of the end of 1999, the Company's
Stores  division  operated 28 retail  outlet  stores,  comprising  approximately
62,808 square feet of selling  space,  all of which are leased.  Except as noted
above, substantially all of the owned and leased property of the Company is used
in   connection   with  its  men's   apparel   business  or  general   corporate
administrative functions.

The  Company   believes  that  its   facilities  and  equipment  are  adequately
maintained,  in good  operating  condition,  and are adequate for the  Company's
present needs.

ITEM 3.  LEGAL PROCEEDINGS

The  Company is a  defendant  in several  legal  actions.  In the opinion of the
Company's management, based upon the advice of the respective attorneys handling
such cases,  such actions are not expected to have a material  adverse effect on
the Company's  consolidated  financial  position,  results of operations or cash
flow. In addition, the Company notes the following legal proceedings.

1. Bankruptcy  Case. On the Filing Date,  Salant filed a voluntary  petition for
relief under chapter 11 of -------------------------- the Bankruptcy Code in the
United States  Bankruptcy Court for the Southern  District of New York (Case No.
98-10107  (CB)).  The Company filed its Plan on the Filing Date and the Plan was
confirmed by the Bankruptcy Court on April 16, 1999. The Plan was consummated on
the Effective  Date. The 1998 Case is currently  pending under the caption In re
Salant  Corporation,  Chapter 11 Case No.  98-10107 (CB).  All  pre-Filing  Date
--------------------------  non-disputed  and allowed claims against Salant have
been or will be satisfied  pursuant to the terms of the Plan.  Salant has filed,
and expects to continue to file,  objections  to all  disputed  pre-Filing  Date
claims asserted against Salant in the 1998 Case.

2.  Rodriguez-Olvera  Action. The Company was a defendant in a lawsuit captioned
Maria      Delores       ----------------------------------       --------------
Rodriguez-Olvera,  et al. v. Salant Corp., et al., Case No.  97-07-14605-CV,  in
the 365th Judicial  District  --------------------------------------------------
Court of Maverick County, Texas (the "Rodriguez-Olvera  Action"). The plaintiffs
in the  Rodriguez-Olvera  Action asserted  personal injury,  wrongful death, and
survival  claims  arising out of a bus accident  that  occurred on June 23, 1997
wherein  fourteen  persons were killed and twelve others claimed  injuries.  The
Rodriguez-Olvera  plaintiffs  sought  compensation  from the  Company  for those
deaths and injuries.  The Company's  insurers agreed to pay (and the Company has
been  informed that they did pay) $30 million to settle this matter in September
1999, and the Rodriguez-Olvera Action has been dismissed.

The  Company  is also a  defendant  in a related  declaratory  judgment  action,
captioned  Hartford  Fire  Insurance  Company v. Salant  Corporation,  Index No.
60233/98, in the Supreme Court of the State of New York, County of New York (the
"Hartford Action"),  relating to the Company's insurance coverage for the claims
that were the subject of the  Rodriguez-Olvera  Action.  In the Hartford Action,
the Company's  insurers seek a declaratory  judgment that the claims asserted in
the Rodriguez-Olvera Action are not covered under the policies that the insurers
had  issued.  The  Company's  insurers  nevertheless  provided  a defense to the
Company in the Rodriguez-Olvera Action, and as indicated above, paid $30 million
to settle the case without  prejudice to their positions in the Hartford Action.
Currently, there are discussions being held with a view to reaching an agreement
for the  settlement  of the  Hartford  Action;  if the  settlement  proposal  is
achieved as contemplated,  management believes there would be no material impact
on the Company's financial position or the results of operations. Pending such a
settlement  of  this  action,   Salant's   insurers  have  not  withdrawn  their
reservation  of rights,  and the  possibility  remains  that one or more of such
insurers will seek recourse against Salant.

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

During the fourth quarter of 1999, no matter was submitted to a vote of security
holders of Salant by means of the solicitation of proxies or otherwise.

                                     PART II

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

Salant's  common stock is  currently  trading on the  Over-the-Counter  Bulletin
Board under the trading  symbol  SLNT.OB.  On December 30, 1998,  the old common
stock suspended  trading on the New York Stock Exchange  ("NYSE").  The NYSE had
advised  Salant  that this  action was taken in view of the fact that Salant had
fallen below the NYSE's continued listing  criteria.  Subsequent to December 30,
1998, the old common stock was traded on the Over-the-Counter Bulletin Board.

The high and low sale  prices  per share of common  stock (old and new) for each
quarter of 1998 and 1999 are set forth below.  The price of the old common stock
is reflected for all of 1998 and the first two quarters of 1999, while the price
of the new common stock is  reflected in the third and fourth  quarters of 1999.
The  Company  did not  declare  or pay any  dividends  during  such  years.  The
Company's  financing  agreement  requires the  satisfaction of certain net worth
tests and other financial  benchmarks  prior to having the right to pay any cash
dividends.  As of January 1, 2000, the Company was  prohibited  from paying cash
dividends by reason of, among other things, these provisions.

          High and Low Sale Prices Per Share of the new Common Stock *

          Quarter                       High                      Low

          1999
          Fourth                        4.250                     1.060
          Third                         6.500                     4.120

          High and Low Sale Prices Per Share of the old Common Stock *

          Quarter                       High                      Low

          1999
          Second                        0.310                     0.125
          First                         0.200                     0.046

          1998
          Fourth                        0.500                     0.031
          Third                         0.875                     0.406
          Second                        0.813                     0.500
          First                         1.813                     0.375

* The new common stock was issued in conjunction  with the  restructuring of the
Company's debt pursuant to the Plan on the Effective Date, at which time the old
common stock was cancelled.  No adjustment has been made to the price of the old
common stock  reflected  above.  Although the Effective Date of the Plan was May
11, 1999,  trading of the  Company's new common stock did not occur until August
11, 1999,  therefore no prices are reflected for the second  quarter of 1999 for
the new common stock.

On March 20,  2000 there were 979  holders of record of shares of Common  Stock,
and the closing market price was $2.625.

All of the outstanding voting securities of the Company's subsidiaries are owned
beneficially  and  (except  for shares of certain  foreign  subsidiaries  of the
Company  owned of  record  by others  to  satisfy  local  laws) of record by the
Company.

ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA
(Amounts in thousands except share, per share and ratio data)

The following  selected  consolidated  financial  data as of January 2, 1999 and
January 1, 2000 and for each of the fiscal  years in the three year period ended
January 1, 2000 have been derived from the Consolidated  Financial Statements of
the  Company,  which have been  audited by Deloitte & Touche LLP,  whose  report
thereon appears under Item 8, "Financial Statements and Supplementary Data". The
selected  consolidated  financial  data for fiscal  years 1995 through 1997 have
been derived from the Company's audited consolidated financial statements, which
are not included  herein.  Such  consolidated  financial  data should be read in
conjunction  with Item 7,  "Management's  Discussion  and  Analysis of Financial
Condition  and  Results  of  Operations"  and  with the  Consolidated  Financial
Statements, including the related notes thereto, included elsewhere herein.
<TABLE>
<CAPTION>

<S>                                                          <C>           <C>         <C>          <C>          <C>
                                                        Jan. 01       Jan. 02     Jan. 03,     Dec. 28,     Dec. 30,
                                                           2000          1999        1998         1996         1995

                                                     (52 Weeks)    (52 Weeks)   (53 Weeks)   (52 Weeks)   (52 Weeks)

For The Year Ended:
  Continuing Operations:
    Net sales                                          $248,730     $300,586    $ 347,667     $ 371,958    $ 445,889

    Restructuring costs (a)                             (4,039)      (24,825)      (2,066)     (11,730)     (3,550)
    Loss from continuing operations                     (2,148)      (56,775)      (8,394)     (12,652)      (3,943)

    Discontinued Operations:
      Income/(loss) from operations, net of income taxes(1,955)      (10,163)   (10,464)        3,329          3,445
      Loss on disposal, net of income taxes                   -       (5,724)      (1,330)            -            -

    Extraordinary gain (b)                               24,703             -        2,100            -        1,000

    Net income/(loss)(a)                                 20,600      (72,662)     (18,088)      (9,323)          502

    Pro forma basic and diluted earnings/(loss) per share:
    Earnings/(loss) per share from continuing
     operations before extraordinary gain (a)           $(0.21)       $(5.68)$      (0.84)    $  (1.26)  $    (0.39)
    Earnings/(loss) per share from discontinued
     operations                                          (0.20)        (1.59)       (1.18)        0.33          0.34
    Earnings per share from extraordinary gain             2.47             -         0.21            -         0.10
    Pro forma basic and diluted earnings/(loss) per share (a)2.06      (7.27)       (1.81)       (0.93)         0.05



    Cash dividends per share                                  -             -            -            -            -

At Year End:
  Current assets                                        $93,331      $149,697    $147,631      $149,476     $163,031
  Total assets                                          121,803       176,129      228,583      231,717      251,340

  Current liabilities (c)                                32,069       201,766      180,898       56,032       59,074

  Long-term debt  (c)                                        --            --           --      106,231      110,040

  Deferred liabilities                                    4,133    5,2735,382        8,863       11,373
  Working capital/(deficiency)                           61,262      (52,069)     (33,267)       93,444      103,957
  Current ratio                                           2.9:1         0.7:1        0.8:1        2.7:1        2.8:1

  Shareholders' equity / (deficiency)                   $85,601     $(30,910)      $42,303      $60,591      $70,853
  Book value per share                                    $8.65       $(2.04)        $2.79        $4.01        $4.71
  Number of shares outstanding                            9,901        15,171       15,171       15,094       15,041
  Pro forma Book value per share                             --       $(3.09)        $4.23        $6.06        $7.09
  Pro forma number of shares outstanding                     --        10,000       10,000       10,000       10,000
</TABLE>


      (a)Includes,  for the year ended  January 1, 2000, a provision  for $4,039
     ($0.40 per pro forma share;  tax benefit not available)  for  restructuring
     costs  related  primarily to the  severance  for  employees  terminated  in
     connection  with the  Company's  restructuring  and exit from its non Perry
     Ellis  businesses.  For the year  ended  January 2, 1999,  a  provision  of
     $24,825  ($2.48  per pro  forma  share;  tax  benefit  not  available)  for
     restructuring  costs primarily related to the Company's  intention to focus
     solely on its Perry Ellis men's apparel business and, as a result, exit its
     non-Perry Ellis menswear  divisions.  For the year ended January 3, 1998, a
     provision of $2,066 ($0.21 per pro forma share;  tax benefit not available)
     for  restructuring  costs  principally  related to (i) $3,530 in connection
     with the decision in the fourth  quarter to close all retail  outlet stores
     other than Perry Ellis outlet  stores and (ii) the  reversal of  previously
     recorded restructuring  provisions of $1,464,  primarily resulting from the
     settlement of liabilities for less than the carrying  amount,  resulting in
     the  reversal of the excess  portion of the  provision.  For the year ended
     December 28, 1996, a provision of $11,730  ($1.17 per pro forma share;  tax
     benefit not available) for restructuring  costs principally  related to (i)
     the write-off of goodwill and the  write-down of other assets for a product
     line which has been put up for sale,  (ii) the write-off of certain  assets
     and  accrual for future  royalties  for a licensed  product  line and (iii)
     employee costs related to closing  certain  facilities.  For the year ended
     December 30, 1995,  a provision of $3,550  ($0.36 per pro forma share;  tax
     benefit not available) for restructuring  costs principally  related to (i)
     fixed  asset  write-downs  at  locations  to be closed  and (ii)  inventory
     markdowns for discontinued product lines. See Note 3. - Restructuring Costs
     to  the  Consolidated   Financial  Statements  for  additional   discussion
     regarding years 1997-1999.

(b)  Includes,  for the year ended January 1, 2000, a gain of $24,703 ($2.47 per
     pro forma share)  related to the conversion of all the Senior Notes and the
     related unpaid interest into equity.  For the year ended January 3, 1998, a
     gain of $2,100  ($0.21  per pro forma  share)  related to the  reversal  of
     excess liabilities  previously  provided for the anticipated  settlement of
     claims  arising  from the 1990  Chapter 11  proceeding.  For the year ended
     December  30, 1995,  a gain of $1,000  ($0.10 per pro forma share)  related
     also to the reversal of 1990 Chapter 11 amounts.

(c)  At January 1, 2000 the Senior  Notes had been  converted  into  equity.  At
     January 2, 1999 and January 3, 1998,  long term debt of  $104,879  has been
     classified as liabilities  subject to compromise  and a current  liability,
     respectively.  See Note 1. - Financial  Reorganization  to the Consolidated
     Financial Statements.


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

Overview

In  connection  with the 1998 Case,  Salant  filed the Plan with the  Bankruptcy
Court in order to implement its  restructuring.  The restructuring  consisted of
two key components;  (i) the conversion of all principal and accrued interest on
the Senior  Notes  into 95% of new  Common  Stock of Salant and (ii) the sale or
disposal  of  substantially  all of the  Company's  businesses  other  than  the
businesses conducted under the Perry Ellis Trademarks.

Results of Operations

Fiscal 1999 Compared with Fiscal 1998

   Net Sales

In fiscal 1999, net sales of $248.4 million were $52.2 million,  or 17.4%,  less
than net sales of $300.6 million in fiscal 1998. The decrease  resulted from the
Company's  exit from its  non-Perry  Ellis  businesses  during 1999,  namely its
Manhattan,  John  Henry,  Gant and private  label  dress  shirt and  accessories
businesses  and  its  private  label  bottoms  business.  Net  sales  for  these
businesses  in fiscal 1999 were $44.5  million,  compared  to $112.7  million in
fiscal 1998, a decrease of $68.3 million,  or 60.6%. Net sales for the Company's
ongoing  Perry Ellis and private  label  businesses  for fiscal 1999 were $203.9
million,  an increase of $16.0 million,  or 8.5%,  over fiscal 1998 net sales of
$187.9 million.  Of the increase,  net sales of the Company's Perry Ellis retail
outlet  stores (28 stores in fiscal 1999  compared to 20 stores in fiscal  1998)
increased  $3.4  million,  or 25.0%,  net sales of Perry Ellis men's  apparel at
wholesale  increased  $12.4  million,  or 7.5%,  and net sales of the  Company's
private label accessories business increased $.2 million, or 2.1%.

  Gross Profit

In fiscal 1999,  gross profit of $56.0  million was $6.4 million less than gross
profit of $62.4 million in fiscal 1998. Gross profit margin increased from 20.8%
in fiscal 1998 to 22.5% in fiscal 1999.  Gross profit for the Company's  ongoing
Perry Ellis and private label businesses  increased to $57.5 million,  or 28.2%,
in fiscal 1999 compared to $51.8 million, or 27.6%, in fiscal 1998. Gross profit
for the non-Perry Ellis  businesses  exited by the Company in fiscal 1999, noted
above,  was $(1.5) million,  or (3.5)%,  compared to $10.6 million,  or 9.4%, in
fiscal 1998.  The decrease  resulted from  markdowns  required to dispose of the
inventories of these businesses.

   Selling, General and Administrative Expenses

Selling,  general and administrative expenses (S,G&A) for fiscal 1999 were $54.9
million,  or 22.1% of net  sales,  compared  to $72.0  million,  or 23.9% of net
sales,  in fiscal 1998, a decrease of $17.1  million,  or 23.7%.  As part of the
Company's  restructuring noted above, headcount in S,G&A was reduced from 525 in
fiscal  1998 to 400 in fiscal  1999,  resulting  in savings  of $8.3  million in
salaries and related benefits. In addition,  the Company realized savings due to
the reduced overhead  associated with the  reorganization of the Company,  along
with the reduction of consulting fees.

   Royalty Income

Royalty income decreased $3.4 million,  or 64.2%, to $1.9 million in fiscal 1999
from $5.3 million in fiscal 1998.  The decrease in royalties was due to the sale
of the John Henry and Manhattan  trademarks,  which  resulted in royalty  income
from these  trademarks for only the first quarter of 1999 versus the entire year
of 1998.

   Provision for Restructuring

During  the  first  quarter  of 1999,  the  Company  recorded  a  provision  for
restructuring  of $4.0  million,  primarily  for  severance  pay  for  employees
terminated  in 1999, as part of the  Company's  restructuring  and exit from its
non-Perry Ellis businesses.  During 1999 the Company incurred approximately $5.7
million  (mostly cash  related  items) of  restructuring  costs that were either
provided for in 1999 or included in the restructuring reserve balance at January
2, 1999.  These costs  included  severance  and employee  costs of $4.1 million,
lease  payments  of $0.8  million,  royalty  payments  of $0.5  million  and the
remaining balance for other restructuring costs, offset by $0.4 million of gains
from the sale of fixed assets.

At January  1, 2000 the  Company  had a building  in  Andalusia,  Alabama  still
available for sale. The Company is investigating,  through various channels,  an
efficient and timely  disposal/sale  of this building.  Additional costs of $0.1
million are  anticipated  and accrued due to holding the Andalusia  facility and
additional  employee  related  expenses  of $0.2  million  were  accrued and are
anticipated  for 2000. The additional  employee  related  expenses are primarily
related to increased  insurance costs for closed  facilities.  These  additional
costs were offset by the favorable results of settlements of royalties and other
restructuring costs of $0.1 million and $0.2 million, respectively.

In fiscal 1998,  the Company  recorded a provision  for  restructuring  of $24.8
million, also related to the Company's exit from its non-Perry Ellis businesses.
The  provision  included  $16.2  million  for the loss on sale of the  Company's
Manhattan and John Henry trademarks,  goodwill and related operating assets. The
provision also included (i) $6.3 million for write downs of property,  plant and
equipment of the Company's manufacturing,  distribution and office facilities to
be disposed of as part of its restructuring, (ii) $2.9 million for the write off
of other assets,  severance  costs,  lease  termination and other  restructuring
costs,  and (iii) an offset of $.6 million relating to adjustments of previously
recorded  restructuring  reserves and the gain on sale of a facility in Thomson,
Georgia.

   Interest Expense, Net

For fiscal 1999, net interest  expense was $.4 million compared to $13.9 million
in fiscal 1998.  The decrease  resulted  primarily from the conversion of $104.9
million aggregate  principal face amount of Senior Notes into equity, as part of
the  Company's  restructuring  in  fiscal  1999.  In  addition,  the sale of the
Company's  Manhattan and John Henry  trademarks for $27 million,  as well as the
Company's   operating  cash  flow  for  fiscal  1999  of  $45.2   million,   has
significantly  reduced the Company's  borrowing needs under its credit facility.
At  January 1, 2000 there were no  borrowings  outstanding  under the  Company's
credit facility, compared to $38.5 million at January 2, 1999.



   Loss from Continuing Operations

In fiscal 1999, the Company's loss from continuing  operations was $2.1 million,
or $.21 per pro forma share,  compared to a loss of $56.8 million,  or $5.68 per
pro forma share, in fiscal 1998.

    Earnings before Interest, Taxes,  Depreciation,  Amortization,
    Reorganization Costs, Debt Restructuring Costs, Restructuring Charges,
    Discontinued Operations, and Extraordinary Gain

Earnings before  interest,  taxes,  depreciation,  amortization,  reorganization
costs, debt restructuring costs, restructuring charges,  discontinued operations
and  extraordinary  gain was $8.6  million  (3.5% of net sales) in fiscal  1999,
compared to $3.3 million (1.1% of net sales) in fiscal 1998, an increase of $5.3
million,  or  160.6%.  The  Company  believes  this  information  is  helpful in
understanding  cash flow from operations which is available for debt service and
capital  expenditures.  This  measure  is not  included  in  generally  accepted
accounting  principles and is not a substitute for operating income,  net income
or cash flows from operating activities.

   Extraordinary Gain

In fiscal 1999, the Company recorded an extraordinary gain of $24.7 million,  or
$2.47 per pro forma  share,  on the  conversion  of its Senior Notes and related
unpaid interest into New Common Stock, as part of its restructuring. The holders
of the Senior Notes  exchanged  $104.9 million of Senior Notes and $14.8 million
of accrued  and unpaid  interest  for 9.5  million  shares of New Common  Stock,
representing 95% of the issued and outstanding shares of the Company.

  Loss from Discontinued Operations

In fiscal 1999,  the Company  recorded a charge of $2.0  million  related to the
discontinuance  of its Children's  Group.  The charge of $2.0 million related to
additional  losses incurred during the phase-out period and additional  expenses
incurred in disposing of the assets related to the Children's business.

In fiscal 1998, the Company recorded a charge of $15.9 million, also relating to
the discontinuance of the Children's Group. Of the $15.9 million,  $10.2 million
related  to  operating  losses  of the  Children's  Group  prior  to the date of
discontinuance,  and $5.7 million represented  estimated future operating losses
and the estimated loss on the sale of the business.  The $5.7 million  consisted
of asset write-offs of $2.9 million, estimated losses from operations during the
phase out period of $1.6 million,  severance pay of $1.5 million and royalty and
lease  payments  of $1.5  million,  offset by $1.8  million  for the sale of the
Company's Dr. Denton trademark.

The  Children's  Group had net sales of $5.5 million and $42.8 million in fiscal
1999 and 1998, respectively.

  Net Income/(Loss)

Net income  for fiscal  1999 was $20.6  million,  or $2.06 per pro forma  share,
compared to a net loss of $72.7 million, or $7.27 per pro forma share for fiscal
1998.  In addition to the items noted above,  the  improvement  was due to lower
chapter 11 reorganization costs ($.5 million in 1999 as compared to $3.2 million
in 1998) and a debt restructuring charge of $8.6 million recorded in 1998.
Fiscal 1998 Compared with Fiscal 1997

  Net Sales

In fiscal 1998 net sales of $300.6  million were $47.1 million,  or 13.5%,  less
than the $347.7  million of net sales in fiscal 1997.  Sales of men's apparel at
wholesale  decreased by $39.1 million,  or 12.0%,  in fiscal 1998. This decrease
resulted  primarily from (i) a $19.4 million reduction in sales of men's bottoms
primarily  due to reduced  demand for basic denim  products and the phase-out of
the Company's  discontinued  Thomson  brand;  (ii) an $8.5 million  reduction in
non-Perry  Ellis product sales,  principally as a result of lower sales of Gant,
John Henry and  Manhattan  dress  shirts  and the  discontinuance  of  Manhattan
sportswear;  and (iii) a $7.1 million decrease in Perry Ellis dress shirt sales,
primarily as a result of the planned reduction of sales to off price channels of
distribution.

Sales by the retail  outlet  stores  division in fiscal 1998  decreased  by $8.0
million,  or 37.0%, from fiscal 1997. This reduction was primarily caused by the
elimination  of all  non-Perry  Ellis retail  outlet stores at the end of fiscal
1997.

  Gross Profit

In fiscal 1998 gross  profit of $62.4  million was $14.9  million  less than the
$77.3 million of gross profit in fiscal 1997. The gross profit margin  decreased
from 22.2% in fiscal 1997 to 20.8% in fiscal  1998.  The decline in gross profit
and gross profit margin was primarily  attributable to (i)  approximately  $10.5
million  to lower  sales and (ii)  approximately  $4.4  million of loss of gross
profit,  relating to the markdowns  taken on the  disposition of non-Perry Ellis
inventories in connection with the Company's restructuring.

  Selling General and Administrative Expenses

Selling, General, and Administrative (S,G&A) expenses for fiscal 1998 were $72.0
million (23.9% of net sales)  compared to $73.2 million (21.0% of net sales) for
fiscal 1997. Through the first nine months of fiscal 1998, the Company decreased
its SG&A expenses by approximately $6.3 million. This decrease in SG&A expenses,
however,  was  substantially  offset in the fourth quarter of fiscal 1998 by (i)
approximately $2.8 million of additional bonus needs required for the management
retention  program in connection  with the Company's  restructuring  activities,
(ii) the write-off of approximately  $2.2 million of  miscellaneous  receivables
from  a  company  that  ceased   doing   business  in  January  1999  and  (iii)
approximately  $1.5 million in additional  cost  relating to the Company's  Year
2000 Compliance Program.

  Provision for Restructuring

In fiscal 1998,  the Company  recorded a provision  for  restructuring  of $24.8
million  related to the decision of the Company to focus  primarily on its Perry
Ellis  men's  apparel  business,  and in  connection  therewith,  exit its other
businesses.  Subsequent  to  January  2,  1999,  Salant  sold its John Henry and
Manhattan  businesses  pursuant to a Purchase and Sale Agreement  dated December
28, 1998. These businesses included the John Henry, Manhattan and Lady Manhattan
trade names and the related  goodwill,  the leasehold  interest in a dress shirt
facility  located in Valle  Hermosa,  Mexico,  and the equipment  located at the
Valle  Hermosa  facility and at the  Company's  facility  located in  Andalusia,
Alabama. These assets had a net book value of $43.2 million (consisting of $30.0
million for  goodwill,  $9.7  million for  licenses  and $3.5  million for fixed
assets) and were sold for $27.0  million,  resulting in a loss of $16.2 million.
At the end of fiscal 1998 the net  realizable  value of $27.0  million for these
assets was included in the  consolidated  balance sheet as assets held for sale.
The assets not sold in this  transaction  were also  included as assets held for
sale and were recorded at their estimated net realizable value of $1.4 million.

In addition to the $16.2 million above, the restructuring provision consisted of
(i) $6.3 million of additional property,  plant and equipment write-downs,  (ii)
$2.9  million for the write off of other  assets,  severance  costs,  lease exit
costs and other  restructuring  costs and (iii)  offset by $0.6 million from the
reversal of previously recorded  restructuring reserves primarily resulting from
the settlement of liabilities  for less than the carrying amount and the gain on
the sale of the Thomson  manufacturing and distribution  facility. As of January
2, 1999, $3.6 million remained in the  restructuring  reserve relating to future
lease payments of $0.8 million, royalties of $0.6 million, of which $0.5 million
related to a1996 restructuring provision for future minimum royalties, severance
of $0.8 million and other miscellaneous restructuring costs of $1.3 million.

In fiscal  1997,  the Company  recorded a provision  for  restructuring  of $2.1
million,  consisting of (i) a $3.5 million  provision related to the decision in
the  fourth  quarter  to close all retail  outlet  stores  other than the outlet
stores that would be used as Perry Ellis outlet  stores and (ii) the reversal of
previously  recorded  restructuring  provisions of $1.4 million,  including $0.3
million  in the fourth  quarter,  primarily  resulting  from the  settlement  of
liabilities  for less than the  carrying  amount,  as a result  of a  settlement
agreement  and license  arrangement  with the former owners of the Company's JJ.
Farmer  trademark,  resulting  in the  reversal  of the  excess  portion  of the
provision.

  Interest Expense, Net

Net  interest  expense was $13.9  million for fiscal  1998  compared  with $14.6
million for fiscal 1997. The decrease in interest expense related primarily to a
lower average borrowing rate.

  Loss from Continuing Operations before extraordinary gain

In fiscal 1998, the Company  reported a loss from continuing  operations  before
extraordinary gain of $56.8 million or $5.68 per pro forma share,  compared to a
loss from continuing  operations before  extraordinary gain of $8.4 million,  or
$0.84 per pro forma share in fiscal 1997.

   Earnings before Interest,  Taxes,  Depreciation,  Amortization,
   Reorganization Costs, Debt Restructuring Costs,Restructuring Charges,
   Discontinued Operations, and Extraordinary Gain

Earnings before  interest,  taxes,  depreciation,  amortization,  reorganization
costs, debt restructuring costs, restructuring charges, discontinued operations,
and  extraordinary  gain was $3.3  million  (1.1% of net sales) in fiscal  1998,
compared to $17.2  million (5% of net sales) in fiscal 1997, a decrease of $13.9
million,   or  81%.  The  Company   believes  this  information  is  helpful  in
understanding  cash flow from  operations that is available for debt service and
capital  expenditures.  This  measure is not  contained  in  generally  accepted
accounting  principles and is not a substitute for operating income,  net income
or net cash flows from operating activities.

  Loss from Discontinued Operations

For fiscal 1998, the Company recognized a charge of $15.9 million reflecting the
discontinuance  of the Children's  Group.  Of the $15.9  million,  $10.2 million
related  to  operating  losses  prior  to the  date  the  decision  was  made to
discontinue the business and $5.7 million represented estimated future operating
losses  and the loss  from  the  sale of the  business.  The  $5.7  million  was
comprised of (i) a write-off of assets of $2.9 million,  (ii) an estimated  loss
from  operations  of $1.6  million,  (iii)  severance  of $1.5  million and (iv)
royalty and lease payments of $1.5 million,  offset by $1.8 million for the sale
of the Dr. Denton trademark. The Children's Group had net sales of $42.8 million
in 1998 and $49.3 million in 1997.

In June 1997, the Company  discontinued  the operations of the Made in the Shade
division,  which produced and marketed women's junior sportswear.  The loss from
operations of the division in 1997 was $8.1 million,  which included a charge of
$4.5 million for the write-off of goodwill.  Additionally,  in 1997, the Company
recorded a charge of $1.3 million to accrue for expected operating losses during
the phase-out period. In addition, the Company discontinued the Children's Group
in 1998 and the loss from  operations  of $2.3  million was added to the loss of
$8.1 million from the discontinued operations of the Made in the Shade division.

  Net Loss

As a result of the above,  the net loss for fiscal  1998 was $72.7  million,  or
$7.27 per pro forma share,  compared with a net loss of $18.1 million,  or $1.81
per pro forma share for fiscal 1997.

Liquidity and Capital Resources

Upon  commencement of the 1998 Case, Salant filed a motion seeking the authority
of the Bankruptcy  Court to enter into a revolving  credit facility with The CIT
Group/Commercial  Services,  Inc.  ("CIT"),  Salant's  existing  working capital
lender  pursuant to and in  accordance  with the terms of the  Ratification  and
Amendment  Agreement,  dated as of December  29, 1998 (the  "Amendment")  which,
together  with  related  documents  are  referred to as the "CIT DIP  Facility,"
effective  as of the Filing Date,  which would  replace the  Company's  existing
working capital facility under its then existing credit  agreement.  On December
29, 1998, the Bankruptcy Court approved the CIT DIP Facility on an interim basis
and on January 19, 1999 the Bankruptcy  Court approved the CIT DIP Facility on a
final basis.

The CIT DIP Facility  provided for a general  working capital  facility,  in the
form of direct borrowings and letters of credit, up to $85 million subject to an
asset-based  borrowing formula. The CIT DIP Facility consisted of an $85 million
revolving credit facility,  with a $30 million letter of credit subfacility.  As
collateral for borrowings under the CIT DIP Facility, the Company granted to CIT
a first  priority  lien on and  security  interest in  substantially  all of the
Company's   assets   and   those  of  its   subsidiaries,   with   superpriority
administrative claim status over any and all administrative expenses in the 1998
Case,  subject to a $2 million  carve-out for professional  fees and the fees of
the United States Trustee.

On May 11, 1999,  the  effective  date of the Plan,  the Company  entered into a
syndicated  revolving credit facility (the "Credit Agreement") with CIT pursuant
to and in  accordance  with the terms of a commitment  letter dated  December 7,
1998, which replaced the CIT DIP Facility described above.

The Credit  Agreement  provides for a general working capital  facility,  in the
form of direct borrowings and letters of credit, up to $85 million subject to an
asset-based  borrowing formula.  The Credit Agreement consists of an $85 million
revolving  credit  facility,  with  at  least a $35  million  letter  of  credit
subfacility.  As  collateral  for  borrowings  under the Credit  Agreement,  the
Company  granted  to CIT  and a  syndicate  of  lenders  arranged  by  CIT  (the
"Lenders") a first priority lien on and security  interest in substantially  all
of the assets of the Company.  The Credit Agreement has an initial term of three
years.

The Credit  Agreement  also provides,  among other things,  that (i) the Company
will be charged an interest  rate on direct  borrowings of .25% in excess of the
Prime Rate or at the Company's request,  2.25% in excess of LIBOR (as defined in
the Credit Agreement), and (ii) the Lenders may, in their sole discretion,  make
loans to the  Company  in excess of the  borrowing  formula  but  within the $85
million limit of the revolving  credit  facility.  The Company is required under
the agreement to maintain certain financial  covenants  relating to consolidated
tangible net worth, capital expenditures, maximum pre-tax losses/minimum pre-tax
income and minimum interest coverage ratios.  The Company was in compliance with
all applicable covenants at January 1, 2000.

Pursuant to the Credit  Agreement,  the Company  will pay or paid the  following
fees: (i) a documentary  letter of credit fee of 1/8 of 1.0% on issuance and 1/8
of 1.0% on  negotiation;  (ii) a standby  letter of credit fee of 1.0% per annum
plus bank charges; (iii) a commitment fee of $325 thousand;  (iv) an unused line
fee of .25%;  (v) an agency fee of $100 thousand  (only for the second and third
years of the term of the Credit Agreement);  (vi) a collateral management fee of
$8,333 per month; and (vii) a field exam fee of $750 per day plus  out-of-pocket
expenses.

At the end of fiscal 1999, there were no direct borrowings outstanding,  letters
of credit  outstanding  under the Credit  Agreement  were $30.1  million and the
Company  had unused  availability,  based on  outstanding  letters of credit and
existing  collateral,  of $16.5 million. In addition to the unused availability,
the  Company  had  approximately  $30.1  million of cash  available  to fund its
operations.  At the end of fiscal 1998,  direct borrowings and letters of credit
outstanding were $38.5 million and $24.3 million,  respectively, and the Company
had unused availability of $13.0 million. During fiscal 1999, the maximum amount
of direct  borrowings  and  letters  of  credit  outstanding  under  the  Credit
Agreement was $66.9 million,  at which time the Company had unused  availability
of $13.0  million.  During fiscal 1998, the maximum  aggregate  amount of direct
borrowings and letters of credit outstanding at any one time was $100.9 million,
at which time the Company had unused availability of $8.4 million.

The Company's  cash provided by operating  activities  for fiscal 1999 was $45.2
million,  which primarily reflects (i) a decrease in inventory of $27.9 million,
(ii) a decrease of accounts  receivable of $22.4  million,  (iii) an increase in
accounts payable of $9.3 million, (iv) cash provided by discontinued  operations
of $6.2 million and (v) non-cash charges, such as depreciation, amortization and
other  assets  of $ 6.1  million.  These  items  were  offset by a  decrease  in
liabilities  subject to  compromise  of $19.6  million,  a  decrease  in accrued
liabilities of $1.2 million, a decrease in deferred  liabilities of $1.1 million
and a loss from continuing operations of $2.1 million.

Cash provided by investing  activities for fiscal 1999 was $21.2 million,  which
reflects proceeds from the sale of assets of $28.3 million,  partially offset by
$4.6 million of capital  expenditures  and $2.5 million for the  installation of
store  fixtures in department  stores.  During fiscal 2000, the Company plans to
make  capital  expenditures  of  approximately  $3.1  million  and to  spend  an
additional  $2.0 million for the  installation  of store  fixtures in department
stores.

Cash used in financing  activities in fiscal 1999 was $37.6  million,  primarily
attributable to repayment of short-term borrowings under the Company's financing
agreement.

New Accounting Standards

In June 1998,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standard  ("SFAS") No. 133,  "Accounting  for  Derivative
Instruments and Hedging Activities".  The statement  establishes  accounting and
reporting  standards  requiring that derivative  instruments  (including certain
derivative  instruments  embedded in other contracts) be recorded in the balance
sheet as either an asset or  liability  measured  at fair value.  The  statement
requires that changes in a  derivative's  fair value be recognized  currently in
earnings unless specific hedge accounting  criteria are met. Special  accounting
for qualifying  hedges allows a derivative's  gains and losses to offset related
results on the hedged item in the income  statement  and requires that a company
formally document,  designate, and assess the effectiveness of transactions that
receive hedge  accounting.  SFAS No. 133 is effective for fiscal years beginning
after June 15, 2000;  however,  it may be adopted earlier.  It cannot be applied
retroactively  to financial  statements of prior  periods.  The Company does not
currently use  derivatives  or hedges and the impact and timing of adopting SFAS
No. 133 on its financial statements has not been determined.

Year 2000 Compliance Issues

The Company has not experienced any material Year 2000 computer problems and, to
the best of the  Company's  knowledge,  its  suppliers,  customers and financial
institutions also have not experienced any material Year 2000 computer problems.
To date,  the Company's  computer and the computers  used to operate the systems
within the Company's office and distribution facilities (i.e. the conveyors, air
conditioning,  telephone and security systems) have functioned properly into the
year 2000.  As a result,  the Company has been able to service its customers and
communicate with its suppliers without disruption.

Seasonality

Although the Company  typically  introduces  and  withdraws  various  individual
products  throughout  the year,  its principal  products are organized  into the
customary  retail  Spring,  Transition,  Fall and Holiday  seasonal  lines.  The
Company's  products are designed as much as one year in advance and manufactured
approximately one season in advance of the related retail selling season.

Backlog

The  Company  does not  consider  the  amount  of its  backlog  of  orders to be
significant  to an  understanding  of its  business  primarily  due to increased
utilization of EDI technology, which provides for the electronic transmission of
orders from customers' computers to the Company's computers. As a result, orders
are placed closer to the required  delivery date than had been the case prior to
EDI  technology.  At March  20,  2000,  the  Company's  backlog  of  orders  was
approximately  $41.9 million,  which was 7.9% less than the backlog of orders of
approximately  $45.5 million that existed at April 5, 1999.  The decrease is due
to the  Company's  decision to focus  primarily on its Perry Ellis  business and
exit from its non-Perry  Ellis apparel  businesses  and its  Children's  Apparel
Group.

Factors that May Affect Future Results and Financial Condition

This report  contains or incorporates  by reference  forward-looking  statements
within the  meaning of the  Private  Securities  Litigation  Reform Act of 1995.
Where any such forward-looking statement includes a statement of the assumptions
or bases underlying such  forward-looking  statement,  the Company cautions that
assumed  facts or bases  almost  always  vary from the actual  results,  and the
differences  between  assumed facts or bases and actual results can be material,
depending on the circumstances.  Where, in any  forward-looking  statement,  the
Company  or its  management  expresses  an  expectation  or  belief as to future
results,  there can be no assurance  that the  statement of the  expectation  or
belief  will  result  or be  achieved  or  accomplished.  The  words  "believe",
"expect",  "estimate",  "project",  "seek", "anticipate" and similar expressions
may identify forward-looking  statements. The Company's future operating results
and financial condition are dependent upon the Company's ability to successfully
design,  manufacture,  import  and  market  apparel.  Taking  into  account  the
foregoing,  the following are  identified as important  factors that could cause
results  to  differ  materially  from  those  expressed  in any  forward-looking
statement made by, or on behalf of, the Company:

Competition. The apparel industry in the United States is highly competitive and
characterized by a relatively small number of multi-line  manufacturers (such as
the Company) and a large number of specialty  manufacturers.  The Company  faces
substantial  competition in its markets from  manufacturers  in both categories.
Many of the Company's  competitors  have greater  financial  resources  than the
Company.  The Company also competes for private label programs with the internal
sourcing organizations of many of its own customers.

Strategic  Initiatives.   Management  of  the  Company  is  considering  various
strategic  opportunities,  including  but not limited to, new  menswear  license
and/or acquisitions.  Management is also exploring ways to increase productivity
and efficiency,  and to reduce the cost structures of its respective businesses.
Through this process  management  expects to increase its distribution  channels
and achieve  effective  economies of scale.  No assurance  may be given that any
transactions resulting from this process will be announced or completed.

Apparel  Industry  Cycles  and other  Economic  Factors.  The  apparel  industry
historically has been subject to substantial  cyclical variation,  with consumer
spending on apparel tending to decline during recessionary periods. A decline in
the general economy or  uncertainties  regarding  future economic  prospects may
affect consumer  spending habits,  which, in turn, could have a material adverse
effect on the Company's results of operations and financial condition.

Retail  Environment.   Various  retailers,   including  some  of  the  Company's
customers,  have  experienced  declines in revenue and profits in recent periods
and some have been forced to file for bankruptcy protection.  To the extent that
these  financial  difficulties  continue,  there  can be no  assurance  that the
Company's  financial  condition and results of operations would not be adversely
affected.

Seasonality of Business and Fashion Risk. The Company's  principal  products are
organized  into seasonal lines for resale at the retail level during the Spring,
Transition,  Fall and Holiday  Seasons.  Typically,  the Company's  products are
designed  as much as one year in  advance  and  manufactured  approximately  one
season in advance of the related retail selling season. Accordingly, the success
of the  Company's  products is often  dependent on the ability of the Company to
successfully  anticipate  the needs of the  Company's  retail  customers and the
tastes of the  ultimate  consumer  up to a year  prior to the  relevant  selling
season.

Foreign  Operations.  The Company's  foreign sourcing  operations are subject to
various  risks  of  doing  business  abroad,   including  currency  fluctuations
(although  the  predominant  currency used is the U.S.  dollar),  quotas and, in
certain parts of the world, political instability. Any substantial disruption of
its relationship with its foreign suppliers could adversely affect the Company's
operations.  Some of the  Company's  imported  merchandise  is subject to United
States  Customs  duties.  In addition,  bilateral  agreements  between the major
exporting countries and the United States impose quotas,  which limit the amount
of  certain  categories  of  merchandise  that may be  imported  into the United
States. Any material increase in duty levels,  material decrease in quota levels
or material  decrease in available quota  allocation  could adversely affect the
Company's  operations.  The Company's  operations in Asia are subject to certain
political  and  economic  risks   including,   but  not  limited  to,  political
instability,  changing tax and trade  regulations and currency  devaluations and
controls.  Although the Company has  experienced  no material  foreign  currency
transaction  losses,  its  operations  in the region are subject to an increased
level of  economic  instability.  The  impact of these  events on the  Company's
business,  and in particular  its sources of supply cannot be determined at this
time.

Dependence  on  Contract  Manufacturing.  As of  January 1,  2000,  the  Company
produced  87% of all  of its  products  (in  units)  through  arrangements  with
independent contract manufacturers.  As the Company has closed its manufacturing
facilities during 1999, the use of independent contracts will increase in fiscal
year 2000. The use of such  contractors and the resulting lack of direct control
could subject the Company to difficulty in obtaining timely delivery of products
of acceptable quality. In addition, as is customary in the industry, the Company
does not have any  long-term  contracts  with its  fabric  suppliers  or product
manufacturers.  While the Company is not  dependent  on one  particular  product
manufacturer  or raw  material  supplier,  the  loss  of  several  such  product
manufacturers  and/or raw  material  suppliers  in a given  season  could have a
material adverse effect on the Company's performance.

Because  of the  foregoing  factors,  as well as  other  factors  affecting  the
Company's operating results and financial condition,  past financial performance
should not be considered to be a reliable indicator of future  performance,  and
investors are cautioned not to use  historical  trends to anticipate  results or
trends in the future.  In addition,  the Company's  participation  in the highly
competitive  apparel  industry  often results in  significant  volatility in the
Company's common stock price.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company does not engage in the trading of market risk sensitive  instruments
in the normal  course of business.  Financing  arrangements  for the Company are
subject to  variable  interest  rates  including  rates  primarily  based on the
Reference  Rate (as defined in the Credit  Agreement),  with a LIBOR option.  An
analysis  of the  Credit  Agreement  can be found in Note 9 to the  Consolidated
Financial  Statements,  Financing  Agreements,  included  in this report of Form
10-K. On January 1, 2000 there were no direct  borrowings  outstanding under the
Credit Agreement.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Independent Auditors' Report

To the Board of Directors and Stockholders of Salant Corporation:

We  have  audited  the  accompanying   consolidated  balance  sheets  of  Salant
Corporation and  subsidiaries  (the "Company") as of January 1, 2000 and January
2, 1999, and the related  consolidated  statements of operations,  comprehensive
income,  shareholders'  equity/deficiency  and cash  flows for the  years  ended
January 1, 2000,  January 2, 1999 and January 3, 1998.  Our audits also included
the financial statement schedule listed in the index at Item 14. These financial
statements  and  financial  statement  schedule  are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements and financial statement schedule based on our audits.

We  conducted  our  audits  in  accordance  with  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 Salant  Corporation and subsidiaries as of
January 1, 2000 and January 2, 1999,  the results of their  operations and their
cash flows for the years ended  January 1, 2000,  January 2, 1999 and January 3,
1998 in conformity with generally accepted accounting  principles.  Also, in our
opinion,  the financial statement  schedule,  when considered in relation to the
basic consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.

As discussed in Note 1 to the financial  statements,  the  Bankruptcy  Court has
entered an order confirming the Plan of Reorganization which became effective on
May 11, 1999.



/s/ Deloitte & Touche LLP


March 6, 2000
New York, New York

<TABLE>
<CAPTION>



                       Salant Corporation and Subsidiaries
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  (Amounts in thousands, except per share data)

                                                                                              Year Ended
                                                             -------------------------------------------
                                                             January 1,            January 2,            January 3,
                                                                   2000                  1999                  1998
                                                          -------------         -------------         -------------


<S>                                                          <C>                   <C>                  <C>
Net sales                                                    $  248,370            $  300,586           $   347,667
Cost of goods sold                                              192,391               238,192               270,328
                                                           ------------           -----------           -----------


Gross profit                                                     55,979                62,394                77,339

Selling, general and administrative expenses                    (54,909)              (71,999)              (73,169)
Royalty income                                                    1,945                 5,254                 5,596
Goodwill amortization                                              (519)               (1,881)               (1,881)
Other income, net                                                   579                   199                   564
Restructuring costs (Note 3)                                     (4,039)              (24,825)               (2,066)

Reorganization costs (Note 1)                                      (500)               (3,200)                   --
Debt restructuring costs (Note 10)                                   --                (8,633)                   --
                                                       ----------------            -----------     ----------------
(Loss)/Income from continuing operations before interest,
  income taxes and extraordinary gain                            (1,464)              (42,691)                6,383
Interest expense, net (Notes 9 and 10)                              439                13,944                14,610
                                                         --------------            ----------          ------------


Loss from continuing operations
  before income taxes and extraordinary gain                     (1,903)              (56,635)              ( 8,227)

Income taxes (Note 12)                                              245                   140                   167
                                                         --------------           ------------       --------------


Loss from continuing operations
  before extraordinary gain                                      (2,148)              (56,775)              ( 8,394)
Discontinued operations (Note 17):
  Loss from discontinued operations                              (1,955)              (10,163)              (10,464)

  Loss on disposal                                                   --                (5,724)               (1,330)
Extraordinary gain (Note 4)                                      24,703                    --                 2,100
                                                            -----------      ----------------        --------------


Net Income/(Loss)                                            $   20,600           $   (72,662)         $    (18,088)
                                                             ==========           ============         =============

Pro Forma basic and diluted loss per share (Note 2):
  Loss per share from continuing
    operations before extraordinary gain                    $    (0.21)          $     (5.68)      $         (0.84)
  Loss per share from discontinued operations               $    (0.20)                (1.59)                (1.18)
  Extraordinary gain                                              2.47                     --                 0.21
                                                         -------------      -----------------     ----------------


Pro Forma basic and diluted income/(loss) per share        $      2.06          $      (7.27)      $         (1.81)
                                                           ===========          =============      ===============

Pro Forma weighted average common stock outstanding               9,998                10,000                10,000
                                                            ===========          ============       ===============




                 See Notes to Consolidated Financial Statements
</TABLE>
<TABLE>
<CAPTION>

                       Salant Corporation and Subsidiaries
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                             (Amounts in thousands)


                                                             January 1,            January 2,            January 3,
                                                                   2000                  1999                  1998
                                                          -------------          ------------          ------------



<S>                                                             <C>                  <C>                   <C>
Net income/(loss)                                               $20,600              $(72,662)             $(18,088)


Other comprehensive income, net of tax:

 Foreign currency translation adjustments                            54                  (203)                  (70)
 Minimum pension liability adjustments                                     1,055         (348)                 (326)
                                                                       ---------  ------------          ------------

Comprehensive income/(loss)                                     $21,709              $(73,213)             $(18,484)
                                                                =======              =========             =========

</TABLE>





































                 See Notes to Consolidated Financial Statements



<TABLE>
<CAPTION>



                       Salant Corporation and Subsidiaries
                           CONSOLIDATED BALANCE SHEETS
                  (Amounts in thousands, except per share data)

                                                                              January 1,                 January 2,
                                                                                    2000                       1999
                                                                            ------------              -------------

ASSETS
Current assets:
<S>                                                                      <C>                        <C>
  Cash and cash equivalents                                              $        30,116            $         1,222
  Accounts receivable - net of allowance for doubtful accounts
  of $2,419 in 1999  and $2,661 in 1998                                           15,956                     38,359
  Inventories (Notes 5 and 9)                                                     41,669                     69,590

  Prepaid expenses and other current assets                                        5,490                      5,266
  Assets held for sale (Note 3)                                                      100                     28,400
  Net assets of discontinued operations (Note 17)                                     --                      6,860
                                                                   ---------------------            ---------------


    Total current assets                                                          93,331                    149,697

Property, plant and equipment, net (Notes 6 and 9)                                14,185                     12,371
Other assets (Notes 7 and 12)                                                     14,287                     14,061
                                                                        ----------------            ---------------


                                                                          $      121,803              $     176,129
                                                                          ==============              =============

LIABILITIES AND SHAREHOLDERS' EQUITY / (DEFICIENCY)
Current liabilities:
  Loans payable (Note 9)                                                              --                     38,496
  Accounts payable                                                                12,097                      2,831

  Reserve for business restructuring (Note 3)                                      2,308                      3,551
  Liabilities subject to compromise (Notes 1and 10)                                4,604                    143,807
  Accrued salaries, wages and other liabilities (Note 8)                          11,751                     13,081
  Net liabilities of discontinued operations (Note 17)                             1,309                         --
                                                                       -----------------          -----------------

    Total current liabilities                                                     32,069                    201,766

Deferred liabilities (Note 15)                                                     4,133                      5,273

Commitments and contingencies (Notes 9, 10, 13, 14, 16 and 20)

Shareholders' equity / (deficiency) (Notes 2 and 14): Preferred stock, par value
  $2 per share:
    Authorized 5,000 shares; none issued                                              --                         --
  Common stock (old), par value $1 per share
     Authorized 30,000 shares;                                                        --                     15,405
     issued and issuable - 15,405 shares in 1998
  Common stock (new), par value $1 per share
     Authorized 45,000 shares;
     Issued and issuable - 10,000 in 1999                                         10,000                         --

  Additional paid-in capital                                                     206,040                    107,249
  Deficit                                                                       (127,297)                  (147,897)
  Accumulated other comprehensive income (Note 18)                                (2,944)                    (4,053)
  Less - treasury stock, at cost - 99 shares in 1999 and 234 shares in 1998              (198)               (1,614)
                                                                           ------------------     -----------------


Total shareholders' equity/(deficiency)                                           85,601                    (30,910)
                                                                       -----------------           ----------------


                                                                          $      121,803            $       176,129
                                                                          ==============            ===============


                 See Notes to Consolidated Financial Statements
</TABLE>
<TABLE>
<CAPTION>

                       Salant Corporation and Subsidiaries
                          CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY / (DEFICIENCY)
                             (Amounts in thousands)

                                                                       Accum-
                                                                      ulated                       Total
                                                                     Other                          Share-
                                    Common Stock    Add'l             Compre-              Treasury Stock      holders'
                                --------------------                                ---------------------------
                                Number            Paid-In            hensive      Number           Equity/
                              of Shares  Amount   Capital     Deficit       Income   of SharesAmount (Deficiency)
                              --------- ------------------------------------------------------------- -----------


<S>                              <C>     <C>       <C>       <C>      <C>           <C>   <C>       <C>
Balance at December 28, 1996     15,328  $15,328   $107,130  $(57,147)$(3,106)      234   $(1,614)  $60,591

Stock options exercised              77       77        119                                             196
Net loss                                                      (18,088)                              (18,088)
Other Comprehensive Income                                                         (396)                               (396)
                            -----------------------------------------------------------------------------------------------

Balance at January 3, 1998       15,405  $15,405   $107,249  $(75,235)$(3,502)      234   $(1,614)  $42,303

Net loss                                                      (72,662)                              (72,662)
Other Comprehensive Income                                                            (551)                              (551)
                           ---------------------------------------------------------------------------------------------------

Balance at January 2, 1999              15,405$15,405$107,249$(147,897)$(4,053)     234   $(1,614) $(30,910)

Net Income                                                     20,600                                20,600
Other Comprehensive Income                                              1,109                         1,109
Reorganization:
  Cancel Old Common Stock       (15,405) (15,405)    13,791                        (234)    1,614        --
  Issue New Common Stock         10,000   10,000     85,000                                              95,000
Purchase of Treasury Stock                                                                           99   (198)      198
                            ----------------------------------------------------------------------------------- --------

Balance at January 1, 2000       10,000  $10,000   $206,040 $(127,297)$(2,944)       99     $(198)  $85,601
                                 ======  =======   ======== ========= =======   =======     =====   =======


</TABLE>

























                 See Notes to Consolidated Financial Statements

<TABLE>
<CAPTION>

                       Salant Corporation and Subsidiaries
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Amounts in thousands)

                                                                                                    Year Ended

                                                             January 1,            January 2,            January 3,
                                                                   2000                  1999                  1998
                                                           ------------         -------------         -------------

Cash Flows from Operating Activities
<S>                                                           <C>                  <C>                  <C>
Loss from continuing operations                               $  (2,148)           $  (56,775)          $    (8,394)
Adjustments to reconcile loss from continuing operations to
  net cash provided by/(used in) operating activities:
    Depreciation                                                  5,027                 7,474                 6,578
    Amortization of intangibles                                     519                 1,881                 1,881
    Write-down of fixed assets                                        -                10,931                 1,274
    Write-down of other assets                                        -                39,952                     -
Changes in operating assets and liabilities:
      Accounts receivable                                        22,403                 1,276                (7,717)
      Inventories                                                27,921                15,187                 3,863
      Prepaid expenses and other current assets                    (224)               (1,730)                  629
      Assets held for sale                                            -               (28,400)
      Other assets                                                 (521)                  301                  (242)
      Accounts payable                                            9,266               (21,058)               (1,690)
      Accrued salaries, wages and other liabilities              (1,209)               (1,222)               (2,589)
      Liabilities subject to compromise                         (19,621)               38,928
      Reserve for business restructuring                         (1,243)                  787                  (205)
      Deferred liabilities                                       (1,140)               (1,372)               (2,203)
                                                         ---------------         -------------         ------------

    Net cash (used in)/provided by continuing operating activities39,030                6,160                (8,815)
    Cash provided by/(used in) discontinued operations            6,214                (5,257)               (5,120)
                                                             ----------          -------------         ------------

Net cash provided by/(used in) operations                        45,244                   903               (13,935)
                                                              ---------         -------------           -----------


Cash Flows from Investing Activities
Capital expenditures, net of disposals                           (4,579)               (4,871)               (5,104)
Store fixture expenditures                                       (2,486)               (1,148)               (3,122)
Proceeds from sale of assets                                     28,300                     -                     -
                                                              ---------      ----------------      ----------------

Net cash provided by/(used in) investing activities              21,235                (6,019)               (8,226)
                                                              ---------         --------------         ------------


Cash Flows from Financing Activities
Net short-term borrowings/(repayments)                          (38,496)                4,696                26,123
Retirement of long-term debt                                          -                     -                (3,372)
Exercise of stock options                                             -                     -                   196
Purchase of treasury stock                                         (198)                    -                     -
Other, net                                                        1,109                  (551)                  (70)
                                                             ----------         --------------      ---------------

Net cash (used in)/provided by financing activities             (37,585)                4,145                22,877
                                                              ----------         ------------          ------------


Net increase/(decrease) in cash and cash equivalents             28,894                  (971)                  716

Cash and cash equivalents - beginning of year                     1,222                 2,193                 1,477
                                                             ----------          ------------         -------------

Cash and cash equivalents - end of year                       $  30,116           $     1,222          $      2,193
                                                              =========           ===========          ============

Supplemental  disclosures  of cash flow  information:  Cash paid during the year
for:
   Interest                                                   $   1,054             $   5,441            $   16,479
                                                              =========             =========            ==========

   Income taxes                                             $        90            $      321          $        201
                                                            ===========            ==========          ============

Supplemental investing and financing non-cash transactions:
    Common Stock issued for Senior Notes                        104,879                    --                    --
    Common Stock issued for pre-petition interest                14,703                    --                    --
    Common Stock issued for post-petition interest                  121                    --                    --



                 See Notes to Consolidated Financial Statements
</TABLE>

                       SALANT CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
       (Amounts in Thousands of Dollars, Except Share and Per Share Data)


Note 1.  Financial Reorganization

On December 29, 1998 (the "Filing Date"),  Salant  Corporation  filed a petition
under chapter 11 of title 11 of the United States Code (the  "Bankruptcy  Code")
with the United States  Bankruptcy  Court for the Southern  District of New York
(the "Bankruptcy Court") (the "1998 Case") in order to implement a restructuring
of its 10-1/2 % Senior Secured Notes due December 31, 1998 (the "Senior Notes").
Salant also filed its plan of  reorganization  (the "Plan") with the  Bankruptcy
Court on the Filing Date in order to implement its  restructuring.  On April 16,
1999, the Bankruptcy Court issued an order (the "Confirmation Order") confirming
the  Plan.  The  effective  date  of the  Plan  occurred  on May 11,  1999  (the
"Effective Date").

Pursuant  to the Plan (i) all of the  outstanding  principal  amount  of  Senior
Notes, plus all accrued and unpaid interest  thereon,  was converted into 95% of
Salant's  new  common  stock,  subject  to  dilution,  and (ii) all of  Salant's
existing  common  stock was  converted  into 5% of  Salant's  new common  stock,
subject to dilution.  Salant's  general  unsecured  creditors  (including  trade
creditors)  were  unimpaired  and are entitled to be paid in full.  The Plan was
approved  by all of the  holders of Senior  Notes that voted and over 96% of the
holders of Salant common stock that voted.

Salant operates its Perry Ellis  businesses under certain  licensing  agreements
(the "Perry Ellis Licenses") between Salant and Perry Ellis International,  Inc.
("PEI").  During the 1998 Case, Supreme International,  Corporation  ("Supreme")
entered  into  discussions  with PEI to  acquire  PEI and,  thereafter,  Supreme
acquired PEI. Prior to the hearing on the confirmation of the Plan,  Supreme (in
its own  capacity  and on behalf  of PEI  (collectively,  referred  to herein as
"Supreme-PEI"))  filed an objection to the confirmation.  In connection with the
confirmation  of the Plan,  Salant and  Supreme-PEI  settled and resolved  their
differences  and the material terms of such  settlement were set forth in a term
sheet (the "Term  Sheet")  attached to and  incorporated  into the  Confirmation
Order (the "PEI Settlement").

The following is a summary of the material  provisions of the Term Sheet setting
forth the terms of the PEI Settlement. The following description is qualified in
its entirety by the provisions of the Term Sheet.  The PEI  Settlement  provided
that (i) Salant would return to PEI the license to sell Perry Ellis  products in
Puerto Rico, the U.S. Virgin Islands, Guam and Canada (Salant retained the right
to sell its existing  inventory in Canada  through  January 31, 2000);  (ii) the
royalty rate due PEI under  Salant's  Perry Ellis  Portfolio  pants license with
respect to regular  price  sales in excess of $15.0  million  annually  would be
increased to 5%; (iii) Salant would provide  Supreme-PEI with the option to take
over any real estate lease for a retail store that Salant intends to close; (iv)
Salant would assign to Supreme-PEI its sublicense with Aris Industries, Inc. for
the  manufacture,  sale  and  distribution  of the  Perry  Ellis  America  brand
sportswear and, depending on certain circumstances, Salant would receive certain
royalty  payments from  Supreme-PEI  through the year 2005; (v) Salant would pay
PEI its pre-petition invoices of $616,844 and post-petition  invoices of $56,954
on the  later of (a) the  Effective  Date of the  Plan or (b) the due date  with
respect to such amounts;  (vi) Supreme-PEI (a) agreed and acknowledged  that the
sales of  businesses  made by Salant  during the 1998 Case did not  violate  the
terms of the Perry Ellis  Licenses and did not give rise to the  termination  of
the Perry Ellis Licenses and (b) consented to the change of control arising from
the  conversion  of debt into equity under the Plan and  acknowledged  that such
change of control  did not give rise to any right to  terminate  the Perry Ellis
Licenses;  and (vii)  Supreme-PEI  withdrew  with  prejudice  its  objection  to
confirmation of the Plan, and supported confirmation of the Plan.

As of the Filing Date, Salant had $143,807 (consisting of $14,703 in Senior Note
interest,  $104,879  of Senior  Notes and  $24,225 of  unsecured  pre-bankruptcy
claims) of liabilities  subject to  compromise,  in addition to $38,496 of loans
payable to CIT. In addition Salant accrued the estimated fees in the 1998 fourth
quarter of $3.2 million in connection with the administration of the 1998 Case.

Pursuant to the Plan,  on the  Effective  Date,  all of Salant's  then  existing
common stock ("Old Common Stock"), $1.00 par value per share, was cancelled.  In
accordance with the Plan, 10,000,000 shares of new common stock, $1.00 par value
per share  (the "New  Common  Stock"),  were  issued by Salant as  follows:  (i)
9,500,000  shares of the New Common Stock were  distributed  to the holders (the
"Noteholders")  of Salant's  Senior Notes,  in full  satisfaction  of all of the
outstanding principal amount, plus all accrued and unpaid interest on the Senior
Notes and (ii) 500,000  shares of the New Common Stock were  distributed  to the
holders  of  Salant's  Old Common  Stock,  in full  satisfaction  of any and all
interests of such holders in Salant.

Accordingly,  under the Plan, as of the Effective  Date,  Salant's  stockholders
immediately  prior to the  Effective  Date,  who at that time  owned 100% of the
outstanding Old Common Stock of Salant,  received,  in the aggregate,  5% of the
issued and outstanding shares of New Common Stock, subject to dilution,  and the
Noteholders received, in the aggregate, 95% of the issued and outstanding shares
of New Common Stock, subject to dilution.  The Company reserved 1,111,111 shares
(10% of the  outstanding  shares)  of New Common  Stock for the Stock  Award and
Incentive Plan.

The authorized  capital stock of Salant as of the Effective Date consists of (i)
45,000,000  shares  of New  Common  Stock,  $1.00  par  value per share and (ii)
5,000,000 shares of Preferred  Stock,  $2.00 par value per share (the "Preferred
Stock").  No Preferred  Stock has been issued either in connection with the Plan
or otherwise.

Post-restructuring,  Salant  has  focused  primarily  on its Perry  Ellis  men's
apparel business and, as a result, Salant exited its other businesses, including
its Children's  Group and non-Perry Ellis menswear  divisions.  During 1999, the
Company sold its John Henry and Manhattan businesses.  These businesses included
the John Henry,  Manhattan and Lady  Manhattan  trade names,  the John Henry and
Manhattan  dress  shirt  inventory,  the  leasehold  interest in the dress shirt
facility  located in Valle  Hermosa,  Mexico,  and the equipment  located at the
Valle Hermosa facility and at Salant's  facility located in Andalusia,  Alabama.
During 1999, Salant also sold its Children's Group, which primarily involved the
sale of inventory  related to the  Children's  Group.  As a result of the above,
Salant will now report its business operations as a single segment.

Note 2.  Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The Consolidated Financial Statements include the accounts of Salant Corporation
("Salant") and subsidiaries.  (As used herein, the "Company" includes Salant and
its  subsidiaries  but excludes  Salant  Children's  Group and Made in the Shade
divisions.) In December 1998, the Company  decided to discontinue the operations
of the Children's Group, which produced and marketed children's blanket sleepers
primarily  using a number of well-known  licensed  characters  created by, among
others,  DISNEY and WARNER BROTHERS.  The Children's Group also marketed pajamas
under the DR DENTON and OSHKOSH B'GOSH  trademarks,  and sleepwear and underwear
under the JOE BOXER  trademark.  In June  1997,  the  Company  discontinued  the
operations  of the Made in the  Shade  division,  which  produced  and  marketed
women's junior  sportswear.  As further  described in Note 17, the  consolidated
financial statements and the notes thereto reflect the Children's Group and Made
in the Shade divisions as  discontinued  operations.  Intercompany  balances and
transactions are eliminated in consolidation.

The Company's principal business is the designing, manufacturing,  importing and
marketing  of men's  apparel.  The  Company  currently  sells  its  products  to
retailers,  including department and specialty stores, and for a portion of 1999
made limited sales of certain products to national chains, major discounters and
mass volume retailers, throughout the United States.

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  (such as  accounts
receivable,  inventories,  restructuring  reserves and valuation  allowances for
income taxes),  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.

Fiscal Year

The Company's  fiscal year ends on the Saturday closest to December 31. The 1999
and 1998  fiscal  years were  comprised  of 52 weeks.  The 1997  fiscal year was
comprised of 53 weeks.

Reclassifications

Certain  reclassifications were made to the 1997 and 1998 consolidated financial
statements to conform to the 1999 presentation.

Cash and Cash Equivalents

The Company treats cash on hand,  deposits in banks and  certificates of deposit
with original  maturities of less than 3 months as cash and cash equivalents for
the purposes of the statements of cash flows.

Inventories

Inventories  are  stated  at the  lower  of cost  (principally  determined  on a
first-in, first-out basis for apparel operations and the retail inventory method
on a first-in, first-out basis for outlet store operations) or market.

Property, Plant and Equipment

Property,  plant  and  equipment  are  stated  at cost  and are  depreciated  or
amortized over their estimated useful lives, or for leasehold improvements,  the
lease term, if shorter.  Depreciation and amortization are computed  principally
by the straight-line  method for financial reporting purposes and by accelerated
methods for income tax purposes.
The annual depreciation rates used are as follows:
<TABLE>
<CAPTION>

<S>                                                               <C>            <C>
Buildings and improvements                                        2.5%      -    10.0%
Machinery, equipment and autos                                    6.7%      -    33.3%
Furniture and fixtures                                           10.0%      -    33.3%
Leasehold improvements            Shorter of the life of the asset or the lease
                                  term
</TABLE>

Other Assets

Intangible assets are being amortized on a straight-line basis over their useful
lives of 25 years.  Costs in excess of fair  value of net  assets  acquired  are
assessed for  recoverability  on a periodic  basis.  In evaluating the value and
future  benefits  of these  intangible  assets,  their  carrying  value would be
reduced  by the  excess,  if any,  of the  intangibles  over  management's  best
estimate of  undiscounted  future  operating  income of the acquired  businesses
before  amortization  of  the  related  intangible  assets  over  the  remaining
amortization period.

Income Taxes

Deferred  income  taxes are  provided  to reflect  the tax  effect of  temporary
differences  between financial statement income and taxable income in accordance
with the  provisions  of  Statement of  Financial  Accounting  Standard No. 109,
"Accounting for Income Taxes".

Fair Value of Financial Instruments

For  financial  instruments,  including  cash  and  cash  equivalents,  accounts
receivable and payable, and accrued expenses,  the carrying amounts approximated
fair value because of their short  maturity.  Liabilities  subject to compromise
are valued based upon the amount the Company plans to pay in accordance with the
Plan. In addition, deferred liabilities have carrying amounts approximating fair
value.

Earnings/(Loss) Per Share

Pro forma basic  income/(loss) per share is based on the weighted average number
of common  shares as if the New Common Stock had been issued at the beginning of
the earliest period presented.  Common stock equivalents are not considered,  as
the  options  for  the New  Common  Stock  are  anti-dilutive  for  the  periods
presented.

The following is a comparison of basic and diluted income/(loss) per share using
the historical shares  outstanding.  Common stock equivalents are not considered
for the Old Common Stock, as the options were cancelled or  anti-dilutive.  Such
computation does not give  retroactive  effect to the issuance of the New Common
Stock.
<TABLE>
<CAPTION>
                                                                       1999            1998            1997
Basic and diluted income/(loss) per share:
<S>                                                                    <C>            <C>             <C>
   From continuing operations                                          (0.18)         (3.74)          (0.55)
   From discontinued operations                                        (0.17)         (1.05)          (0.78)
   From extraordinary gain                                              2.09           0.00            0.14
                                                                        ----           ----            ----

Basic and diluted income/(loss) per share                               1.74          (4.79)          (1.19)
                                                                        ====          =====           =====
Weighted average common stock outstanding                              11,830          15,171         15,139
                                                                       ======          ======         ======
</TABLE>

Foreign Currency

The Company had no forward foreign exchange contracts at the end of fiscal 1999.
In fiscal 1998, the Company  entered into forward  foreign  exchange  contracts,
relating to its projected 1999 Mexican peso needs,  to fix its cost of acquiring
pesos and  diminish  the risk of  currency  fluctuations.  Gains  and  losses on
foreign  currency  contracts  are  included  in income  and offset the gains and
losses on the  underlying  transactions.  On January 2,  1999,  the  outstanding
foreign  currency  contracts had a cost of  approximately  $4,886 and a year end
market  value  of  approximately  $4,851.  Subsequent  to  year-end  1998 and in
connection with the  restructuring,  the outstanding  foreign currency contracts
were sold without a material gain or loss.

In fiscal 1997, the Company  entered into forward  foreign  exchange  contracts,
relating to 80% of its  projected  1998 Mexican  peso needs,  to fix its cost of
acquiring pesos and diminish the risk of currency fluctuations. Gains and losses
on foreign  currency  contracts  are included in income and offset the gains and
losses on the  underlying  transactions.  On January 3,  1998,  the  outstanding
foreign  currency  contracts had a cost of  approximately  $8,900 and a year end
market value of approximately $10,000.

Revenue Recognition

Revenue is recognized at the time  merchandise  is shipped.  Retail outlet store
revenues are recognized at the time of sale.

New Accounting Standards

In June 1998,  the  Financial  Accounting  Standards  Board issued SFAS No. 133,
"Accounting for Derivative  Instruments and Hedging  Activities".  The statement
establishes   accounting  and  reporting  standards  requiring  that  derivative
instruments   (including  certain  derivative   instruments  embedded  in  other
contracts)  be  recorded in the  balance  sheet as either an asset or  liability
measured at fair value.  The statement  requires that changes in a  derivative's
fair value be recognized  currently in earnings unless specific hedge accounting
criteria are met. Special accounting for qualifying hedges allows a derivative's
gains and losses to offset  related  results  on the  hedged  item in the income
statement and requires that a company formally document,  designate,  and assess
the effectiveness of transactions that receive hedge accounting. SFAS No. 133 is
effective for fiscal years  beginning  after June 15, 2000;  however,  it may be
adopted earlier. It cannot be applied  retroactively to financial  statements of
prior periods.  The Company does not currently use derivatives or hedges and the
impact and timing of adopting SFAS No. 133 on its financial  statements  has not
been determined.

Note 3.  Restructuring Costs

In 1999, the Company  recorded a provision for  restructuring  of $4,039 related
the Company's  1998 decision to focus  primarily on it Perry Ellis men's apparel
business. The restructuring charge related primarily to employee costs of $3,898
that could not be accrued in 1998,  as the  employees  were not  notified  until
1999.  In  addition,  $161 of the charge  was  related to the write off of store
fixtures and the closing of the  operations  in Canada.  During 1999 the Company
used approximately $5,671 of its restructuring reserves related to severance and
employee  costs of $4,080,  lease  payments of $753 offset by $389 of gains from
the sale of fixed assets,  royalties of $452 and the remaining balance for other
restructuring  costs. At the end of fiscal 1999,  $2,308 remained in the reserve
of which  approximately  $850 relates to severance  and other  employee  related
costs,  $600 for lease buy outs and other asset related  disposal costs and $858
for other restructuring items.

Assets held for sale at January 1, 2000  relates to the  building in  Andalusia,
Alabama.  The Company is investigating,  through various channels,  an efficient
and  timely  disposal/sale  of this  building.  Additional  costs  of  $119  are
anticipated  due to holding  the  Andalusia  facility  and  additional  employee
related  expenses  of $212 were  accrued  and are  anticipated  for 2000.  These
additional  costs  were  offset  by the  favorable  results  of  settlements  of
royalties and other  restructuring  liabilities of $140 and $191,  respectively.
Activity in the accrued reserve for restructuring for fiscal 1999 is as follows:
<TABLE>
<CAPTION>

                              Balance               First Quarter                  Balance
                              1/2/99       Uses        Provisions      Other       1/1/00

Lease payments and
<S>                          <C>         <C>            <C>           <C>         <C>
other property costs         $   845     $   (753)      $  (389)      $  508      $   600
Royalties                        592         (452)           --         (140)          --
Severance                        840       (4,080)        3,878          212          850
Other                          1,274         (386)          161         (191)         858
                             -------    ----------     --------       -------    --------

                              $3,551      $(5,671)       $4,039       $  389       $2,308
                              ======      ========       ======       ======       ======
</TABLE>

In 1998, the Company  recorded a provision for  restructuring of $24,825 related
to the  decision  of the  Company to focus  primarily  on its Perry  Ellis men's
apparel business.  As a result,  the Company has substantially  exited its other
businesses.  During 1999,  Salant sold its John Henry and  Manhattan  businesses
pursuant to a Purchase and Sale  Agreement  dated  December 28, 1998 (subject to
and subsequently  approved by the Bankruptcy Court on February 26, 1999).  These
businesses included the John Henry, Manhattan and Lady Manhattan trade names and
the related goodwill,  the leasehold  interest in a dress shirt facility located
in Valle  Hermosa,  Mexico,  and the  equipment  located  at the  Valle  Hermosa
facility and at Salant's  facility located in Andalusia,  Alabama.  These assets
had a net book value of $43,184 (consisting of $29,979 for goodwill,  $9,680 for
licenses and $3,525 for fixed assets) and were sold for $27,000,  resulting in a
loss of $16,184.  At the end of fiscal 1998 the net realizable  value of $27,000
for these assets was included in the  consolidated  balance sheet as assets held
for sale. The assets not sold in this  transaction  were also included as assets
held for sale and are recorded at their estimated net realizable value of $1,400
at January 2, 1999.

In addition to the $16,184  charge  noted  above,  the  restructuring  provision
consisted of (i) $6,305 of additional property, plant and equipment write-downs,
(ii) $2,936 for the write off of other assets, severance costs, lease exit costs
and other  restructuring  costs and (iii)  offset by $600 from the  reversal  of
previously  recorded   restructuring   reserves  primarily  resulting  from  the
settlement of liabilities  for less than the carrying amount and the gain on the
sale of the Thomson manufacturing and distribution facility.

In  1997,  the  Company  recorded  a  provision  for  restructuring  of  $2,066,
consisting of (i) $3,530  related to the decision in the fourth quarter to close
all retail  outlet  stores  other than Perry  Ellis  outlet  stores,  consisting
primarily of asset  write-offs  and future  payments  related to  non-cancelable
operating  leases,  offset  by (ii) a $1,464  reversal  of  previously  recorded
restructuring  reserves,   including  $300  in  the  fourth  quarter,  primarily
resulting from the settlement of liabilities for less than the carrying  amount.
As of  January  3, 1998,  $1,579  remained  in the  restructuring  reserve,  all
relating to the retail outlet store closings.

Note 4.  Extraordinary Gain

In the second quarter of 1999,  the Company  recorded an  extraordinary  gain of
$24,703  related to the  conversion  of the Senior Notes and the related  unpaid
interest into equity, as described in Note 1.

Pursuant to the Plan, the  Noteholders  received,  in the aggregate,  95% of the
issued and outstanding shares of New Common Stock, subject to dilution,  in full
satisfaction of all of the outstanding  principal  amount  ($104,879),  plus all
accrued and unpaid interest ($14,824) on the Senior Notes. As a result, pursuant
to the Plan,  9,500,000 shares of the New Common Stock,  were distributed to the
holders of Salant's Senior Notes.

In 1997, the Company recorded an extraordinary gain of $2,100,  including $1,500
in the fourth quarter,  related to the reversal of excess liabilities previously
provided for the anticipated  settlement of claims arising from the 1990 Chapter
11 proceeding.

Note 5.  Inventories
<TABLE>
<CAPTION>
                                                                          January 1,            January 2,

                                                                                2000                  1999

<S>                                                                        <C>                   <C>
Finished goods                                                             $  25,385             $  42,022
Work-in-process                                                               10,208                17,225
Raw materials and supplies                                                     6,076                10,343
                                                                         -----------            ----------
                                                                           $  41,669             $  69,590
                                                                           =========             =========
</TABLE>

Finished goods inventory includes in transit merchandise of $1,501 and $1,858 at
January 1, 2000 and January 2, 1999, respectively.


Note 6.  Property, Plant and Equipment
<TABLE>
<CAPTION>
                                                                          January 1,            January 2,
                                                                                2000                  1999

<S>                                                                       <C>                    <C>
Land and buildings                                                        $    6,851             $   6,404
Machinery, equipment, furniture
  and fixtures                                                                16,769                15,088
Leasehold improvements                                                         5,290                 4,172
                                                                         -----------           -----------
                                                                              28,910                25,664
Less accumulated depreciation and amortization                                14,725                13,293
                                                                          ----------             ---------
                                                                           $  14,185             $  12,371
                                                                           =========             =========
</TABLE>

Note 7.  Other Assets
<TABLE>
<CAPTION>
                                                                          January 1,             January 2
                                                                                2000                  1999
Excess of cost over net assets acquired,
 net of accumulated amortization of
<S>        <C>      <C>       <C>                                         <C>                    <C>
 $4,232 in 1999 and $3,828 in 1998                                        $    6,929             $   7,333
Trademarks and license agreements,
 net of accumulated amortization of
 $1,342 in 1999 and $1,227 in 1998                                             3,258                 3,373
Other                                                                          4,100                 3,355
                                                                         -----------           -----------
                                                                           $  14,287             $  14,061
                                                                           =========             =========
</TABLE>

In fiscal 1998,  the  unamortized  portion of intangible  assets  related to the
non-Perry Ellis menswear operations  amounting to $39,952 ($29,979  representing
the excess of cost over net assets acquired,  $9,680  representing  licenses and
$293  representing  trademarks)  were  included in the  restructuring  charge as
discussed in Note 3.

Note 8.  Accrued Salaries, Wages and Other Liabilities
<TABLE>
<CAPTION>

                                                                          January 1,            January 2,
                                                                                2000                  1999

<S>                                                                        <C>                   <C>
Accrued salaries and wages                                                 $   4,247             $   5,491
Accrued pension and retirement benefits                                        2,055                 1,972

Workers Compensation                                                           2,163                 2,526

Other accrued liabilities                                                      3,286                 3,092
                                                                          ----------            ----------
                                                                            $ 11,751              $ 13,081
                                                                            ========              ========
</TABLE>

Note 9.  Financing Agreements

Upon  commencement of the 1998 Case, Salant filed a motion seeking the authority
of the Bankruptcy  Court to enter into a revolving  credit facility with The CIT
Group/Commercial  Services,  Inc.  ("CIT"),  Salant's  existing  working capital
lender  pursuant to and in  accordance  with the terms of the  Ratification  and
Amendment  Agreement,  dated as of December  29, 1998 (the  "Amendment")  which,
together  with  related  documents  are  referred to as the "CIT DIP  Facility,"
effective  as of the Filing Date,  which would  replace the  Company's  existing
working capital facility under its then existing credit  agreement.  On December
29, 1998, the Bankruptcy Court approved the CIT DIP Facility on an interim basis
and on January 19, 1999 the Bankruptcy  Court approved the CIT DIP Facility on a
final basis.

On May 11,  1999,  the  effective  date,  the Company  entered into a syndicated
revolving  credit facility (the "Credit  Agreement") with CIT pursuant to and in
accordance  with the terms of a commitment  letter dated  December 7, 1998 which
replaced the CIT DIP Facility.

The Credit  Agreement  provides for a general working capital  facility,  in the
form of direct borrowings and letters of credit, up to $85 million subject to an
asset-based  borrowing formula.  The Credit Agreement consists of an $85 million
revolving  credit  facility,  with  at  least a $35  million  letter  of  credit
subfacility.  As  collateral  for  borrowings  under the Credit  Agreement,  the
Company  granted  to CIT  and a  syndicate  of  lenders  arranged  by  CIT  (the
"Lenders") a first priority lien on and security  interest in substantially  all
of the assets of the Comapny.  The Credit Agreement has an initial term of three
years.

The Credit  Agreement  also provides,  among other things,  that (i) the Company
will be charged an interest  rate on direct  borrowings of .25% in excess of the
Reference Rate or 2.25% in excess of LIBOR (as defined in the Credit Agreement),
and (ii) the Lenders may, in their sole discretion, make loans to the Company in
excess  of the  borrowing  formula  but  within  the $85  million  limit  of the
revolving  credit  facility.  The Company is  required  under the  agreement  to
maintain  certain  financial  covenants  relating to  consolidated  tangible net
worth, capital expenditures,  maximum pre-tax  losses/minimum pre-tax income and
minimum  interest  coverage  ratios.  The  Company  was in  compliance  with all
applicable covenants at January 1, 2000.

Pursuant to the Credit  Agreement,  the Company  paid or will pay the  following
fees: (i) a documentary  letter of credit fee of 1/8 of 1.0% on issuance and 1/8
of 1.0% on  negotiation;  (ii) a standby  letter of credit fee of 1.0% per annum
plus bank charges; (iii) a commitment fee of $325 thousand;  (iv) an unused line
fee of .25%;  (v) an agency fee of $100 thousand  (only for the second and third
years of the term of the Credit Agreement);  (vi) a collateral management fee of
$8,333 per month; and (vii) a field exam fee of $750 per day plus  out-of-pocket
expenses

On January 1, 2000,  there  were no direct  borrowings  outstanding,  letters of
credit  outstanding  under the Credit Agreement were $30,093 and the Company had
unused  availability,  based on  outstanding  letters  of  credit  and  existing
collateral, of $16,497. In addition to the unused availability,  the Company had
$30,116 of cash  available to fund its  operations.  On January 2, 1999,  direct
borrowings  and letters of credit  outstanding  under the Credit  Agreement were
$38,496 and $24,325,  respectively,  and the Company had unused  availability of
$13,022.  The weighted  average  interest  rate on  borrowings  under the Credit
Agreement  for the years ended  January 1, 2000 and January 2, 1999 was 8.7% and
8.4%, respectively.

In addition to the financial  covenants  discussed  above,  the Credit Agreement
contains  a number  of other  covenants,  including  restrictions  on  incurring
indebtedness and liens, making investments in or purchasing the stock, or all or
a substantial part of the assets of another person,  selling property and paying
cash dividends.

Note 10.  Long-Term Debt

On September 20, 1993, the Company issued  $111,851  principal  amount of Senior
Notes.  The Senior  Notes could be redeemed  at any time prior to  maturity,  in
whole or in part,  at the option of the Company,  at a premium to the  principal
amount thereof plus accrued interest.  The Senior Notes were due on December 31,
1998 and as of January 2, 1999,  $104,879 of  principal  and $14,703 in interest
was  outstanding  and included in liabilities  subject to compromise.  In fiscal
1999  pursuant  to the Plan,  the  Company  converted  the Senior  Notes and the
outstanding  interest  into  equity.  (See  additional  discussion  in Note 1. -
Financial Reorganization)

On April 22, 1998,  the Company  filed a  registration  statement on Form S-4 in
order to facilitate the debt  restructuring of the Senior Notes due December 31,
1998.  Thereafter,  Salant filed amendments to the registration statement on May
10, 1998,  May 26, 1998 and August 31, 1998.  In  consideration  of, among other
things, the significant additional time required to consummate such transactions
and the occurrence of certain events (including, but not limited to, a reduction
in the value of certain of Salant's business units) that caused the Company, its
noteholders and shareholders to seek an alternative debt  restructuring  process
through  chapter 11  proceedings.  In connection with the S-4 filing the Company
incurred  $8,633  relating to the efforts to  restructure  the debt  through the
registration  statement  process,  which  were  charged to expense in the fourth
quarter of 1998.

Note 11. Significant Customers

The Company's principal business is the designing, manufacturing,  importing and
marketing  of men's  apparel.  The  Company  currently  sells  its  products  to
retailers,  including department and specialty stores, and for a portion of 1999
made limited sales of certain products to national chains, major discounters and
mass volume retailers,  throughout the United States.  The Company also operates
28  retail  outlet  stores  in  various  parts  of the  United  States.  Foreign
operations, other than sourcing, are not significant.

In  1999  approximately  19% of the  Company's  sales  were  made  to  Federated
Department  Stores,  Inc.  ("Federated")  and approximately 18% of the Company's
sales  were  made  to   Dillards   Corporation   ("Dillards").   Also  in  1999,
approximately  16% of the Company's  sales were made to the May Company  ("May")
and  approximately  13% of the Company's sales were made to Marmaxx  Corporation
("Marmaxx").  In 1998 and 1997, approximately 20% and 19% of the Company's sales
were made to Sears, Roebuck & Company ("Sears"),  respectively and approximately
11% and 10% of the  Company's  sales  were made to  Dillards  for 1998 and 1997,
respectively.  Also in 1998 and 1997, approximately 14% and 12% of the Company's
sales were made to Federated,  respectively and approximately 10% and 11% of the
Company's sales were made to Marmaxx for 1998 and 1997, respectively.

No other  customer  accounted  for more than 10% of sales during  1999,  1998 or
1997.

Note 12.  Income Taxes

The provision for income taxes consists of the following:
<TABLE>
<CAPTION>

                                                    January 1,             January 2,           January 3,
2000                                                      1999                   1998
Current:
<S>                                                  <C>                       <C>                  <C>
 Federal                                             $     (20)                $ (109)              $  (34)
 State                                                      --                     --                   --
 Foreign                                                   265                    249                  201
                                                         -----                -------               ------
                                                        $  245                 $  140                $ 167
                                                        ======                 ======                =====
</TABLE>

The  following  is a  reconciliation  of  the  tax  provision/(benefit)  at  the
statutory Federal income tax rate to the actual income tax provision:
<TABLE>
<CAPTION>

                                                          1999                   1998                 1997
                                                       ----------              --------             ------


<S>                    <C>                               <C>                 <C>                   <C>
Income tax benefit, at 34%                               $(647)              $(19,256)             $(3,589)

Loss producing no current tax benefit                      647                 19,256                3,589
Tax refunds from prior years                               (20)                  (109)                 (34)
Foreign taxes                                              265                    249                  201
                                                   -----------             ----------           ----------

Income tax provision                                $      245              $     140            $     167
                                                    ==========              =========            =========
</TABLE>

The following are the tax effects of significant items comprising the Company's
net deferred tax asset:
<TABLE>
<CAPTION>

                                                                          January 1,            January 2,
                                                                                2000                  1999

Deferred tax liabilities:
<S>                                                                       <C>                    <C>
 Differences between book and tax basis of property                       $   (2,237)            $  (3,575)
                                                                          ----------             ---------

Deferred tax assets:
 Reserves not currently deductible                                            14,427                24,419
 Operating loss carryforwards                                                 45,517                58,886
 Tax credit carryforwards                                                      1,764                 1,764
 Expenses capitalized into inventory                                           4,296                 3,800
                                                                           ---------            ----------
                                                                              66,004                88,869
                                                                            --------             ---------
Net deferred tax asset                                                        63,767                85,294
Valuation allowance                                                          (63,767)              (85,294)
                                                                            --------             ---------
Net deferred tax asset                                                  $         --         $          --
                                                                        ============         =============
</TABLE>

At January 1, 2000,  the Company had net operating loss  carryforwards  ("NOLs")
for income tax purposes of  approximately  $116,707,  expiring  from 2000 to the
year 2019, which can be used to offset future taxable income.  To the extent any
of these NOLs relate to the  acquisition of Manhattan  Industries in April 1988,
their utilization will reduce the remaining balance of approximately  $10,100 of
intangible assets recorded in connection with the acquisition.

The Manhattan  Industries  acquisition  and the 1990  bankruptcy  and subsequent
consummation have caused an "ownership  change" for federal income tax purposes.
As a result, the use of any NOLs existing at the date of the ownership change to
offset future taxable  income is limited by section 382 of the Internal  Revenue
Code of 1986, as amended  ("Section  382"). The $116,707 of NOLs reflected above
is the  maximum  the Company may use to offset  future  taxable  income.  Of the
$116,707 of NOLs,  $87,700 is subject to annual usage  limitations under Section
382 of approximately $7,200.

Additionally,  by virtue of the  consummation  of the Plan,  a second  ownership
change under  Section 382 has occurred  during  fiscal  1999.  As a result,  the
utilization  of the NOLs  and tax  credit  carryforwards  could  be  subject  to
additional limitations, which could reduce their use.

In  addition,  at  January  1,  2000,  the  Company  had  available  tax  credit
carryforwards  of  approximately  $1,764  which  expire  between  2000 and 2010.
Utilization  of these  credits may be limited in the same manner as the NOLs, as
described above.

Note 13.  Employee Benefit Plans

Pension and Retirement Plans

The  Company has several  defined  benefit  plans for  virtually  all  full-time
salaried employees and certain non-union hourly employees. The Company's funding
policy for its plans is to fund the  minimum  annual  contribution  required  by
applicable regulations.

The Company also has a non-qualified  supplemental  retirement and death benefit
plan covering certain employees that was terminated during 1998. The funding for
this plan was based on premium costs of related insurance contracts.

The  reconciliation  of the  funded  status of the plans at  January 1, 2000 and
January 2, 1999 is as follows:
<TABLE>
<CAPTION>
                                                                                1999                  1998
                                                                             ----------            -------

Change in Projected Benefit Obligation (PBO)
During Measurement Period
<S>           <C>                                                             <C>              <C>
PBO, November 30 of previous year                                             51,151           $    49,862
Service Cost                                                                     760                 1,000
Interest Cost                                                                  3,290                 3,307
Actuarial (Gain)/Loss                                                         (4,890)                   24
Plan Curtailment                                                              (2,000)                  (70)
Plan Settlement                                                                   --                  (332)
Benefits Paid                                                                 (2,756)               (2,640)
                                                                          -----------         ------------
PBO, November 30                                                           $  45,555            $   51,151
                                                                           =========            ==========

Change in Plan Assets During the Measurement Period
Plan Assets at Fair Value, November 30
 of previous year                                                                                  $45,282
$    42,295
Actual Return on Plan Assets                                                   4,560                 2,299
Employer Contribution                                                          1,119                 3,586
Benefits Paid                                                                 (2,756)               (2,898)
                                                                          ----------           -----------
Plan Assets at Fair Value, November 30                                     $  48,205            $   45,282
                                                                           =========            ==========

</TABLE>


The reconciliation of the Prepaid/(Accrued) plans at January 1, 2000 and January
2, 1999 is as follows:
<TABLE>
<CAPTION>
                                                                                1999                  1998
                                                                                ----                  ----

Reconciliation of Prepaid/(Accrued)
<S>                                                                        <C>                  <C>
Funded Status of the Plan                                                  $   2,650            $   (5,868)
Unrecognized Net (Gain)/Loss                                                     155                 8,141
Unrecognized Prior Service Cost                                                 (456)               (1,031)
Unrecognized Net Transition (Asset)/Obligation                                   178                   411
                                                                         -----------          ------------
Net Amount Recognized                                                      $   2,527            $    1,653
                                                                           =========            ==========

Prepaid Benefit Cost                                                           2,227            $    1,683
Accrued Benefit Liability                                                     (2,501)               (3,886)
Accumulated Other Comprehensive Income                                         2,801                 3,856
                                                                          ----------           -----------
Net Amount Recognized                                                      $   2,527            $    1,653
                                                                           =========            ==========

</TABLE>

Components of Net Periodic Benefit Cost for Fiscal Year

<TABLE>
<CAPTION>
                                                          1999                  1998                  1997
                                                          ----                  ----                  ----

<S>                                                        <C>            <C>                    <C>
Service Cost                                               760            $    1,000             $   1,050
Interest Cost                                            3,290                 3,307                 3,272
Expected Return of Plan Assets                          (3,707)               (3,427)               (3,027)
Amortization of Unrecognized:
   Net (Gain)/Loss                                         244                   266                   233
   Prior Service Cost                                      (79)                 (111)                 (111)
   Net Transition (Asset)/Obligation                        36                    71                    71
Settlement Gain                                             --                   (92)                    -
Curtailment (Gain)/Loss                                   (299)                  101                     -
                                                    -----------          -----------        --------------
Net Periodic Pension Cost                           $      245             $   1,115            $    1,488
                                                    ==========             =========            ==========

Other Comprehensive Income                           $   1,055            $     (348)          $      (326)

Accrued Benefit Obligation, November 30               $ 43,814              $ 46,878             $  46,042
</TABLE>

Assumptions used in accounting for defined benefit pension plans are as follows:

<TABLE>
<CAPTION>
                                                   1999        1999       1998       1998       1997       1997
                                                   Non-      Qualified    Non-     Qualified    Non-     Qualified
                                                 Qualified     Plans    Qualified    Plans    Qualified    Plans
                                                   Plans                  Plan                  Plan

<S>                                                <C>         <C>        <C>        <C>        <C>        <C>
Discount rate                                      7.5%        7.5%       6.75%      6.75%      7.0%       7.0%
Rate of increase in compensation levels             N/A        5.0%        N/A       5.0%        N/A       5.0%
Expected long-term rate of return on assets        8.5%        8.5%       8.5%       8.5%       8.0%       8.5%
</TABLE>


Assets of the Company's qualified plans are invested in directed trusts.  Assets
in the directed  trusts are invested in common and preferred  stocks,  corporate
bonds,  money market funds and U.S.  government  obligations.  The  nonqualified
supplemental  plan  assets  consisted  of the cash  surrender  value of  certain
insurance contracts.

The Company also  contributes to certain union  retirement  and insurance  funds
established to provide  retirement  benefits and group life, health and accident
insurance  for eligible  employees.  The total cost of these  contributions  was
$3,056,  $3,184 and $3,839 in 1999, 1998 and 1997,  respectively.  The actuarial
present value of accumulated plan benefits and net assets available for benefits
for  employees  in the  union  administered  plans  are  not  determinable  from
information available to the Company.

Long Term Savings and Investment Plan

Salant sponsors the Long Term Savings and Investment  Plan, under which eligible
salaried  employees  may  contribute  up to 15% of  their  annual  compensation,
subject to certain  limitations,  to a money market  mutual fund, a fixed income
fund,  the  Company's   common  stock  and/or  selected  mutual  funds.   Salant
contributes a minimum  matching amount of 20% of the first 6% of a participant's
annual  compensation  and may contribute an additional  discretionary  amount in
cash or in the Company's common stock. In 1999, 1998 and 1997 Salant's aggregate
contributions  to the Long Term Savings and  Investment  Plan  amounted to $140,
$198 and $218, respectively.

Note 14.  Stock Options and Shareholder Rights

Pursuant to the Plan, on the Effective  Date, all existing stock options for the
Old  Common  Stock  were  cancelled  and the  Company  established,  subject  to
shareholder  approval and in accordance  with the  description  set forth in the
Plan, the Salant Corporation 1999 Stock Award and Incentive Plan (the "Incentive
Plan").  The Plan provides that Salant will reserve 10% of the  outstanding  New
Common Stock,  on a fully diluted basis,  as of the Effective  Date, in order to
create new employee  stock and stock option plans for the benefit of the members
of management and the other employees of Salant. In addition,  the Plan provides
that, on the Effective  Date, a management  stock option plan will be authorized
pursuant to which  options to acquire a certain  percentage  of such 10% reserve
will be  granted  to (i) the  directors  of Salant  and (ii)  those  members  of
management  of Salant  selected  by  executive  management  and  approved by the
non-management  members  of the  board of  directors  of  Salant.  The Plan also
provides  that the  decision  to grant any  additional  stock  options  from the
balance of the 10% reserve  referred  to above,  and the  administration  of the
stock plans,  will be at the  discretion  of the  non-management  members of the
board of directors of Salant.

The following table summarizes stock option  transactions  during 1997, 1998 and
1999:

<TABLE>
<CAPTION>
                                                                                                 Weighted
                                                                                                  Average
                                                                                                  Exercise
                                                          Shares             Price Range             Price

<S>                             <C> <C>                  <C>               <C>    <C>            <C>
Options outstanding at December 28, 1996                 1,033,740         $1.625-15.125         $6.56
Options granted during 1997                              1,316,900         $2.0625-4.125         $3.65
Options exercised during 1997                              (76,500)         $1.625-2.625         $2.56
Options surrendered or cancelled during 1997              (930,747)        $2.625-15.125         $6.54
                                                         ---------
Options outstanding at January 3, 1998                   1,343,393        $2.0625-12.875         $3.95
Options granted during 1998                                 10,000               $1.7188         $1.72
Options exercised during 1998                                    0
Options surrendered or canceled during 1998                (87,026)         $2.25-12.875         $5.15
                                                           -------
Options outstanding at January 2, 1999                   1,266,367          $1.7188-9.82         $3.85
Options cancelled due to reorganization - 1999          (1,266,367)         $1.7188-9.82         $3.85
Options granted during 1999                              1,814,554          $4.125-5.875         $4.99
Options exercised during 1999                                    0
Options surrendered or canceled during 1999               (895,609)               $5.875         $5.88
                                                        -----------
Options outstanding at January 1, 2000                     914,945          $4.125-5.875         $4.13

Options exercisable at January 1, 2000                     406,389          $4.125-5.875         $4.14
                                                     =============

Options exercisable at January 2, 1999                     513,526        $2.0625-12.875         $4.21
                                                     =============
</TABLE>

The 895,609 of options  shown in the above table as  "surrendered  or  canceled"
during 1999  reflect  890,277 of options that were issued at $5.875 and repriced
to $4.125 all within fiscal 1999.


The following tables summarize information about outstanding stock options as of
January 1, 2000 and January 2, 1999:

<TABLE>
<CAPTION>
                                                 Options Outstanding                        Options Exercisable

                                                       Weighted Average
                                          Number           Remaining        Weighted          Number           Weighted
                                      Outstanding at   Contractual Life      Average      Exercisable at       Average
                                                       ----------------
      Range of Exercise Price             1/1/00                            Exercise          1/1/00        Exercise Price
                                                                              Price

<S>        <C>    <C>                         <C>                   <C>          <C>               <C>              <C>
           $4.125-5.875                       914,945               9.43         $4.130            406,389          $4.136


                                                       Weighted Average
                                          Number           Remaining        Weighted          Number           Weighted
                                     Outstanding at    Contractual Life      Average      Exercisable at       Average
                                                   -   ----------------
      Range of Exercise Price             1/2/99                            Exercise          1/2/99        Exercise Price
                                                                              Price

          $1.7188 -$2.75                      300,300               8.56         $2.495            100,299          $2.529
          $2.813 - $4.00                      453,900               8.11          3.849            201,060           3.809
              $4.125                          400,000               8.22          4.125            100,000           4.125
           $4.25 - $5.88                       45,167               3.86          5.459             45,167           5.459
          $6.69 - $ 9.82                       67,000               4.82          7.245             67,000           7.245

         $1.7188 - $ 9.82                   1,266,367               7.93           3.85            513,526            4.21
</TABLE>

In summary,  as of January 1, 2000,  there were  914,945  shares of Common Stock
reserved  for the exercise of stock  options and 196,166  shares of Common Stock
reserved for future grants of stock options or awards.

All stock  options are granted at fair market  value of the Common  Stock at the
grant date. The weighted  average fair value of the stock options granted during
1999 and 1998 was $5.88 and  $1.45,  respectively.  The fair value of each stock
option grant is estimated  on the date of grant using the  Black-Scholes  option
pricing model with the following weighted average assumptions used for grants in
1999, 1998 and 1997,  respectively:  risk-free  interest rate of 6.00%,5.16% and
5.75%;  expected dividend yield of 0%, for all years; expected life of 5.75,4.46
years and 4.62 years;  and  expected  volatility  of 316%,  106%,  and 49%.  The
outstanding stock options at January 1, 2000 have a weighted average contractual
life of 9.42 years.

The Company  accounts for the stock option plans in accordance  with  Accounting
Principles Board Opinion No. 25, under which no compensation  cost is recognized
for stock option awards.  Had compensation cost been determined  consistent with
Statement of Financial  Accounting Standard No. 123, "Accounting for Stock-Based
Compensation"  (SFAS 123), the Company's pro forma net  income/(loss)  for 1999,
1998 and 1997 would have been $16.687,  ($74,069) and  ($19,070),  respectively.
The  Company's pro forma net  income/(loss)  per share based upon the New Common
Stock for 1999,  1998 and 1997  would  have been  $1.67,  ($7.41)  and  ($1.91),
respectively.  Because the SFAS 123 method of accounting has not been applied to
options granted prior to 1995, the resulting pro forma compensation cost may not
be representative of that to be expected in future years.


Note 15.  Deferred Liabilities
<TABLE>
<CAPTION>
                                                                          January 1,            January 2,
                                                                                2000                  1999

<S>                                                                            <C>                   <C>
Deferred pension obligations                                                   2,801                 3,856

Other deferred liabilities                                                        18                   154

Deferred rent                                                                  1,314                 1,263
                                                                              ------                 -----
                                                                               4,133                 5,273
                                                                              ======                ======
</TABLE>

Note 16.  Commitments and Contingencies

(a)      Lease Commitments

The Company  conducts a portion of its  operations  in premises  occupied  under
leases  expiring at various dates through  2012.  Certain of the leases  contain
renewal  options.  Rental  payments  under  certain  leases may be adjusted  for
increases in taxes and operating expenses above specified amounts.  In addition,
certain of the leases for outlet stores contain  provisions for additional  rent
based upon sales.

In  1999,  1998  and  1997,  rental  expense  was  $5,144,  $7,008  and  $7,689,
respectively.  As of January 1,  2000,  future  minimum  rental  payments  under
noncancelable  operating  leases  (exclusive  of  renewal  options,   percentage
rentals,  and  adjustments  for property  taxes and operating  expenses) were as
follows:
<TABLE>
<CAPTION>

                           Fiscal Year

<S>                        <C>                                                <C>
                           2000                                               $    4,398
                           2001                                                    4,232
                           2002                                                    4,078
                           2003                                                    3,966
                           2004                                                    3,737
                           Thereafter                                           _ 25,149
                                                                                --------
                              Total (Not reduced by minimum                    $  45,560
                                                                               =========
                                             sublease rentals of 21,268)
</TABLE>

(b)      Employment Agreements

The Company has employment agreements with certain executives, which provide for
the payment of compensation aggregating approximately $1,102 in 2000 and $380 in
2001. In addition, such employment agreements provide for incentive compensation
based on various performance criteria.

Note 17.  Discontinued Operations

In December  1998,  the Company  discontinued  the  operations of the Children's
Group, which produced and marketed children's blanket sleepers primarily using a
number of well-known  licensed  characters created by, among others,  DISNEY and
WARNER BROTHERS. The Children's Group also marketed pajamas under the DR. DENTON
and OSHKOSH B'GOSH  trademarks,  and sleepwear and underwear under the JOE BOXER
trademark.  For fiscal 1999, the Company recognized a charge of $2.0 million for
additional expenses incurred during the phase out period and additional expenses
needed to dispose of the assets related to the Children's  business.  At the end
of Fiscal 1999,  $941  thousand  remained in the reserve of which  approximately
$300  thousand  was for  severance  and the  remaining  balance  related  to the
disposal of assets.  For Fiscal 1998,  the Company  recognized a charge of $15.9
million  reflecting the  discontinuance  of the Children's  Group.  Of the $15.9
million,  $10.2 million related to the operations prior to the date the decision
was made to  discontinue  the business and $5.7  million  represented  estimated
future losses during the phase-out period. The $5.7 million was comprised of (i)
write-off of assets of $2.9 million, (ii) estimated loss from operations of $1.6
million,  (iii) severance of $1.5 million and (iv) royalty and lease payments of
$1.5 million,  offset by $1.8 million for the sale of the Dr. Denton  trademark.
No income tax benefits have been allocated to the division.

Pursuant to a purchase and sale  agreement  dated January 14, 1999,  the Company
sold,  all of Salant's  right to,  title and interest  in,  certain  assets (Dr.
Denton  trademark,  selected  inventory  and  machinery  and  equipment)  of the
Children's  Group.  Inventory not sold above has been or will be sold during the
phase-out period.  Accounts receivable,  prepaids,  accounts payable and accrued
liabilities  will be collected  or paid  through the normal  course of business.
Property,  plant  and  equipment  has been  written  down to its  estimated  net
realizable  value and the Company is  actively  pursuing  the  disposal of these
assets.

 In June 1997, the Company  discontinued the operations of the Made in the Shade
division,  which produced and marketed women's junior sportswear.  The loss from
operations of the division in 1997 was $8,136, which included a charge of $4,459
for the write-off of goodwill.  Additionally,  in 1997,  the Company  recorded a
charge of $1,330 to accrue for expected  operating  losses  during the phase-out
period.  Substantially  all assets and  liabilities  were settled in fiscal year
1997 with the balance resolved in early fiscal year 1998.

The Made in the  Shade  division's  results  for 1998 and  1997,  as well as the
Salant Children's  division's  results for 1999, 1998 and 1997 are summarized as
follows (no income tax benefits have been allocated to the divisions):
<TABLE>
<CAPTION>

                                                               1999               1998             1997
                                                             ------               ----             ----

Net Sales
<S>                                                               <C>             <C>             <C>
   Children's                                                     5,493           42,766          $ 49,265
   Made in the Shade                                                 --               --             2,822
                                                              ---------     ------------        ----------
Total                                                             5,493           42,766          $ 52,087
                                                                 ======          =======          ========

Net Income/(Loss) from operations
   Children's                                                    (1,955)         (10,163)        $  (2,328)

   Made in the Shade                                                 --               --            (8,136)
                                                             ----------     ------------        -----------

Total                                                            (1,955)         (10,163)         $(10,464)
                                                                 ======          =======          ========
</TABLE>

Net  (liabilities)/assets  of  discontinued  operations  in the  1999  and  1998
consolidated balance sheets include:
<TABLE>
<CAPTION>

                                                                 1999              1998
                                                                 ----              ----

<S>                                                        <C>                   <C>
         Net accounts receivable                           $         --          $ 3,833
         Net inventory                                               --            5,698
         Prepaids and other                                          24              999
         Assets held for Sale                                        86            2,826
                                                               --------         --------

         Assets                                                     110           13,356
                                                                -------           ------

         Accounts payable                                           193            1,374
         Accrued liabilities                                        285              394
         Reserve for future phase-out losses                        941            4,728
                                                                -------          -------

         Liabilities                                              1,419            6,446
                                                                 ------           ------

         Net (Liabilities)/Assets                              $ (1,309)         $ 6,860
                                                                ========          ======
</TABLE>

Note 18.  Accumulated Other Comprehensive Income

<TABLE>
<CAPTION>
                                                                                                    Accum-
                                                                   Foreign         Minimum        ulated
                                                                   Currency       Pension          other
                                                                  Translation    Liability       Compre-
                                                                   Adjust-        Adjust-         hensive
                                                                    ments          ments           Income

1999

<S>                                                               <C>            <C>               <C>
  Beginning of the year balance                                   $(197)         $(3,856)          $(4,053)
  12 month change                                                    54            1,055             1,109
                                                                -------         --------          --------
  End of the year balance                                         $(143)         $(2,801)          $(2,944)
                                                                  ======         =======           =======

1998

  Beginning of the year balance                                 $     6          $(3,508)          $(3,502)
  12 month change                                                  (203)            (348)             (551)
                                                                  ------       ----------        ----------
  End of the year balance                                         $(197)         $(3,856)          $(4,053)
                                                                  ======         ========          ========

1997

  Beginning of the year balance                                  $   76          $(3,182)          $(3,106)
  12 month change                                                   (70)            (326)             (396)
                                                                 -------       ----------        ----------
  End of the year balance                                       $     6          $(3,508)          $(3,502)
                                                                ========         ========          ========
</TABLE>




Note 19.  Quarterly Financial Information (Unaudited)
<TABLE>
<CAPTION>

                        Fiscal year ended January 1, 2000

                                                Total      4th Qtr.     3rd Qtr.      2nd Qtr.     1st Qtr.

<S>                                          <C>           <C>           <C>          <C>          <C>
Net sales                                    $248,370      $50,671       $57,297      $61,820      $78,582
Gross profit                                   55,979       15,267        14,111        9,768       16,833
Net income/(loss)                              20,600        1,859         2,371       22,141       (5,771)
Pro forma diluted earnings/(loss) per share     $2.06        $0.19        $0.24        $2.21         $0.58

                        Fiscal year ended January 2, 1999

                                                Total      4th Qtr.     3rd Qtr.      2nd Qtr.     1st Qtr.
Net sales                                    $300,586      $73,935       $80,344      $69,362      $76,945
Gross profit                                   62,394        8,899        20,862       16,665       15,968
Net income/(loss)                             (72,662)     (67,887)        2,090       (3,568)      (3,297)
Pro forma diluted earnings/(loss) per share    $(7.27)      $(6.79)       $0..21      $(0..36)      $(0..33)
</TABLE>


Reference is made to Notes 3, 4 and 10  concerning  fourth  quarter  adjustments
during the years ended January 1, 2000 and January 2, 1999.

Note 20. Legal Proceedings

The  Company is a  defendant  in several  legal  actions.  In the opinion of the
Company's management, based upon the advice of the respective attorneys handling
such cases,  such actions are not expected to have a material  adverse effect on
the Company's  consolidated  financial  position,  results of operations or cash
flow. In addition, the Company notes the following legal proceedings.

1. Bankruptcy  Case. On the Filing Date,  Salant filed a voluntary  petition for
relief under chapter 11 of the Bankruptcy  Code in the United States  Bankruptcy
Court for the  Southern  District  of New York  (Case No.  98-10107  (CB)).  The
Company  filed its Plan on the  Filing  Date and the Plan was  confirmed  by the
Bankruptcy  Court on April 16, 1999.  The Plan was  consummated on the Effective
Date.  The 1998  Case is  currently  pending  under  the  caption  In re  Salant
Corporation, Chapter 11 Case No. 98-10107 (CB). All pre-Filing Date non-disputed
and allowed claims against Salant have been or will be satisfied pursuant to the
terms of the Plan. Salant has filed, and expects to continue to file, objections
to all disputed pre-Filing Date claims asserted against Salant in the 1998 Case.

2.  Rodriguez-Olvera  Action. The Company was a defendant in a lawsuit captioned
Maria Delores ------------------------- --------------- Rodriguez-Olvera, et al.
v. Salant Corp., et al., Case No. 97-07-14605-CV, in the 365th Judicial District
-------------------------------------------------   Court  of  Maverick  County,
Texas (the  "Rodriguez-Olvera  Action").  The plaintiffs in the Rodriguez-Olvera
Action asserted personal injury, wrongful death, and survival claims arising out
of a bus accident that occurred on June 23, 1997 wherein  fourteen  persons were
killed and twelve  others  claimed  injuries.  The  Rodriguez-Olvera  plaintiffs
sought  compensation  from the  Company  for  those  deaths  and  injuries.  The
Company's  insurers  agreed to pay (and the Company has been  informed that they
did  pay)  $30  million  to  settle  this  matter  in  September  1999,  and the
Rodriguez-Olvera Action has been dismissed.

The  Company  is also a  defendant  in a related  declaratory  judgment  action,
captioned  Hartford  Fire  Insurance  Company v. Salant  Corporation,  Index No.
60233/98, in the Supreme Court of the State of New York, County of New York (the
"Hartford Action"),  relating to the Company's insurance coverage for the claims
that were the subject of the  Rodriguez-Olvera  Action.  In the Hartford Action,
the Company's  insurers seek a declaratory  judgment that the claims asserted in
the Rodriguez-Olvera Action are not covered under the policies that the insurers
had  issued.  The  Company's  insurers  nevertheless  provided  a defense to the
Company in the Rodriguez-Olvera Action, and as indicated above, paid $30 million
to settle the case without  prejudice to their positions in the Hartford Action.
Currently, there are discussions being held with a view to reaching an agreement
for the  settlement  of the  Hartford  Action;  if the  settlement  proposal  is
achieved as contemplated,  management  believes there will be no material impact
on the Company's financial position or the results of operations. Pending such a
action,  Salant's insurers have not withdrawn their  reservation of rights,  and
the  possibility  remains that one or more of such  insurers  will seek recourse
against Salant.

ITEM 9.           DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.
                                    PART III

ITEM 10.          DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by Item 10 is incorporated by reference herein from the
Company's Proxy Statement to be filed by the Company relating to the 2000 annual
meeting of shareholders.

ITEM 11.          EXECUTIVE COMPENSATION

The information required by Item 11 is incorporated by reference herein from the
Company's Proxy Statement to be filed by the Company relating to the 2000 annual
meeting of shareholders.

ITEM 12.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by Item 12 is incorporated by reference herein from the
Company's Proxy Statement to be filed by the Company relating to the 2000 annual
meeting of shareholders.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by Item 13 is incorporated by reference herein from the
Company's Proxy Statement to be filed by the Company relating to the 2000 annual
meeting of shareholders.

                                     PART IV

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

Exhibits.

Financial Statements

The following financial statements are included in Item 8 of this Annual Report:

Independent Auditors' Report

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income

Consolidated Balance Sheets

Consolidated Statements of Shareholders' Equity/(Deficiency)

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Financial Statement Schedule

The following  Financial Statement Schedule for the years ended January 1, 2000,
January 2, 1999 and January 3, 1998 is filed as part of this Annual Report:

Schedule II - Valuation and Qualifying Accounts and Reserves

All other  schedules  have been  omitted  because they are  inapplicable  or not
required,  or the information is included elsewhere in the financial  statements
or notes thereto.

                       SALANT CORPORATION AND SUBSIDIARIES

SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<TABLE>
<CAPTION>

COLUMN A                               COLUMN B                  COLUMN C               COLUMN D               COLUMN E
--------                               --------    ------------------------------------  -------               --------

                                                        (1)             (2)
                                     Balance at     Charged to         Charged to                               Balance
                                      Beginning     Costs and      Other Accounts      Deductions               at End
Description                          of Period       Expenses     -- Describe         -- Describe              of Period
                                    ----------      ---------  ------------------     -----------              ---------

YEAR ENDED JANUARY 1, 2000:

Accounts receivable allowance
<S>                                      <C>              <C>              <C>           <C>                      <C>
  for doubtful accounts                  $2,661           $260             $ --          $502 (A)                 $2,419

Reserve for business restructuring       $3,551         $4,039             $ --        $5,282 (B)                 $2,308

YEAR ENDED JANUARY 2, 1999:

Accounts receivable - allowance
  for doubtful accounts                  $2,094         $2,769            $  --        $2,202 (A)                 $2,661

Reserve for business restructuring     $2,764          $24,825            $  --       $24,038 (B)                 $3,551

YEAR ENDED JANUARY 3, 1998:

Accounts receivable allowance
  for doubtful accounts                  $2,806           $195             $ --          $907 (A)                 $2,094

Reserve for business restructuring       $2,969         $2,066             $ --        $2,271 (B)                 $2,764

</TABLE>


NOTES:

(A) Uncollectible  accounts written off, less recoveries.  (B) Costs incurred in
plant closings and business restructuring.

Reports on Form 8-K

The Company did not file any reports on Form 8-K for the quarter  ended  January
1, 2000.

<TABLE>
<CAPTION>

                                    Exhibits

                                                                 Incorporation
Number         Description                                       By Reference To
<S>            <C>                                               <C>
2.1            Third Amended Disclosure                          Exhibit 1 to
               Statement of Salant                               Form 8-A dated
               Corporation, and Denton                           July 28, 1993.
               Mills, Inc., dated
               May 12,1993.

2.2            Third Amended Joint                               Included as
               Chapter 11 Plan of                                Exhibit D-1
               Reorganization of                                 to Exhibit 1
               Salant Corporation                                to Form 8-A
               and Denton Mills, Inc.                            dated July 28, 1993.

2.3            Chapter 11 Plan of Reorganization                 Exhibit 2.3 to Form 8-K dated
               for Salant Corporation, dated                     December 29, 1998.
               December 29, 1998.

2.4            Disclosure Statement for Chapter 11               Exhibit 2.4 to Form 8-K dated
               Plan of Reorganization, dated                     December 29, 1998.
               December 29, 1998.

2.5            First Amended Chapter 11 Plan of                  Exhibit 2.5 to Form 8-K dated
               Reorganization for Salant                         April 30, 1999.
               Corporation, dated
               February 3, 1999.

2.6            First Amended Disclosure
               Statement for Chapter 11 Plan
               of Reorganization for Salant
               Corporation, dated
               February 3, 1999.

2.7            Order Pursuant to Section 1129                    Exhibit 99.3 to Salant
               of the Bankruptcy Code Confirming                 Corporation's Current Report on
               the First Amended Plan of                         Form 8-K dated April 30, 1999.
               Reorganization of Salant
               Corporation, dated
               April 16, 1999.

3.1            Form of Amended and                               Included as Exhibit
               Restated Certificate of                           D-1 to Exhibit 2
               Incorporation of Salant                           to Form 8-A dated
               Corporation.                                      July 28, 1993.

3.2            Form of Bylaws, as amended, of                    Exhibit 3.2 to Form 10-K
               Salant Corporation, effective                     dated March 24, 1995
               September 21, 1994.

3.3            Amended and Restated                              Exhibit 1.1 to
               Certificate of                                    Form 8-A dated
               Incorporation of                                  May 12, 1999
               Salant Corporation,
               effective May 11, 1999.

3.4            Amended and Restated                              Exhibit 1.2 to
               By-laws of Salant                                 Form 8-A dated
               Corporation, effective                            May 12, 1999
               May 11, 1999.

4.1            Rights Agreement dated as of                      Exhibit 1 to Current Report
               December 8, 1987 between Salant                   on Form 8-K dated December 8, 1987.
               Corporation and The Chase
               Manhattan Bank, N.A.,
               as Rights Agent.  The Rights
               Agreement includes as Exhibit B the
               form of Right Certificate.

4.2            Form of First Amendment                           Exhibit 3 to
               to the Rights Agreement                           Amendment No. 1 to
               between Salant Corporation                        Form 8-A dated
               and Mellon Securities.                            July 29, 1993.

4.3            Indenture, dated as of                            Exhibit 10.34 to
               September 20, 1993, between Salant                Quarterly Report
               Corporation and Bankers                           on Form 10-Q for
               Trust Company, as trustee,                        the quarter ended
               for the 10-1/2% Senior                            October 2, 1993.
               Secured Notes due
               December 31, 1998.

10.1           Revolving Credit,                                 Exhibit 10.33 to
               Factoring and Security                            Quarterly Report
               Agreement dated September 29, 1993,               on Form 10-Q for
               between Salant Corporation                        the quarter ended
               and The CIT Group/Commercial                      October 2, 1993.
               Services, Inc.

10.2           Salant Corporation 1987 Stock Plan.*              Exhibit 19.2 to Annual Report on
                                                                 Form 10-K for fiscal year 1987.

10.3           Salant Corporation 1988 Stock Plan.*              Exhibit 19.3 to Annual Report on
                                                                 Form 10-K for fiscal year 1988.

10.4           First Amendment, effective                        Exhibit 19.1 to Quarterly Report
               as of July 25, 1989, to the Salant                on Form 10-Q for the quarter
               Corporation 1988 Stock Plan. *                    ended September 30, 1989.

10.5           Form of Salant Corporation 1988                   Exhibit 19.7 to Annual Report on
               Stock Plan Employee Agreement. *                  Form 10-K for fiscal year 1988.

10.6           Form of Salant Corporation                        Exhibit 19.8 to
               1988 Stock Plan Director                          Annual Report on
               Agreement. *                                      Form 10-K for fiscal
                                                                 year 1988.

10.7           License Agreement, dated                          Exhibit 19.1 to Annual Report
               January 1, 1991, by and between                   on Form 10-K for fiscal year 1992.
               Perry Ellis International Inc.
               and Salant Corporation regarding
               men's sportswear.

10.8           License Agreement, dated                          Exhibit 19.2 to Annual Report
               January 1, 1991, by and between                   on Form 10-K for
               Perry Ellis International Inc.                    fiscal year 1992.
               and Salant Corporation regarding
               men's dress shirts.

10.9           Forms of Salant Corporation 1993                  Exhibit 10.34 to Annual
               Stock Plan Directors' Option                      Report on Form
               Agreement. *                                      10-K for Fiscal Year 1993.

10.10          Letter Agreement, dated as of                     Exhibit 10.45 to
               August 24, 1994, amending the                     Quarterly Report on
               Revolving Credit, Factoring and                   Form 10-Q for the
               Security Agreement, dated                         quarter ended October 1, 1994.
               September 20, 1993,
               between The CIT Group/Commercial
               Services, Inc. and Salant Corporation.

10.11          Third Amendment to Credit Agreement,              Exhibit 10.48 to Current Report on
               dated February 28, 1995, to the                   Form 8-K, dated March 2, 1995.
               Revolving Credit, Factoring and
               Security Agreement, dated
               September 20, 1993, as amended,
               between The CIT Group/Commercial
               Services, Inc. and Salant Corporation.

10.12          Salant Corporation Retirement Plan,               Exhibit 10.23 to Annual Report on
               as amended and restated. *                        Form 10-K for Fiscal Year 1994.

10.13          Salant Corporation Pension Plan,                  Exhibit 10.24 to Annual Report on
               as amended and restated. *                        Form 10-K for Fiscal Year 1994.

10.14          Salant Corporation Long Term Savings              Exhibit 10.25 to Annual Report on
               and Investment Plan as amended                    Form 10-K for Fiscal Year 1994.
               and restated. *

10.15          Fourth Amendment to Credit                        Exhibit 10.27 to
               Agreement, dated as of March 1,                   Quarterly Report
               1995, to the Revolving Credit,                    on Form 10-Q for
               Factoring and Security Agreement,                 the quarter
               dated as of September 20, 1993,                   ended April 1,
               as amended, between Salant                        1995.
               Corporation and The CIT Group/
               Commercial Services, Inc.

10.16          Fifth Amendment to Credit                         Exhibit 10.29
               Agreement, dated as of                            to Quarterly
               June 28, 1995, to the                             Report on
               Revolving Credit, Factoring                       Form l0-Q for
               and Security Agreement,                           the quarter
               dated as of September 20,                         ended July 1,
               1993, as amended, between                         1995.
               Salant Corporation and The
               CIT Group/Commercial Services, Inc.

10.17          Sixth Amendment to Credit                         Exhibit 10.30
               Agreement, dated as of                            to Quarterly
               August 15, 1995, to the                           Report on
               Revolving Credit, Factoring                       Form l0-Q for
               and Security Agreement,                           the quarter
               dated as of September 20,                         ended July 1,
               1993, as amended, between                         1995.
               Salant Corporation and The
               CIT Group/Commercial Services, Inc.

10.18          Letter from The CIT Group/                        Exhibit 10.31
               Commercial Services, Inc.,                        to Quarterly
               dated as of July 11, 1995,                        Report on
               regarding the waiver of a                         Form l0-Q for
               default.                                          the quarter
                                                                 ended July 1,
                                                                 1995.

10.19          Letter Agreement between                          Exhibit 10.31
               Salant Corporation and The                        to Quarterly
               CIT Group/Commercial Services,                    Report on
               Inc. dated as of July 11, 1995,                   Form l0-Q for
               regarding the Seasonal Overadvance                the quarter
               Subfacility.                                      ended July 1,
                                                                 1995.

10.20          Seventh Amendment to Credit                       Exhibit 10.34 to
               Agreement, dated as of                            Annual Report on
               March 27, 1996, to the                            Form 10-K for
               Revolving Credit, Factoring                       fiscal year 1995.
               and Security Agreement,
               dated as of  September  20,  1993,  as  amended,  between  Salant
               Corporation and The CIT Group/Commercial Services, Inc.

10.21          First Amendment to the Salant                     Exhibit 10.35 to
               Corporation Retirement Plan, dated                Quarterly Report on
               as of January 31, 1996. *                         Form 10-Q for the
                                                                 quarter ended
                                                                 March 30, 1996.

10.22          First Amendment to the Salant                     Exhibit 10.36 to
               Corporation Long Term Savings and                 Quarterly Report on
               Investment Plan, effective as of                  Form 10-Q for the
               January 1, 1994. *                                quarter ended
                                                                 March 30, 1996.

10.23          Eighth Amendment to Credit Agreement,             Exhibit 10.37 to
               dated as of June 1, 1996, to the                  Quarterly Report on
               Revolving Credit, Factoring and                   Form 10-Q for the
               Security Agreement, dated as of                   quarter ended
               September 20, 1993, as amended,                   June 29, 1996.
               between Salant Corporation and
               The CIT Group/Commercial Services,
               Inc.

10.24          Ninth Amendment to Credit Agreement,              Exhibit 10.38 to
               dated as of August 16,1996, to the                Quarterly Report on
               Revolving Credit, Factoring and                   Form 10-Q for the
               Security Agreement, dated as of                   quarter ended
               September 20, 1993, as amended,                   June 29, 1996.
               between Salant Corporation and
               The CIT Group/Commercial Services,
               Inc.

10.25          Salant Corporation 1996 Stock Plan.*              Exhibit 10.40 to Annual Report on
                                                                 Form 10-K for Fiscal Year 1996.

10.26          Tenth Amendment to Credit Agreement,              Exhibit 10.41 to Annual Report on
               dated as of February 20, 1997, to                 Form 10-K for Fiscal Year 1996.
               the Revolving Credit, Factoring and
               Security Agreement, dated as of
               September 20, 1993, as amended,
               between Salant Corporation and
               The CIT Group/Commercial Services,
               Inc.

10.27          Employment Agreement, dated as                    Exhibit 10.43 to Annual Report on
               of March 24, 1997, between                        Form 10-K for Fiscal Year 1996.
               Jerald S. Politzer and
               Salant Corporation. *

10.28          Employment Agreement, dated as of                 Exhibit 10.44 to Quarterly Report on
               May 1, 1997, between Todd Kahn and                Form 10-Q for the quarter ended
               Salant Corporation. *                             June 28, 1997.

10.29          Employment Agreement, dated as of                 Exhibit 10.45 to Quarterly Report on
               August 18, 1997 between Philip A.                 Form 10-Q for the quarter ended
               Franzel and Salant Corporation. *                 June 28, 1997.

10.30          Eleventh Amendment to Credit                      Exhibit 10.46 to Quarterly Report on
               Agreement, dated as of                            Form 10-Q for the quarter ended
               August 8, 1997, to the Revolving                  June 28, 1997.
               Credit, Factoring and Security
               Agreement, dated as of
               September 20, 1993, as amended,
               between Salant Corporation and
               The CIT Group/Commercial Services, Inc.

10.31          Letter Agreement, dated                           Exhibit 10.48 to Current Report on
               March 2, 1998, by and among Salant                Form 8-K dated March 4, 1998.
               Corporation, Magten Asset Management
               Corp., as agent on behalf of
               certain of its accounts, and Apollo
               Apparel Partners, L.P.

10.32          Twelfth Amendment and Forbearance                 Exhibit 10.49 to Current Report on
               Agreement to Credit Agreement, dated              Form 8-K dated March 4, 1998.
               as of March 2, 1998, by and between
               Salant Corporation and The CIT
               Group/Commercial Services, Inc.

10.33          Thirteenth Amendment and Forbearance              Exhibit 10.53 to Current Report on
               Agreement, dated as of June 1, 1998,              Form 8-K dated June 1, 1998.
               By and between Salant Corporation
               And The CIT Group/Commercial
               Services, Inc.

10.34          Commitment Letter,  dated June 1, Exhibit 10.54 to Current Report
               on 1998, by and between Salant Form 8-K dated June 1, 1998.
               Corporation and The CIT
               Group/Commercial Services, Inc.

10.35          Letter Agreement, dated June 1,                   Exhibit 10.55 to Current Report on
               1998, by and among Salant                         Form 8-K dated June 1, 1998.
               Corporation, Magten Asset Management
               Corp., as agent on behalf of
               certain of its accounts, and Apollo
               Apparel Partners, L.P.

10.36          Letter Agreement, dated July 8,                   Exhibit 10.44 to Quarterly Report on
               1998, amending the Letter Agreement,              Form 10-Q for the quarter ended
               dated March 2, 1998, as amended,                  July 4, 1998.
               By and among Salant Corporation,
               Magten Asset Management Corp.,
               as agent on behalf of certain of its
               accounts, and Apollo Apparel
               Partners, L.P.


10.37          Letter Agreement, dated July 20,                  Exhibit 10.45 to Quarterly Report on
               1998, amending the Employment                     Form 10-Q for the quarter ended
               Agreement, dated August 18, 1997,                 October 3, 1998.
               between Philip A. Franzel and
               Salant Corporation. *

10.38          Letter Agreement, dated July 20,                  Exhibit 10.46 to Quarterly Report on
               1998, amending the Employment                     Form 10-Q for the quarter ended
               Agreement, dated May 1, 1997,                     October 3, 1998.
               between Todd Kahn and Salant
               Corporation. *

10.39  Letter Agreement, dated July 20,                          Exhibit 10.47 to Quarterly Report on
               1998, amending the Employment                     Form 10-Q for the quarter ended
               Agreement, dated March 20, 1997,                  October 3, 1998.
               between Jerald s. Politzer and
               Salant Corporation. *

10.40          Letter Agreement, dated                           Exhibit 10.48 to Current Report on
               November 30, 1998, by and between                 Form 8-K dated November 30, 1998.
               Salant Corporation and The CIT
               Group/Commercial Services, Inc.

10.41          Letter Agreement, dated                           Exhibit 10.49 to Current Report on
               December 4, 1998, by and between                  Form 8-K dated November 30, 1998.
               Salant Corporation and The CIT
               Group/Commercial Services, Inc.

10.42          Ratification and Amendment                        Exhibit 10.50 to Current Report on
               Agreement, dated as of December 29,               Form 8-K dated December 29, 1998.
               1998, by and between Salant
               Corporation and The CIT Group/Commercial
               Services, Inc.

10.43          Agreement between Salant                          Exhibit 99.4 to Current Report on
               Corporation and Pension Benefit                   Form 8-K dated April 30, 1999.
               Guaranty Corporation, dated
               March 24, 1999.

10.44          Amended and Restated Revolving                    Exhibit 10.43 to Form 10-Q, dated
               Credit and Security Agreement,                    May 17, 1999.
               dated May 11, 1999.

10.45          Employment Agreement, dated
               February 1, 1999, between
               Awadhesh Sinha and Salant
               Corporation. *

10.46          Employment Agreement, dated as
               of May 17, 1999, between Michael
               Setola and Salant Corporation. *

10.47          Letter Agreement, dated July 1, 1999,
               amending the Employment Agreement,
               dated February 1, 1999, between
               Awadhesh Sinha and Salant
               Corporation. *

21             List of Subsidiaries of the Company

27             Financial Data Schedule
</TABLE>

* constitutes a management contract or compensatory plan or arrangement.

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.

                                                    SALANT CORPORATION

Date: May 30, 2000                                  By: /s/ Awadhesh Sinha
                                                    -------------------
                                                    Awadhesh Sinha
                                                    Chief Financial Officer and
                                                    Chief Operating 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 indicated and on April 19, 1999.

         Signature                             Title

         /s/  Michael Setola         Chairman of the Board,
         Michael Setola              and Chief Executive Officer
                                    (Principal Executive Officer); Director

         /s/  Awadhesh Sinha         Chief Financial Officer
         Awadhesh Sinha              and Chief Operating Officer
                                    (Principal Financial and Accounting Officer)




         /s/   Talton Embry                        /s/  Raymond Empson

         Talton Embry      Director                Raymond Empson      Director


         /s/  Ben Evans                           /s/  Rose Lynch

         Ben Evans         Director               Rose Lynch           Director




                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549






                                    EXHIBITS


                                       to


                                    FORM 10-K


                     FOR THE FISCAL YEAR ENDED JANUARY 1, 2000

                               SALANT CORPORATION
                                  EXHIBIT INDEX
<TABLE>
<CAPTION>

                                                                 Incorporation
Number         Description                                       By Reference To

<S>            <C>                                               <C>
2.1            Third Amended Disclosure                          Exhibit 1 to
               Statement of Salant                               Form 8-A dated
               Corporation, and Denton                           July 28, 1993.
               Mills, Inc., dated
               May 12,1993.

2.2            Third Amended Joint                               Included as
               Chapter 11 Plan of                                Exhibit D-1
               Reorganization of                                 to Exhibit 1
               Salant Corporation                                to Form 8-A
               and Denton Mills, Inc.                            dated July 28, 1993.

2.3            Chapter 11 Plan of Reorganization                 Exhibit 2.3 to Form 8-K dated
               for Salant Corporation, dated                     December 29, 1998.
               December 29, 1998.

2.4            Disclosure Statement for Chapter 11               Exhibit 2.4 to Form 8-K dated
               Plan of Reorganization, dated                     December 29, 1998.
               December 29, 1998.

2.5            First Amended Chapter 11 Plan of                  Exhibit 2.5 to Form 8-K dated
               Reorganization for Salant                         April 30, 1999.
               Corporation, dated
               February 3, 1999.

2.7            First Amended Disclosure
               Statement for Chapter 11 Plan
               of Reorganization for Salant
               Corporation, dated
               February 3, 1999.

2.8            Order Pursuant to Section 1129                    Exhibit 99.3 to Salant
               of the Bankruptcy Code Confirming                 Corporation's Current Report on
               the First Amended Plan of                         Form 8-K dated April 30, 1999.
               Reorganization of Salant
               Corporation, dated
               April 16, 1999.

3.1            Form of Amended and                               Included as Exhibit
               Restated Certificate of                           D-1 to Exhibit 2
               Incorporation of Salant                           to Form 8-A dated
               Corporation.                                      July 28, 1993.

3.2            Form of Bylaws, as amended, of                    Exhibit 3.2 to Form 10-K
               Salant Corporation, effective                     dated March 24, 1995
               September 21, 1994.

3.3            Amended and Restated                              Exhibit 1.1 to
               Certificate of                                    Form 8-A dated
               Incorporation of                                  May 12, 1999
               Salant Corporation,
               effective May 11, 1999.

3.4            Amended and Restated                              Exhibit 1.2 to
               By-laws of Salant                                 Form 8-A dated
               Corporation, effective                            May 12, 1999
               May 11, 1999.

4.1            Rights Agreement dated as of                      Exhibit 1 to Current Report
               December 8, 1987 between Salant                   on Form 8-K dated December 8, 1987.
               Corporation and The Chase
               Manhattan Bank, N.A.,
               as Rights Agent.  The Rights
               Agreement includes as Exhibit B the
               form of Right Certificate.

4.2            Form of First Amendment                           Exhibit 3 to
               to the Rights Agreement                           Amendment No. 1 to
               between Salant Corporation                        Form 8-A dated
               and Mellon Securities.                            July 29, 1993.

4.3            Indenture, dated as of                            Exhibit 10.34 to
               September 20, 1993, between Salant                Quarterly Report
               Corporation and Bankers                           on Form 10-Q for
               Trust Company, as trustee,                        the quarter ended
               for the 10-1/2% Senior                            October 2, 1993.
               Secured Notes due
               December 31, 1998.

10.1           Revolving Credit,                                 Exhibit 10.33 to
               Factoring and Security                            Quarterly Report
               Agreement dated September 29, 1993,               on Form 10-Q for
               between Salant Corporation                        the quarter ended
               and The CIT Group/Commercial                      October 2, 1993.
               Services, Inc.

10.2           Salant Corporation 1987 Stock Plan.*              Exhibit 19.2 to Annual Report on
                                                                 Form 10-K for fiscal year 1987.

10.3           Salant Corporation 1988 Stock Plan.*              Exhibit 19.3 to Annual Report on
                                                                 Form 10-K for fiscal year 1988.

10.4           First Amendment, effective                        Exhibit 19.1 to Quarterly Report
               as of July 25, 1989, to the Salant                on Form 10-Q for the quarter
               Corporation 1988 Stock Plan. *                    ended September 30, 1989.

10.5           Form of Salant Corporation 1988                   Exhibit 19.7 to Annual Report on
               Stock Plan Employee Agreement. *                  Form 10-K for fiscal year 1988.

10.6           Form of Salant Corporation                        Exhibit 19.8 to
               1988 Stock Plan Director                          Annual Report on
               Agreement. *                                      Form 10-K for fiscal
                                                                 year 1988.

10.7           License Agreement, dated                          Exhibit 19.1 to Annual Report
               January 1, 1991, by and between                   on Form 10-K for fiscal year 1992.
               Perry Ellis International Inc.
               and Salant Corporation regarding
               men's sportswear.

10.8           License Agreement, dated                          Exhibit 19.2 to Annual Report
               January 1, 1991, by and between                   on Form 10-K for
               Perry Ellis International Inc.                    fiscal year 1992.
               and Salant Corporation regarding
               men's dress shirts.

10.9           Forms of Salant Corporation 1993                  Exhibit 10.34 to Annual
               Stock Plan Directors' Option                      Report on Form
               Agreement. *                                      10-K for Fiscal Year 1993.

10.10          Letter Agreement, dated as of                     Exhibit 10.45 to
               August 24, 1994, amending the                     Quarterly Report on
               Revolving Credit, Factoring and                   Form 10-Q for the
               Security Agreement, dated                         quarter ended October 1, 1994.
               September 20, 1993,
               between The CIT Group/Commercial
               Services, Inc. and Salant Corporation.

10.11          Third Amendment to Credit Agreement,              Exhibit 10.48 to Current Report on
               dated February 28, 1995, to the                   Form 8-K, dated March 2, 1995.
               Revolving Credit, Factoring and
               Security Agreement, dated
               September 20, 1993, as amended,
               between The CIT Group/Commercial
               Services, Inc. and Salant Corporation.

10.12          Salant Corporation Retirement Plan,               Exhibit 10.23 to Annual Report on
               as amended and restated. *                        Form 10-K for Fiscal Year 1994.

10.13          Salant Corporation Pension Plan,                  Exhibit 10.24 to Annual Report on
               as amended and restated. *                        Form 10-K for Fiscal Year 1994.

10.14          Salant Corporation Long Term Savings              Exhibit 10.25 to Annual Report on
               and Investment Plan as amended                    Form 10-K for Fiscal Year 1994.
               and restated. *

10.15          Fourth Amendment to Credit                        Exhibit 10.27 to
               Agreement, dated as of March 1,                   Quarterly Report
               1995, to the Revolving Credit,                    on Form 10-Q for
               Factoring and Security Agreement,                 the quarter
               dated as of September 20, 1993,                   ended April 1,
               as amended, between Salant                        1995.
               Corporation and The CIT Group/
               Commercial Services, Inc.

10.16          Fifth Amendment to Credit                         Exhibit 10.29
               Agreement, dated as of                            to Quarterly
               June 28, 1995, to the                             Report on
               Revolving Credit, Factoring                       Form l0-Q for
               and Security Agreement,                           the quarter
               dated as of September 20,                         ended July 1,
               1993, as amended, between                         1995.
               Salant Corporation and The
               CIT Group/Commercial Services, Inc.

10.17          Sixth Amendment to Credit                         Exhibit 10.30
               Agreement, dated as of                            to Quarterly
               August 15, 1995, to the                           Report on
               Revolving Credit, Factoring                       Form l0-Q for
               and Security Agreement,                           the quarter
               dated as of September 20,                         ended July 1,
               1993, as amended, between                         1995.
               Salant Corporation and The
               CIT Group/Commercial Services, Inc.

10.18          Letter from The CIT Group/                        Exhibit 10.31
               Commercial Services, Inc.,                        to Quarterly
               dated as of July 11, 1995,                        Report on
               regarding the waiver of a                         Form l0-Q for
               default.                                          the quarter
                                                                 ended July 1,
                                                                 1995.

10.19          Letter Agreement between                          Exhibit 10.31
               Salant Corporation and The                        to Quarterly
               CIT Group/Commercial Services,                    Report on
               Inc. dated as of July 11, 1995,                   Form l0-Q for
               regarding the Seasonal Overadvance                the quarter
               Subfacility.                                      ended July 1,
                                                                 1995.

10.20          Seventh Amendment to Credit                       Exhibit 10.34 to
               Agreement, dated as of                            Annual Report on
               March 27, 1996, to the                            Form 10-K for
               Revolving Credit, Factoring                       fiscal year 1995.
               and Security Agreement,
               dated as of  September  20,  1993,  as  amended,  between  Salant
               Corporation and The CIT Group/Commercial Services, Inc.

10.21          First Amendment to the Salant                     Exhibit 10.35 to
               Corporation Retirement Plan, dated                Quarterly Report on
               as of January 31, 1996. *                         Form 10-Q for the
                                                                 quarter ended
                                                                 March 30, 1996.

10.22          First Amendment to the Salant                     Exhibit 10.36 to
               Corporation Long Term Savings and                 Quarterly Report on
               Investment Plan, effective as of                  Form 10-Q for the
               January 1, 1994. *                                quarter ended
                                                                 March 30, 1996.

10.23          Eighth Amendment to Credit Agreement,             Exhibit 10.37 to
               dated as of June 1, 1996, to the                  Quarterly Report on
               Revolving Credit, Factoring and                   Form 10-Q for the
               Security Agreement, dated as of                   quarter ended
               September 20, 1993, as amended,                   June 29, 1996.
               between Salant Corporation and
               The CIT Group/Commercial Services,
               Inc.

10.24          Ninth Amendment to Credit Agreement,              Exhibit 10.38 to
               dated as of August 16,1996, to the                Quarterly Report on
               Revolving Credit, Factoring and                   Form 10-Q for the
               Security Agreement, dated as of                   quarter ended
               September 20, 1993, as amended,                   June 29, 1996.
               between Salant Corporation and
               The CIT Group/Commercial Services,
               Inc.

10.25          Salant Corporation 1996 Stock Plan.*              Exhibit 10.40 to Annual Report on
                                                                 Form 10-K for Fiscal Year 1996.

10.26          Tenth Amendment to Credit Agreement,              Exhibit 10.41 to Annual Report on
               dated as of February 20, 1997, to                 Form 10-K for Fiscal Year 1996.
               the Revolving Credit, Factoring and
               Security Agreement, dated as of
               September 20, 1993, as amended,
               between Salant Corporation and
               The CIT Group/Commercial Services,
               Inc.

10.27          Employment Agreement, dated as                    Exhibit 10.43 to Annual Report on
               of March 24, 1997, between                        Form 10-K for Fiscal Year 1996.
               Jerald S. Politzer and
               Salant Corporation. *

10.28          Employment Agreement, dated as of                 Exhibit 10.44 to Quarterly Report on
               May 1, 1997, between Todd Kahn and                Form 10-Q for the quarter ended
               Salant Corporation. *                             June 28, 1997.

10.29          Employment Agreement, dated as of                 Exhibit 10.45 to Quarterly Report on
               August 18, 1997 between Philip A.                 Form 10-Q for the quarter ended
               Franzel and Salant Corporation. *                 June 28, 1997.

10.30          Eleventh Amendment to Credit                      Exhibit 10.46 to Quarterly Report on
               Agreement, dated as of                            Form 10-Q for the quarter ended
               August 8, 1997, to the Revolving                  June 28, 1997.
               Credit, Factoring and Security
               Agreement, dated as of
               September 20, 1993, as amended,
               between Salant Corporation and
               The CIT Group/Commercial Services, Inc.

10.31          Letter Agreement, dated                           Exhibit 10.48 to Current Report on
               March 2, 1998, by and among Salant                Form 8-K dated March 4, 1998.
               Corporation, Magten Asset Management
               Corp., as agent on behalf of
               certain of its accounts, and Apollo
               Apparel Partners, L.P.

10.32          Twelfth Amendment and Forbearance                 Exhibit 10.49 to Current Report on
               Agreement to Credit Agreement, dated              Form 8-K dated March 4, 1998.
               as of March 2, 1998, by and between
               Salant Corporation and The CIT
               Group/Commercial Services, Inc.

10.33          Thirteenth Amendment and Forbearance              Exhibit 10.53 to Current Report on
               Agreement, dated as of June 1, 1998,              Form 8-K dated June 1, 1998.
               By and between Salant Corporation
               And The CIT Group/Commercial
               Services, Inc.

10.34          Commitment Letter,  dated June 1, Exhibit 10.54 to Current Report
               on 1998, by and between Salant Form 8-K dated June 1, 1998.
               Corporation and The CIT
               Group/Commercial Services, Inc.

10.35          Letter Agreement, dated June 1,                   Exhibit 10.55 to Current Report on
               1998, by and among Salant                         Form 8-K dated June 1, 1998.
               Corporation, Magten Asset Management
               Corp., as agent on behalf of
               certain of its accounts, and Apollo
               Apparel Partners, L.P.

10.36          Letter Agreement, dated July 8,                   Exhibit 10.44 to Quarterly Report on
               1998, amending the Letter Agreement,              Form 10-Q for the quarter ended
               dated March 2, 1998, as amended,                  July 4, 1998.
               By and among Salant Corporation,
               Magten Asset Management Corp.,
               as agent on behalf of certain of its
               accounts, and Apollo Apparel
               Partners, L.P.


10.37          Letter Agreement, dated July 20,                  Exhibit 10.45 to Quarterly Report on
               1998, amending the Employment                     Form 10-Q for the quarter ended
               Agreement, dated August 18, 1997,                 October 3, 1998.
               between Philip A. Franzel and
               Salant Corporation. *

10.38          Letter Agreement, dated July 20,                  Exhibit 10.46 to Quarterly Report on
               1998, amending the Employment                     Form 10-Q for the quarter ended
               Agreement, dated May 1, 1997,                     October 3, 1998.
               between Todd Kahn and Salant
               Corporation. *

10.39  Letter Agreement, dated July 20,                          Exhibit 10.47 to Quarterly Report on
               1998, amending the Employment                     Form 10-Q for the quarter ended
               Agreement, dated March 20, 1997,                  October 3, 1998.
               between Jerald s. Politzer and
               Salant Corporation. *

10.40          Letter Agreement, dated                           Exhibit 10.48 to Current Report on
               November 30, 1998, by and between                 Form 8-K dated November 30, 1998.
               Salant Corporation and The CIT
               Group/Commercial Services, Inc.

10.41          Letter Agreement, dated                           Exhibit 10.49 to Current Report on
               December 4, 1998, by and between                  Form 8-K dated November 30, 1998.
               Salant Corporation and The CIT
               Group/Commercial Services, Inc.

10.42          Ratification and Amendment                        Exhibit 10.50 to Current Report on
               Agreement, dated as of December 29,               Form 8-K dated December 29, 1998.
               1998, by and between Salant
               Corporation and The CIT Group/Commercial
               Services, Inc.

10.43          Agreement between Salant                          Exhibit 99.4 to Current Report on
               Corporation and Pension Benefit                   Form 8-K dated April 30, 1999.
               Guaranty Corporation, dated
               March 24, 1999.

10.44          Amended and Restated Revolving                    Exhibit 10.43 to Form 10-Q, dated
               Credit and Security Agreement,                    May 17, 1999.
               dated May 11, 1999.

10.45          Employment Agreement, dated
               February 1, 1999, between
               Awadhesh Sinha and Salant
               Corporation. *

10.46          Employment Agreement, dated as
               of May 17, 1999, between Michael
               Setola and Salant Corporation. *

10.47          Letter Agreement, dated July 1, 1999,
               amending the Employment Agreement,
               dated February 1, 1999, between
               Awadhesh Sinha and Salant
               Corporation. *

21             List of Subsidiaries of the Company

27             Financial Data Schedule

* constitutes a management contract or compensatory plan or arrangement.

EXHIBIT 21
</TABLE>


                         SUBSIDIARIES OF THE REGISTRANT


Birdhill, Limited, a Hong Kong corporation

Carrizo Manufacturing Co., S.A. de C.V., a Mexican corporation

Clantexport, Inc., a New York corporation

Denton Mills, Inc., a Delaware corporation

JJ. Farmer Clothing, Inc., a Canadian corporation

Frost Bros. Enterprises, Inc., a Texas corporation

Manhattan Industries, Inc., a Delaware corporation

Manhattan Industries, Inc., a New York corporation

Manhattan Industries (Far East) Limited, a Hong Kong corporation

Maquiladora Sur S.A. de C.V., a Mexican corporation

Salant Canada, Inc., a Canadian corporation

SLT Sourcing, Inc., a New York corporation

Vera Licensing, Inc., a Nevada corporation

Vera Linen Manufacturing, Inc., a Delaware corporation

Salant Caribbean, S.A., a Guatemalan Corporation