SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C.  20549
                           ---------------------
                                 FORM 10-K
(Mark One)
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)

                For the Fiscal Year Ended December 31, 1995

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

     For the transition period from _______________ to _______________

                        Commission File No. 1-2782

                       SIGNAL APPAREL COMPANY, INC.
                       ----------------------------
          (Exact name of Registrant as specified in its charter)

          Indiana                       62-0641635
          -------                       ----------
 (State of Incorporation) (I.R.S. Employer Identification Number)

200 Manufacturers Road, Chattanooga, Tennessee           37405
----------------------------------------------           -----
     (Address of principal executive offices)                    (zip code)

Registrant's telephone number, including area code (423) 266-2175

Securities registered pursuant to Section 12(b) of the Act:

                                        Name of each exchange 
     Title of each class                 on which registered
     -------------------                ---------------------
Common Stock:  Par value $.01 a share   New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirement 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.
                                                       [   ]

State the aggregate market value of the voting stock held by
nonaffiliates of the registrant:  $18,817,962 calculated by using
the closing price on the New York Stock Exchange on March 21,
1996 of the Company's Common stock, and excluding common shares
owned beneficially by directors and officers of the Company, and
by certain other entities, who may be deemed to be "affiliates",
certain of whom disclaim such status.

Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

          Class               Outstanding as of March 26, 1996
          -----               --------------------------------
Common Stock, $.01 par value            11,528,046 shares     


                    DOCUMENTS INCORPORATED BY REFERENCE

Part of        Documents from Which Portions are
Form 10-K      Incorporated by Reference
---------      ---------------------------------

Part III       Proxy Statement for Annual Meeting of Shareholders




SIGNAL APPAREL COMPANY, INC.

ANNUAL REPORT ON

FORM 10-K

FOR THE YEAR ENDED DECEMBER 31, 1995

                                INDEX
                              
Item
----
     PART I

1.   Business

2.   Properties

3.   Legal Proceedings

4.   Submission of Matters to a Vote of Security Holders

     PART II

5.   Market for the Registrant's Common Equity and
     Related Stockholder Matters

6.   Selected Financial Data

7.   Management's Discussion and Analysis of Financial 
     Condition and Results of Operations

8.   Financial Statements and Supplementary Data

9.   Disagreements on Accounting and Financial Disclosure

     PART III

10.  Directors and Executive Officers of the Registrant

11.  Executive Compensation

12.  Security Ownership of Certain Beneficial Owners 
     and Management
     
13.  Certain Relationships and Related Transactions

     PART IV

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


                                  PART I


Item 1.   BUSINESS

(a)  Signal Apparel Company, Inc. ("Signal" or the "Company") is
     engaged in the manufacture and marketing of apparel within
     the following product lines: knit sportswear and activewear,
     women's knit apparel and screenprinted knit apparel.

     In November 1994, the Company purchased all the outstanding
     capital stock of American Marketing Works, Inc. ("AMW"), a
     branded licensed apparel company. 
     
(b)  The Company is engaged in the single line of business of
     apparel manufacturing and marketing.

     For financial information about the Company, see the
     information discussed in Item 8 below.

(c)  GENERAL

     Founded in 1891 as Wayne Knitting Mills, a women's hosiery
     company, in Fort Wayne, Indiana, the Company merged with the
     H. W. Gossard Co. of Chicago, Illinois in 1967 and became
     Wayne-Gossard Corporation.  The Company's name was changed
     to Signal Apparel Company, Inc. in February 1987.  As a
     result of a merger in July 1991, The Shirt Shed, Inc. became
     a wholly-owned subsidiary of the Company.  During 1993, The
     Shirt Shed, Inc. began doing business under the name Signal
     Artwear.  In November 1994, the Company purchased all the
     outstanding capital stock of American Marketing Works, Inc.
     ("AMW"), a branded licensed apparel company.

     The Company is a vertically integrated manufacturing company
     which manufactures and markets activewear in juvenile, youth
     and adult size ranges and upscale knit apparel for the
     ladies' market.  The Company's products are sold to
     wholesalers, screen printers and retail accounts with the
     Signal Sport, Signal Artwear, Riddell Athletic, or a
     customer's label or, under applicable license agreements,
     with the label of designers or sports personalities (Magic
     Johnson and Hank Aaron).  Currently, a major portion of the
     products manufactured by the Company consists of products
     generally similar in design and composition to those
     produced by the Company's competition.  The Company's
     business is therefore highly subject to competitive
     pressures.

     In August 1995, Bruce E. Krebs was elected President and
     Chief Operating Officer of the Company.  Mr. Krebs was
     formerly President of H. H. Cutler Company, a division of V.
     F. Corporation. 

     Since August 1995, Mr. Krebs has led the Company in an
     aggressive cost reduction program which has included among
     other actions the consolidation of divisional sales,
     merchandising and manufacturing functions into corporate
     functions, merging the Rutledge, Tennessee cut and sew
     facility into the Tazewell, Tennessee cut and sew facility,
     the closing of AMW's California facilities, and the
     announced closing of the Signal Artwear Indiana facilities
     and the Company's satellite art facility in Charlotte, North
     Carolina.

     The screenprint/distribution functions formerly performed at
     the California and Indiana facilities are being consolidated
     into a new facility in Chattanooga, Tennessee.
     
     As part of its recent consolidation, the Company's
     divisional management structure has been replaced by a
     strategic business unit structure.  Under this structure,
     the Company's strategic business units are:

     SIGNAL KNITWEAR/PRIVATE LABEL BUSINESS UNIT:

     Signal Knitwear manufactures fabric from which it produces
     T-shirts, fleece garments, and other sportswear.  The
     products of the division are sold primarily to wholesalers,
     distributors, screenprinters, private label customers and to
     certain retail accounts.  In addition to sales to its own
     customers, Signal Knitwear is a source of unprinted products
     for other units of the Company.

     LICENSED SPORTS BUSINESS UNIT:

     The Licensed Sports Business Unit, consisting of AMW
     Licensed Sports and Riddell Athletic, is engaged in selling
     screenprinted apparel to mid-mass and mass merchants, chain
     stores, sporting goods and sport specialty stores and
     department stores as a line of popularly priced sportswear,
     ranging from children's to adult sizes.  This unit markets
     tops and bottoms from the Signal Knitwear division and other
     suppliers with a variety of silkscreened graphics derived
     under license from popular cartoons, colleges and
     professional sports leagues.  Finished products are
     generally sold under licensed brands such as Hank Aaron
     Originals, Hank Aaron Signature Series, Magic Johnson Tees
     and Pure Magic.

     SIGNAL ARTWEAR BUSINESS UNIT:

     The Shirt Shed, Inc., a wholly-owned subsidiary doing
     business as Signal Artwear, is a screenprinting company
     engaged in selling to mass merchants and chain stores a line
     of popularly priced sportswear, ranging from children to
     adult sizes.  Signal Artwear utilizes unprinted tops and
     bottoms from Signal Knitwear and other suppliers and
     produces its finished products through the addition of a
     variety of silkscreened graphics derived under license from
     popular cartoons, movies, and television shows, as well as
     original concepts produced by an internal art staff.  In
     addition, Signal Artwear provides screenprinting services on
     a contract basis.  

     HERITAGE SPORTSWEAR BUSINESS UNIT:

     Heritage Sportswear produces and sells two designer lines of
     tailored knits designed under license by Joan Vass and
     Cynthia Rowley which bear the "joan vass, u.s.a." and
     "Cynthia Rowley" labels, respectively.  These designer lines
     are sold to fine specialty stores, department stores, and
     Joan Vass and Cynthia Rowley stores, respectively.  The
     division also produces knit shirts and fashion fleece
     products which are marketed by other divisions of the
     Company.

     SALES BY PRODUCT LINE

     The following table reflects the percentage of net sales
     contributed by the Company's product lines to net sales
     during 1995, 1994, and 1993:              

                                            Percentage of
            Product Line                      Net Sales
            ------------                ------------------------
                                       1995      1994      1993
                                       ----      ----      ----
            Active sportswear           32%       48%       45%
            Screenprinted apparel       51%       31%       33%
            Women's knit apparel        17%       21%       20%

     In 1995 and 1994 no one customer accounted for as much as
     10% of sales.  One customer, K-Mart Corporation, accounted
     for 21% of sales in 1993.

     DESCRIPTION OF OPERATIONS               

     The primary raw material used by the Company is yarn made
     from both synthetic and natural fibers which it purchases
     from several different suppliers.  The Company also
     purchases sewing thread, dyes and chemicals, inks, elastic,
     hangers, cartons and printed bags.  Supplies of synthetic
     fibers are dependent upon the availability of petroleum,
     while supplies of natural fibers are dependent upon
     worldwide crop conditions.  These factors generally have had
     a greater effect on price than on availability.

     Although the Company does not have formal arrangements
     extending beyond one year with its suppliers, the Company
     has not experienced any significant difficulty obtaining
     yarn or any other raw materials from its current sources and
     believes that, in any event, adequate alternative sources of
     supply are available.

     "Signal Artwear" and "Signal Sport" are the principal
     registered trademarks of the Company.  In addition to the
     license to use the "Riddell" trademark and logo, the Company
     is licensed through May 1996 to use the registered trademark
     "joan vass, u.s.a." in connection with women's knit apparel. 
     The Company is negotiating to extend the license for a
     minimum of five years; however, there is no assurance that
     the Company will be able to obtain such an extension.  The
     Company is also licensed to use the "Cynthia Rowley"
     registered trademark in connection with women's knit
     apparel.  The Company and its various subsidiaries are
     licensed to use various trademarks of the National Football
     League, the National Basketball Association, the National
     Hockey League and various colleges in connection with
     collections of activewear.  In the fourth quarter of 1995,
     the Company entered into an arrangement with Henry Aaron,
     Inc. permitting the Company to manufacture and sell knit
     products featuring the trademarks of Major League Baseball. 
     The Company is also licensed by several companies to print
     various cartoon, movie and celebrity characters and other
     graphics on garments.  The Company is licensed by affiliates
     of well known athletes Magic Johnson and Hank Aaron to
     produce and sell products bearing labels with their
     respective names.  The ability to use the foregoing
     trademarks is important to the implementation of the
     Company's strategy of expanding sales of products directed
     to the retail market.  Sales under the license to use the
     "joan vass, u.s.a." trademark have represented a significant
     portion of the sales of the Company's Heritage Sportswear
     Division.

     The business of the Company tends to be seasonal with peak
     shipping months varying from product line to product line. 
     To meet the demands of peak shipping months, it is necessary
     to build inventories of some products well in advance of
     expected shipping dates.  The Company believes that its
     credit practices and merchandise return policy are customary
     in the industry.  Borrowings are used to the extent
     necessary to finance seasonal inventories and receivables. 
     See "Management's Discussion and Analysis of Financial
     Condition and Results of Operations - Financial Condition".

     During 1995, the Company sold its products to over 3,400
     customers, including department stores, mass merchandisers,
     other retailers and specialty stores, wholesalers,
     distributors, screenprinters, and other manufacturers. 
     Products are shipped directly from the Company's
     manufacturing facilities and warehouses.

     On December 31, 1995, Signal Knitwear, Heritage Sportswear,
     Signal Artwear and American Marketing Works had scheduled
     order backlogs of approximately $2,941,000, $2,807,000,
     $7,926,000, and $3,214,000, respectively.  On December 31,
     1994, Signal Knitwear, Heritage Sportswear, Signal Artwear
     and American Marketing Works had scheduled order backlogs of
     approximately $7,050,000, $2,322,000, $8,250,000 and
     $4,265,000, respectively.  On December 31, 1993, Signal
     Knitwear, Heritage Sportswear, and Signal Artwear had
     scheduled order backlogs of approximately $15,700,000,
     $3,800,000 and $10,300,000, respectively.  Scheduled order
     backlogs consist of orders received from customers and
     entered into the Company's order entry system, at which
     point the orders are scheduled for production.  The Company
     expects to ship substantially all of its December 31, 1995
     backlog of unfilled orders by December 31, 1996; however,
     orders are subject to cancellation, generally without
     penalty, by customers prior to shipment.  The Company's
     backlog of orders on December 31, 1995 is not necessarily
     indicative of actual shipments or sales for any future
     period, and period-to-period comparisons from 1994 to 1995
     may not be meaningful.  

     The apparel industry as a whole, including the part of the
     industry engaged in by the Company, is highly competitive. 
     The Company believes that the principal methods of
     competition in the markets in which it competes are design
     and styling, price and quality.  The designer and brand name
     markets are influenced by fashion, design, color, consistent
     quality and consumer loyalty.  Imports offer competition to
     the sweater and knit shirt product lines.  The industry is
     very fragmented, and the Company's relative position in the
     industry is not known.

     Compliance with federal, state and local provisions which
     have been enacted regulating the discharge of materials into
     the environment, or otherwise relating to the protection of
     the environment, have not had, and are not expected to have,
     any material effect upon the capital expenditures, operating
     results, or the competitive position of the Company.

     The Company had approximately 1,200 employees at March 1,
     1996, compared to 1,750 employees at March 1, 1995.  The
     reduction of 550 employees since March 1, 1995 is the result
     of extensive actions to reduce costs as well as reduced
     manufacturing volume.

(d)  All of the Company's manufacturing facilities are located in
     the United States.  Substantially all (over 95%) of the
     Company's sales are domestic.


Item 2.   PROPERTIES

The company operates owned and leased facilities, aggregating
approximately 967,700 square feet of usable space.  The following
table sets forth certain information concerning each of these
facilities:

Facility            Square    Owned/     Products/
Location             Feet     Leased     Operations
--------            ------    ------     ----------

SIGNAL KNITWEAR:

Chattanooga, TN    192,200    Owned      Sportswear - warehouse,
                                         distribution and
                                         offices

New Tazewell, TN    91,300    Owned      Sportswear - cut and
                                         sew, warehouse and
                                         distribution

LaGrange, GA       134,500    Owned      Sportswear - knitting,
                                         dyeing and finishing,
                                         warehouse and
                                         distribution


HERITAGE SPORTSWEAR:

Marion, SC         164,600    Owned      Women's apparel, knit
                                         sweaters and skirts -
                                         knitting, cut and sew,
                                         and offices

Lakeview, SC        85,100    Owned      Women's apparel, knit
                                         sweaters and skirts -
                                         warehouse and
                                         distribution

New York, NY         3,900    Leased     Showroom and offices    

SIGNAL ARTWEAR:

Wabash, IN          69,000    Owned      Screen printing -
                                         printing, warehouse and
                                         offices

                     3,900    Leased     Storage
                          
Marion, IN         223,700    Leased     Screen printing -
                                         warehouse and printing

Chattanooga, TN    100,000    Leased     Screen printing -
                                         printing, warehouse,
                                         distribution and
                                         offices

New York, NY         4,200    Leased     Showroom and offices


Charlotte, NC        3,800    Leased     Offices

IDLE FACILITIES:

Rutledge, TN        59,700    Owned

Marion, SC          29,200    Owned

Gardena, CA         49,000    Leased

The buildings at all facilities set forth in the table above and
the machinery and equipment contained therein are well maintained
and are suitable for the Company's needs (see later paragraph for
a discussion of the idle facilities).  Substantially all of the
buildings are protected by sprinkler systems and automatic alarm
systems, and all are insured for amounts which the Company
considers adequate.  The plant in Rutledge, Tennessee is subject
to mortgage liens incurred in connection with industrial
development financing.  The plants in New Tazewell, Tennessee,
LaGrange, Georgia and Wabash, Indiana are subject to mortgage
liens incurred in connection with financing with the senior
lender and a principal shareholder, Walsh Greenwood and
affiliates.

The Company owns or leases several facilities, aggregating
approximately 137,900 square feet, which were idled by the
Company during 1995.  Also, on February 26, 1996, the Company
announced the closing of its Signal Artwear screenprinting
facilities located in Wabash and Marion, Indiana.  This closing
will take effect on April 12, 1996.  At the present time the
Company intends to sell the owned facilities and is renegotiating
the leases on the leased facilities.

As part of its strategic plan, the Company uses independent
contractors to supplement the productive capacities of its own
manufacturing facilities.  The Company believes the production of
its own facilities plus the contracted production will support
the expected level of business in 1996.

Item 3.   Legal Proceedings   

The Company is unaware of any material pending legal proceeding
other than ordinary, routine litigation incidental to its
business.


Item 4.   Submission of Matters To A Vote of Security Holders

No matters were submitted to a vote of security holders in the
fourth quarter of 1995.

                                  PART II


Item 5.   Market for the Registrant's Common Stock and Related
          Stockholder Matters


MARKET PRICES AND DIVIDENDS

                                 Quarter Ended
--------------------------------------------------------------------------------
                         March 31      June 30      September 30  December 31
                        1995  1994    1995  1994    1995  1994   1995   1994
--------------------------------------------------------------------------------
Common Stock:
 High                  $8.13  $7.50  $7.38 $8.00   $5.88 $8.13   $7.75 $8.00 
 Low                    6.50   5.13   5.25  6.50    5.25  6.50    5.50  4.00
 Cash dividends           --     --     --    --      --    --      --    --
--------------------------------------------------------------------------------

The Company's loan agreements contain provisions which currently
restrict the Company's ability to pay dividends (see Note 4 of
Notes to Consolidated Financial Statements).  No Common Stock
dividends were declared during the five-year period ended
December 31, 1995.

Shareholders of record as of March 27, 1996:
     Common    1,040  

The Company's Common Stock is listed on the New York Stock
Exchange.


Item 6.   Selected Financial Data

SUMMARY OF SELECTED FINANCIAL DATA
Dollars in Thousands (Except Per Share Data)

                             1995     1994(a)   1993      1992     1991(b)
--------------------------------------------------------------------------------
Net Sales                  $89,883   $95,818  $131,000  $172,194   $90,137 
================================================================================
Net loss                   (39,959)  (53,304)  (34,878)  (20,210)  (31,771)
================================================================================
Net loss per common
 share                       (3.80)    (6.88)    (4.17)    (2.41)    (6.59)
================================================================================
Total assets                43,229    69,448    87,914   121,280   113,732 
================================================================================
Long-term obligations       57,243    49,258    26,748    72,126    54,869 
================================================================================

(a)  The data includes amounts applicable to American Marketing
     Works from date of acquisition, November 22, 1994.

(b)  The data includes amounts applicable to The Shirt Shed, Inc.
     from date of acquisition, July 22, 1991.
 

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


RESULTS OF OPERATIONS

1995 COMPARED WITH 1994

Net sales of $89.9 million for 1995 represent a decrease of 6.2%
or $5.9 million when compared to the $95.8 million in net sales
for 1994.  This decrease is comprised of a $17.0 million
reduction for active sportswear, a $4.3 million reduction for
women's fashion knitwear and a $1.2 million reduction for Signal
Artwear screenprinted products, partially offset by a $16.6
million increase due to the inclusion of sales of American
Marketing Works, Inc. (AMW).

Sales of active sportswear decreased 37% to $28.9 million in 1995
as compared to $45.9 million in 1994.  Of the $17.0 million
reduction, $4.2 million resulted from reduced sales of Riddell
products while $4.5 million is reduced sales to distributors and
$2.4 million is a result of reduced sales to a large customer. 
Reduction in unit volume accounted for 79% of the total reduction
of active sportswear sales while reduction in average selling
price accounted for the remaining 21%.  The decrease in average
selling price was due to a combination of product mix and unit
selling price changes.

Sales of women's fashion knitwear decreased 22% to $15.6 million
in 1995 as compared to $19.9 million in 1994.  The $4.3 million
sales reduction was primarily due to competition from garments
selling at lower retail prices.  Unit volume accounted for a $4.4
million reduction which was partially offset by an increase in
average selling price.  The increase in average selling price was
due to a combination of product mix and unit selling price
changes.

Signal Artwear sales were $27.0 million for 1995 versus $28.2
million in 1994.  The sales reduction was primarily the result of
reduced sales to a large customer.  Unit volume accounted for a
$2.6 million reduction which was partially offset by an increase
in average selling price.  The increase in average selling price
was due to a combination of product mix (including fewer
closeouts in 1995) and unit selling price changes.

Gross profit was $14.0 million (15.6% of sales) in 1995 compared
to $8.4 million (8.7% of sales) in 1994.  The $5.6 million
increase in gross profit in 1995 was the result of decreased
closeout sales ($5.5 million) and improved manufacturing
efficiencies ($1.4 million) partially offset by lower margins on
first quality sales due to sales mix ($1.3 million).  The 1995
gross profit includes a $2.0 million charge for inventory write-
downs which compares to a $7.7 million charge for inventory
write-downs in 1994.

Royalty expense related to licensed product sales was 7.1% and
3.5% of total sales for 1995 and 1994, respectively.  In 1995
$1.0 million was accrued for unearned minimum royalties which
accounts for one-seventh of the royalty expense experienced in
1995.  The balance of the increase in royalty expense percentage
over 1994 is the result of increased sales of licensed products
relative to total sales.

Selling, general and administrative ("SG&A") expenses were 30%
and 28% of sales for the years ended December 31, 1995 and 1994
respectively.  Actual SG&A expense increased $.5 million to $27.3
million.  SG&A expenses for AMW of $7.4 million were included in
1995 (where SG&A expenses for AMW of only $1.0 million were
included in 1994) but this was partially offset by SG&A expense
reductions at other divisions.

The primary elements making up the 1995 other expense amount of
$1.3 million are $.4 million amortization of goodwill and $.1
million in factor charges for customer late payments.  The
primary elements making up the 1994 other expense amount of $2.0
million are $1.0 million amortization of goodwill, and $.2
million in factor charges for customer late payments.

AMW has incurred significant losses in 1994 and 1995 and the
Company's projections for future operating results for AMW
indicate an impairment of the goodwill.  Accordingly, the Company
deemed it appropriate to write off the goodwill arising from the
acquisition.  The write-off resulted in a charge of $10.7 million
in 1995.

In August 1995, the Company named Bruce E. Krebs President and
Chief Operating Officer.  This change in management was
undertaken to assist the Company to effect its plans to improve
sales and operating results.

Since August 1995, Mr. Krebs has led the Company in an aggressive
cost reduction program which has included among other actions the
consolidation of divisional sales, merchandising and
manufacturing functions into corporate functions, merging the
Rutledge, Tennessee cut and sew facility into the Tazewell,
Tennessee cut and sew facility, the closing of AMW's California
facilities, and the announced closing of the Signal Artwear
Indiana facilities and the Company's satellite art facility in
Charlotte, North Carolina.

The screenprint/distribution functions formerly performed at the
California and Indiana facilities are being consolidated into a
new facility in Chattanooga, Tennessee.

1994 COMPARED WITH 1993

Net sales of $95.8 million for 1994 represent a decrease of 26.9%
or $35.2 million when compared to the $131.0 million in net sales
for 1993.  This decrease is comprised of a $13.2 million
reduction for screenprinted products, a $12.5 million reduction
for active sportswear, a $5.2 million reduction for women's
fashion knitwear and a $4.3 million reduction for discontinued
lines.  The inclusion of AMW's operations since the date of
acquisition increased sales by $1.8 million.

Signal Artwear's sales were $28.2 million in 1994 versus $42.6
million in 1993.  Of the $14.4 million reduction, $14.7 million
is a result of reduced sales to a large customer.  On a license
basis, team sports were down $6.0 million while sales of licensed
products under three movie themes accounted for a $7.9 million
reduction.  Closeout sales were up $3.1 million while first
quality sales were down by $17.5 million.  Total dozens sold were
down 20% in 1994 from 1993 with a 91% increase of dozens in
closeout sales and a 42% reduction of dozens in first quality
sales.  Decreased dozens accounted for 58% of the total sales
dollar reduction while product mix change accounted for the
balance of the reduction.  Orders for printed sportswear and
licensed apparel for Signal Artwear were approximately $8.3,
$10.3 and $13.0 million at year-end 1994, 1993 and 1992,
respectively.  Orders for printed sportswear and licensed apparel
for AMW were approximately $4.3 million at December 31, 1994.

Sales of active sportswear decreased 22% to $45.9 million in 1994
as compared to $59.0 million in 1993.  Of the $13.2 million
reduction, $5.7 million is a result of reduced sales to a large
customer.  In 1994, there was a 24% reduction in the dozens of
active sportswear sold which accounted for a $13.9 million
decrease in sales dollars.  The sales price per dozen increased
1% ($.7 million) in 1994 over 1993 due to sales mix.

Sales of women's fashion knitwear excluding discontinued lines,
decreased $5.2 million to $19.9 million in 1994 as compared to
$25.1 million in 1993.  The 21% sales reduction was primarily due
to competition from garments selling at lower retail prices. 
Unit volume accounted for 32% of the decrease.  Reduction in
average selling price accounted for 68% of the decrease and was
due to a combination of product mix and unit selling price
changes.

Gross profit was $8.4 million (8.7% of sales) in 1994 compared to
$12.4 million (9.5% of sales) in 1993.  The $4.1 million
reduction in gross profit in 1994 compared to 1993 was the result
of decreased sales volume excluding closeouts ($9.2 million),
increased losses on closeouts ($1.6 million), offset by more
favorable sales mix ($2.0 million), increased manufacturing
efficiencies ($2.2 million), reduced favorable raw material
prices and contractor purchase price variances ($.8 million) and
a favorable inventory reserve adjustment ($3.3 million).  The
1994 gross profit includes a $7.7 million charge for inventory
write-downs which compares to a $9.6 million charge for inventory
write-downs in 1993.

Royalty expense related to licensed product sales was 3.5% and
3.6% for the years ended December 31, 1994 and 1993,
respectively.  Royalty expense declined $1.4 million in 1994
versus 1993 due to decreased sales of licensed apparel.

Selling, general and administrative ("SG&A") expenses were 28%
and 24% for the years ended December 31, 1994 and 1993,
respectively.  SG&A expenses decreased $4.7 million in 1994
compared to 1993.  Closing of the Keds division, Joan Vass
Sporting and the certain outlet stores accounted for a $3.0
million reduction.  Reduction in legal and professional expense
($2.0 million) and in shipping expense ($.8 million) offset by
the addition of AMW ($1.0 million) were the primary elements of
the remaining reduction.

The primary elements making up the 1994 other expense amount of
$2.0 million are $1.0 million amortization of goodwill and $.2
million in factor charges for customer late payments.  The
primary elements making up the 1993 other expense amount of $1.4
million are $1.0 million for amortization of goodwill and $.3
million in factor charges for customer late payments.

Signal Artwear has incurred losses each year since its
acquisition in 1991 and the Company's projections for future
operating results for Artwear indicate an impairment of the
goodwill.  Accordingly, the Company deemed it appropriate to
write off the goodwill arising from the acquisition.  The write-
off resulted in a charge of $26.5 million in 1994.

FINANCIAL CONDITION

Additional working capital was required in 1995 to fund the
continued losses incurred by the Company.  The Company's need was
met through several transactions with the Company's principal
shareholders and the senior lender.  In January 1995, Walsh
Greenwood and affiliates purchased 30 shares of the Company's
Series C Preferred Stock for an investment of $3.0 million. 
Effective March 31, 1995, the Company entered into a secured
credit agreement with Walsh Greenwood (the "Walsh Greenwood
Credit Agreement"), pursuant to which the Company could borrow up
to $15.0 million.  Effective August 10, 1995, the Company amended
the Walsh Greenwood Credit Agreement, and the principal amount
available under the credit agreement was increased to $20.0
million.  At December 31, 1995, the Company had borrowed the
entire $20.0 million available under the Walsh Greenwood Credit
Agreement.  At December 31, 1995, the Company had overadvance
borrowings of approximately $8.3 million with its senior lender.  

During the first quarter of 1996, the senior lender agreed to an
additional $5.0 million discretionary overadvance because a
principal shareholder, Walsh Greenwood, agreed to guarantee such
additional discretionary overadvances with the senior lender. 
After this transaction, the discretionary overadvance facilities
aggregated $13.0 million.  (See Note 4 for a more detailed
discussion of the discretionary overadvance facilities with the
Company's senior lender.)

Working capital at December 31, 1995 decreased $30.4 million from
the prior year.  The decrease in working capital was primarily
due to a significant increase in the current portion of long-term
debt resulting from the classification of certain long-term debt
as a current obligation ($21.6 million), a significant decrease
in inventories ($11.2 million) and a decrease in accounts
receivable ($2.4 million), which were partially offset by lower
accounts payable and accrued liabilities ($1.1 million) and lower
discretionary overadvances ($2.5 million).

Accounts receivable decreased $2.4 million or 35% compared to the
prior year due primarily to reduced sales.  

Inventories decreased $11.2 million or 34% compared to last year. 
Inventories decreased as a result of the Company's sale of excess
and closeout inventory of approximately $6.0 million (net of
reserves) during 1995 and the implementation of an inventory
control program to more efficiently utilize working capital.  

Total current liabilities increased $18.3 million or 57% over
year-end 1994, primarily due to the classification of the
revolving advance account ($11.3 million) and senior term notes
($3.8 million) with the senior lender (See Note 4 for a further
discussion) and of certain senior notes ($6.5 million) as a
current obligation. Additionally, accounts payable and accrued
liabilities decreased $1.1 million and the discretionary
overadvance with the senior lender decreased $2.5 million.

Cash used in operations was $11.3 million in 1995, compared to
$11.2 million used in operating activities in 1994.  The net loss
of $40.0 million was the primary use of funds in 1995.  These
items were partially offset by depreciation and amortization
($3.7 million), write-off of goodwill ($10.7 million),
significantly lower inventory levels ($11.2 million) and a
decrease in accounts receivable ($2.4 million).  

Cash used in investing activities of $.4 million was for
purchases of property and equipment.  Commitments to purchase
equipment totaled approximately $.1 million at December 31, 1995. 
During 1996, the Company anticipates capital expenditures of
approximately $.5 million.

Cash provided by financing activities was $12.9 million in 1995.  
The Company borrowed $20.0 million in the form of a senior
secured subordinated promissory note pursuant to the Walsh
Greenwood Credit Agreement during 1995.  Also, the Company issued
30 shares of Series C Preferred Stock to Walsh Greenwood for an
equity investment of $3.0 million.

The revolving advance account decreased $9.3 million from $28.9
million at year-end 1994 to $19.6 million at December 31, 1995. 
Committed credit lines with the Company's senior lender
aggregated a maximum of $40.0 million, including overadvance
facilities, at December 31, 1995.  At year-end, approximately
$8.3 million was overadvanced under the revolving advance
account, which is classified as a current obligation in the
consolidated balance sheets at December 31, 1995 (see Note 4 for
a more detailed discussion of the revolving advance account under
the credit facility with the senior lender and the related
discretionary overadvance facilities).

Interest expense was $8.3 million in 1995 compared to $3.0
million in 1994.  Total outstanding debt averaged $55.2 million
and $31.9 million for 1995 and 1994, respectively, with average
interest rates of 15.0% and 9.4%.  Average outstanding debt
increased due to the borrowings under the Walsh Greenwood Credit
Agreement totalling $20.0 million with an annual interest rate of
25%.  As a result of continued losses, the Company has been
unable to fund its cash needs from operating activities.  The
Company's liquidity shortfalls were primarily funded through the
$20.0 million Walsh Greenwood Credit Agreement.

The Company also uses letters of credit to support some domestic
sourcing of inventory and certain other obligations.  Outstanding
letters of credit were $1.9 million at December 31, 1995,
(excluding collateral of $2.0 million pledged to the senior
lender in the form of a standby letter of credit).

Total shareholders' equity decreased $33.7 million compared to
year-end 1994.  The Company sustained losses of $40.0 million
during 1995 (including the write-off of goodwill of $10.7
million), which were partially offset by a $3.0 million
investment in Preferred Stock by a principal shareholder and by
the conversion of $2.4 million of promissory notes into Common
Stock.

LIQUIDITY AND CAPITAL RESOURCES

As a result of continuing losses, the Company has been unable to
fund its cash needs through cash generated by operations during
1994 and 1995.  The Company's liquidity shortfalls from
operations during these periods have been funded through several
transactions with its principal shareholders and with the
Company's senior lender.  These transactions are detailed above
in the Financial Condition section.

The Company's senior lender waived all existing loan covenant
violations as of December 31, 1995.  However, as the Company is
not currently in compliance with certain financial covenants of
its financing agreement with the senior lender, all long-term
debt due the senior lender is subject to accelerated maturity and
as such, has been classified as a current liability in the
consolidated balance sheets.  If the senior lender were to
accelerate the maturity of the debt, the Company would not have
funds available to repay this debt.

Actions taken by the Company since year-end 1994 to improve its
operations and liquidity have included: (i) the institution of an
extensive cost reduction program that has reduced general and
administrative expenses during 1995 and is expected to further
reduce such expenses during 1996; (ii) the sale of excess and
close-out inventories during 1995 and into 1996; (iii) the
implementation of an inventory control program in order to
eliminate the manufacture of excess goods and to more effectively
utilize working capital; (iv) the extension of the maturity dates
of $6.5 million in senior notes acquired in the AMW acquisition;
(v) obtaining $20.0 million in financing under the Walsh
Greenwood Credit Agreement; and (vi) further guarantees by Walsh
Greenwood to the senior lender in order to support an increase in
the Company's overadvance position with the senior lender.  The
Company believes it can improve its operating margins as a result
of certain of the actions being taken.  The Company has also
considered the sale of certain assets.  At the present time,
however, the Company has no definitive plans for any such sale. 
The Company closed its AMW facility in Gardena, California on
October 18, 1995.  The Company closed its Rutledge, Tennessee
sewing plant on November 29, 1995.  On February 26, 1996, the
Company announced the closing of its Wabash, Indiana facility. 
This closing will take effect on April 12, 1996.

Effective August 1, 1995 the Board of Directors named Bruce Krebs
President and Chief Operating Officer, and Gary LaBelle assumed
the position of Vice President of Operations.  These appointments
were made in order to both increase sales and further streamline
the operations of the Company.

The Company did not meet its sales and profit projections for the
first three months of 1996.  If the Company's sales and profit
margins for the remainder of 1996 do not meet projected levels,
management will be required to reduce the Company's activities or
seek additional capital to complete its plan for improving the
Company's performance.  In any event, additional capital will be
required to continue the Company's operations at current levels. 
In order to obtain such additional capital, the Company may be
required to issue securities that would dilute the interests of
the stockholders of the Company.  No assurance can be given that
any such additional financing will be available to the Company on
commercially reasonable terms or otherwise.  If sales and profit
margins continue to fall below projected levels or if additional
funds cannot be raised, the Company's ability to continue as a
going concern will be jeopardized. 

In December 1995, the Company began actively pursuing the
possibility of issuing a significant amount of its Common Stock
in a private placement transaction exempt from registration under
the Securities Act of 1933, which could include an offshore
private placement pursuant to Regulation S under such Act. 
Securities sold in such a transaction may not be offered or sold
in the United States (or, in the case of offshore sales under
Regulation S, to or for the benefit of any "U. S. person" as
defined in Regulation S) absent registration or an applicable
exemption under such Act.  The Company believes that any such
offering may require that the shares of Common Stock issued
therein be offered at a price below the then current quoted
market price for such shares.  The Company will continue to
explore financing alternatives.  It is essential that the Company
be able to obtain additional financing through such a transaction
or otherwise, in order to successfully implement its business
plan for 1996.

Item 8.   Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES

     Report of Independent Public Accountants

     Consolidated Balance Sheets as of December 31, 1995 and
          December 31, 1994

     Consolidated Statements of Operations for the Years Ended
          December 31, 1995, 1994, and 1993

     Consolidated Statements of Shareholders' Equity (Deficit)
          for the Years Ended December 31, 1995, 1994, and 1993

     Consolidated Statements of Cash Flows for the Years Ended
          December 31, 1995, 1994, and 1993

     Notes to Consolidated Financial Statements

     Financial Statement Schedules:

          See Part IV, Item 14 (a) 2



                 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Board of Directors and Shareholders
of Signal Apparel Company, Inc.:

We have audited the accompanying consolidated balance sheets of
SIGNAL APPAREL COMPANY, INC. (an Indiana corporation) AND
SUBSIDIARIES as of December 31, 1995 and 1994, and the related
consolidated statements of operations, shareholders' equity
(deficit) and cash flows for the years then ended.  These
financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

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

In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Signal Apparel Company, Inc. and subsidiaries as of December
31, 1995 and 1994, and the results of their operations and their
cash flows for the years then ended in conformity with generally
accepted accounting principles.

The accompanying consolidated financial statements have been
prepared assuming the Company will continue as a going concern. 
As discussed in Note 1 to the consolidated financial statements,
the liquidity of the Company has been adversely affected by
recurring losses from operations, which raises substantial doubt
about the Company's ability to continue as a going concern. 
Management's plans in regard to these matters are also described
in Note 1.  The financial statements do not include any
adjustments to reflect the possible future effects on the
recoverability and classification of asset carrying amounts or
the amount and classification of liabilities that might result
should the Company be unable to continue as a going concern.



                                   /s/Arthur Andersen LLP
                                   ARTHUR ANDERSEN LLP

Chattanooga, Tennessee
March 26, 1996




CONSOLIDATED BALANCE SHEETS

Signal Apparel Company, Inc. and Subsidiaries
December 31, 1995 and 1994
(Dollars in thousands)

                                             1995        1994
                                          ---------    ---------
Assets

Current assets:
  Cash                                    $  1,495     $    303 
  Receivables, less allowance for 
    doubtful accounts of $1,703 in
    1995 and $1,787 in 1994                  4,358        6,713 
  Inventories                               22,122       33,350 
  Prepaid expenses and other                 1,346        1,135 
                                          ---------    ---------
       Total current assets                 29,321       41,501 
                                          ---------    ---------
Property, plant and equipment, at cost:   
  Land                                         505          505 
  Buildings and improvements                12,460       12,437 
  Machinery and equipment                   37,103       38,684 
                                          ---------    ---------
    Total property, plant and equipment     50,068       51,626 
      Less accumulated depreciation         36,431       34,816 
                                          ---------    ---------
        Net property, plant and equipment   13,637       16,810 
                                          ---------    ---------
Goodwill, less accumulated amortization
  of $41 in 1994                                 0       10,786 
Other assets                                   271          351 
                                          ---------    ---------
          Total assets                    $ 43,229     $ 69,448 
                                          =========    =========

Liabilities and Shareholders' 
  Equity (Deficit)

Current liabilities:
  Accounts payable                        $  7,030     $  8,663 
  Accrued liabilities                        9,834       10,925 
  Accrued interest                           2,076          431 
  Current portion of long-term debt         22,986        1,144 
  Discretionary overadvances from bank       8,349       10,849 
                                          ---------    ---------
    Total current liabilities               50,275       32,012 
                                          ---------    ---------
Long-term debt (less current portion): 
  Senior obligations                        20,841       30,217 
  Subordinated debt to related parties       3,000        5,434 
                                          ---------    ---------
  Total long-term debt                      23,841       35,651 
                                          ---------    ---------
Other noncurrent liabilities                 2,067        1,084 
                                          ---------    ---------
Commitments and Contingencies (Notes 1,
  2, 4, 5 and 8)
Shareholders' equity (deficit):
  Series A Preferred Stock, $100,000 
    stated value per share, 400 shares
    authorized, 327.087 shares issued and 
    outstanding in 1995 and 1994 
    (liquidation preference of $100,000
    per share plus cumulative unpaid 
    dividends of $6,875 in 1995 and 1994)   39,584       39,584 
  Series C Preferred Stock, $100,000
    stated value per share, 1,000 shares
    authorized, 317.678 shares issued in 
    1995 and 287.678 shares issued in 1994
    (liquidation preference of $100,000
    per share plus cumulative unpaid
    dividends of $4,850 in 1995 and 1994)   36,618       33,618 
  Common Stock, 40,000,000 and 20,000,000
    shares authorized in 1995 and 1994, 
    $.01 par value per share,
    11,528,046 shares issued in 1995 and
    10,204,296 shares issued in 1994           115          102 
  Additional paid-in capital                73,012       69,721 
  Accumulated deficit                     (181,166)    (141,207)
                                          ---------    ---------
          Subtotal                         (31,837)       1,818 
  Less cost of common treasury
    shares (140,220 shares)                 (1,117)      (1,117)
                                          ---------    ---------
    Total shareholders' equity (deficit)   (32,954)         701 
                                          ---------    ---------
          Total liabilities and
            shareholders' 
            equity (deficit)              $ 43,229     $ 69,448 
                                          =========    =========

See accompanying notes to consolidated financial statements.


CONSOLIDATED STATEMENTS OF OPERATIONS

Signal Apparel Company, Inc. and Subsidiaries
Years ended December 31, 1995, 1994, and 1993
(In thousands, except per share data)

                                 1995        1994         1993
-----------------------------------------------------------------
Net sales                   $  89,883    $  95,818    $ 131,000 
Cost of sales                  75,896       87,450      118,562 
-----------------------------------------------------------------
  Gross profit                 13,987        8,368       12,438 
Royalty expense                (6,362)      (3,342)      (4,702)
Selling, general and
  administrative expenses     (27,279)     (26,803)     (31,549)
Interest expense               (8,255)      (3,002)      (4,855)
Other expense, net             (1,314)      (2,044)      (1,425)
Write-off of goodwill         (10,736)     (26,481)          -- 
Restructuring costs                --           --       (4,785)
-----------------------------------------------------------------
  Loss before income taxes    (39,959)     (53,304)     (34,878)
Income taxes                       --           --           -- 
-----------------------------------------------------------------
  Net loss                    (39,959)     (53,304)     (34,878)
Less Preferred Stock dividends     --       (9,224)      (2,501)
-----------------------------------------------------------------
Net loss applicable to 
  Common Stock              $ (39,959)   $ (62,528)   $ (37,379)
=================================================================
Weighted average common and
  common equivalent shares
  outstanding                  10,503        9,082        8,963 
=================================================================

Net loss per common share   $    (3.80)  $   (6.88)   $   (4.17)
=================================================================

See accompanying notes to consolidated financial statements.



<TABLE>

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)

Signal Apparel Company, Inc. and Subsidiaries
Years ended December 31, 1995, 1994, and 1993 
(Dollars in thousands, except share data)

<CAPTION>
                                     Preferred Stock                                Addt'l
                               --------------------------- Common  Class A  Class B Paid-In   Accum.      Treasury
                               Series A  Series B Series C Stock   Common   Common  Capital   Deficit     Stock      Total
-----------------------------  ------    ------   ------   ------- -------  ------  --------  --------    -------    -------- 
<S>                           <C>       <C>       <C>      <C>     <C>      <C>    <C>       <C>          <C>        <C> 

Balance, December 31, 1992,
  as previously reported      $     -   $     -   $    -   $   -   $   82   $   9   $68,620  $  (41,300)   $(1,117)  $ 26,294
Net loss                            -         -        -       -        -       -         -     (34,878)         -    (34,878)
Redesignation of Common Stock       -         -        -      91      (82)      9)        -           -          -          - 
Exercise of employee stock
  options                           -         -        -       -        -       -        12           -           -        12 
Issuance of 544.765 shares
  of Preferred Stock           32,709    21,768        -       -        -       -         -           -           -     54,477 
Cumulative accrued dividends
  on Preferred Stock            1,455     1,046        -       -        -       -         -      (2,501)          -          - 
----------------------------- --------  --------  -------  ------  -------  ------  --------  ---------   ---------   ---------  
Balance, December 31, 1993    $34,164   $22,814   $    -   $  91   $    -   $   -   $68,632  $  (78,679)   $(1,117)   $ 45,905 
Net loss                            -         -        -       -        -       -         -     (53,304)         -     (53,304)
Issuance of 70 shares of
  Series C Preferred StoCk          -         -    7,000       -        -       -         -           -          -       7,000 
Exchange of 287.678 shares
  of Series B Preferred Stock
  for 287.678 shares of 
  Series C Preferred Stock          -   (22,814)  22,814       -        -       -         -           -          -           - 
Cumulative accrued dividends
  on Preferred Stock            5,420         -    3,804       -        -       -         -      (9,224)         -           - 
Issuance of 1,100,000 shares
  of restricted Common Stock
  in connection with the
  acquisition of American
  Marketing Works, Inc.             -         -        -      11        -       -     1,089           -          -       1,100 
----------------------------- -------- ---------  -------  ------  -------  ------  -------- ----------    --------   ---------
Balance, December 31, 1994    $39,584   $     -  $33,618   $ 102   $    -   $   -   $69,721  $ (141,207)   $(1,117)   $    701 
Net loss                            -         -        -       -        -       -         -     (39,959)         -     (39,959)
Exercise of employee stock
  options                           -         -        -       -        -       -        97           -          -          97 
Issuance of 30 shares of
  Series C Preferred Stock          -         -    3,000       -        -       -         -           -          -       3,000 
Issuance of 1,310,000 shares of 
  Common Stock                      -         -        -      13        -       -     2,740           -          -       2,753 
Grant of 200,000 shares of
  Common Stock below market
  value                             -         -        -       -        -       -       454           -          -         454 
----------------------------- --------   ------- --------  ------  -------  ------  --------  ----------   --------   ---------
Balance, December 31, 1995    $39,584     $   -  $36,618  $  115    $   -   $   -   $73,012   $(181,166)   $(1,117)   $(32,954)
============================= ========   ======= ======== =======  =======  ======  ========  ==========   ========   =========
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>


CONSOLIDATED STATEMENTS OF CASH FLOWS

Signal Apparel Company, Inc.
  and Subsidiaries
Years ended December 31, 1995, 1994, and 1993
(Dollars in thousands)

                                      1995        1994        1993
                                   ---------    ---------  ---------
Operating Activities:
  Net loss                          $(39,959)   $(53,304)  $(34,878)
  Adjustments to reconcile net
    loss to net cash used in
    operating activities:
      Depreciation and amortization    3,708       4,653      5,338 
      Loss on disposal of property,
        plant and equipment              166         251        732 
      Write-off of goodwill           10,736      26,481         -- 
      Grant of Common Stock options 
        below market value               454          --         -- 
      Changes in operating assets and
        liabilities, net of effects of
        business acquired:
        Decrease in receivables        2,354       5,273      3,319 
        Decrease in inventories       11,229       6,858     25,209 
        (Increase) Decrease in prepaid
          expenses and other            (130)        330        345 
        Increase (Decrease) in accounts 
          payable and accrued 
          liabilities                    118      (1,790)    (3,867)
                                    ---------   ---------  ---------
            Net cash used in operating
              activities             (11,324)    (11,248)    (3,802)
                                    ---------   ---------  ---------
Investing activities:
  Purchases of property, plant and
    equipment                           (452)     (2,168)    (1,838)
  Proceeds from the sale of property,
    plant and equipment                   81          20         25 
  Acquisition of business, less cash
    acquired                              --      (1,343)        -- 
                                    ---------   ---------  ---------
            Net cash used in investing
              activities                (371)     (3,491)    (1,813)
                                    ---------   ---------  ---------
Financing activities:
  Net increase (decrease) in revolving
    advance account                   (9,244)      8,918    (16,354)
  Proceeds from subordinated notes    20,000       3,000      7,500 
  Principal payments on borrowings      (668)     (4,102)      (718)
  Principal payments on multiemployer
    withdrawal liability                (298)       (218)      (206)
  Proceeds from issuance of stock      3,000       7,000     15,000 
  Proceeds from exercise of stock options 97          --         12 
                                    ---------   ---------  ---------
            Net cash provided by 
              financing activities    12,887      14,598      5,234 
                                    ---------   ---------  ---------
Increase (decrease) in cash            1,192        (141)      (381)
Cash at beginning of year                303         444        825 
                                    ---------   ---------  ---------
Cash at end of year                 $  1,495    $    303   $    444 
                                    =========   =========  =========

See accompanying notes to consolidated financial statements.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Signal Apparel Company, Inc. and Subsidiaries


1.  Summary of Significant Accounting Policies

Basis of Presentation

The Company's consolidated financial statements have been
presented on a going concern basis which contemplates the
realization of assets and the satisfaction of liabilities in the
normal course of business.  The Company reported a net loss
applicable to Common Stock of $39,959,000 for the year ended
December 31, 1995, and cumulative losses for the past three years
of $139,866,000.  The 1994 loss includes a write-down of goodwill
of approximately $26,481,000 related to the acquisition of The
Shirt Shed, Inc., while the 1995 loss includes a write-down of
goodwill of approximately $10,736,000 related to the acquisition
of AMW (see "Goodwill").  As a result of these losses,
shareholders' equity has declined to a deficit of $32,954,000 at
December 31, 1995.

Over 1995 and during the first quarter of 1996, the Company
experienced liquidity shortfalls from operations that were
resolved through (i) the sale of $3,000,000 of Series C Preferred
Stock to Walsh Greenwood, a principal shareholder (see Note 5) in
January 1995, (ii) the advance to the Company, pursuant to the
Walsh Greenwood Credit Agreement, of $20,000,000 under a senior
secured subordinated promissory note (Note 4), (iii) the waiver
(as of December 31, 1995) by Walsh Greenwood Trading Company
Limited Partnership (as asignee under the Walsh Greenwood Credit
Agreement) of certain defaults by the Company under the Walsh
Greenwood Credit Agreement, including payment (but not the
accrual) of interest charges and compliance with financial
covenants, which arise prior to January 1, 1997; and (iv) the
provision by the senior lender of additional discretionary
overadvances of $5,000,000 since December 31, 1995 (see Note 4).

As the Company is not currently in compliance with certain
financial covenants of its financing agreement with the senior
lender, all long-term debt due the senior lender is subject to
accelerated maturity and as such, has been classified as a
current liability in the consolidated balance sheets.  If the
senior lender were to accelerate the maturity of the debt, the
Company would not have funds available to repay this debt.

The Company's continued existence is dependent upon its raising
additional financing or equity funds, maintaining existing credit
facilities in place and substantially improving its operating
results during 1996.  Actions taken by the Company during 1995 to
improve its operations and liquidity include (i) the $15,000,000
senior secured subordinated promissory note closed on March 31,
1995, and later amended and increased to $20,000,000 on August
10, 1995 under the Walsh Greenwood Credit Agreement, (ii) the
institution of an extensive cost reduction program that is
expected to substantially reduce general and administrative
expenses, (iii) the sale of excess and closeout inventories of
approximately $6,000,000 and the implementation of an inventory
control program in order to eliminate the manufacture of excess
goods and more efficiently utilize working capital, (iv) the
extension of the maturity dates of senior notes of $6,500,000 to
December 31, 1996 (Note 4), (v) the closure and the consolidation
of certain facilities, and (vi) the consideration by the Company
of the sale of certain assets.  The Company believes it can
improve its operating margins as a result of certain of the
actions being taken.

In order for the Company to have sufficient liquidity for it to
continue as a going concern in its present form, the Company will
need to raise additional funds and execute the above steps and
other planned improvements.  The consolidated financial
statements do not include any adjustments relating to
recoverability and classification of recorded asset amounts or
the amount and classification of liabilities or any other
adjustments that might become necessary should the Company be
unable to continue as a going concern in its present form.  There
can be no assurances that all of the above steps, if successfully
completed, can return the Company's operations to profitability.

Nature of Operations

The Company is a vertically integrated manufacturing company
which manufactures and markets activewear in juvenile, youth and
adult size ranges and upscale knit apparel for the ladies'
market.  The Company's products are sold to wholesalers,
screenprinters and retail accounts, primarily in the United
States.

Principles of Consolidation

The consolidated financial statements include the accounts of
Signal Apparel Company, Inc. ("Signal") and its wholly-owned
subsidiaries (collectively, the "Company").  All significant
intercompany balances and transactions have been eliminated in
consolidation.

Inventories

Inventories are stated at the lower of first-in, first-out (FIFO)
cost or market for all inventories.  For discontinued and
closeout inventories, the Company evaluates the need for write-
downs on an item by item basis.  Market value for finished goods
and blank (unprinted) goods is net realizable value.

Property, Plant and Equipment

Depreciation of property, plant and equipment is provided over
the estimated useful lives of the assets principally using
accelerated methods.  Assets under capital leases are included in
property, plant and equipment, and amortization of such assets is
included with depreciation expense.  The estimated useful lives
of the assets range from 4 to 32 years for buildings and
improvements and from 3 to 10 years for machinery and equipment. 
Expenditures for maintenance and repairs are charged to expense
as incurred.  Depreciation and amortization of property, plant
and equipment for financial statement purposes amounted to
$3,353,000 in 1995, $3,635,000 in 1994, and $4,355,000 in 1993. 
At December 31, 1995, the Company had idle property, plant and
equipment (as a result of plant consolidation) with a net book
value of approximately $2,300,000.  The Company plans to relocate
certain machinery and equipment, and has written the property,
plant and equipment down to its estimated net realizable value.

Net Loss Per Common Share

The net loss per common share is based on the weighted average
number of common shares outstanding during each year after giving
effect to dividend requirements of the preferred stock.  Effects
of the Company's Common Stock equivalents (see Note 5) have been
excluded from the per share computations as they are anti-
dilutive for all periods presented.

Use of Estimates

The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period.  Actual results could differ from those estimates.

Credit and Market Risk

The Company sells products to a wide variety of customers
servicing the ultimate consumer.  Pursuant to the terms of a
factoring agreement with its senior lender, the Company sells
substantially all accounts receivable, except cash in advance or
cash on delivery sales, to the factor on a preapproved basis. 
The Company pays a factoring commission as compensation for the
credit risk and other services provided by the factor.

With regard to credit-approved sales, the factor accepts the
credit risk for nonpayment due to financial inability to pay. 
With regard to noncredit approved sales, the Company accepts all
credit risk of nonpayment for any reason.  A portion of accounts
receivable due from customers (approximately 47% and 49% at
December 31, 1995 and 1994, respectively) is carried at the risk
of the factor.  The Company performs ongoing credit evaluations
of those customers carried at its own risk and generally does not
require collateral for such receivables.  The Company maintains
an allowance for doubtful accounts at a level which management
believes is sufficient to cover potential credit losses.

In 1995 and 1994, no one customer accounted for more than 10% of
total sales.  One customer accounted for 21% of net sales in
1993. 

Goodwill

In connection with the acquisition of American Marketing Works,
Inc. ("AMW"), the Company recorded goodwill for the excess of the
cost over the net assets acquired.  The Company continually
evaluates whether later events and circumstances have occurred
that indicate the remaining estimated useful life of goodwill may
warrant revision or that the remaining balance may not be
recoverable.  When factors indicate that goodwill should be
evaluated for possible impairment, the Company uses an estimate
of the related business segment's undiscounted net income over
the remaining life of the goodwill in measuring whether goodwill
is recoverable.

In 1995, the Company determined that the goodwill related to the
acquisition of AMW had been impaired.  This impairment was due to
operating losses by AMW, the loss of significant licenses,
shortfalls in sales projections, and the uncertainty about AMW's
return to profitability.  As a result, the unamortized balance of
the AMW goodwill was written off.  In 1994, the Company
determined that goodwill related to the acquisition of The Shirt
Shed, Inc. had been impaired due to continuing operating losses
along with the uncertainty about Shirt Shed's return to
profitability.  As a result, the unamortized balance of the Shirt
Shed goodwill was written off.  The charges for the goodwill
write-offs were $10,736,000 and $26,481,000 in 1995 and 1994,
respectively, and have been separately presented in the
accompanying statements of operations.

2.   Acquisition of American Marketing Works

Pursuant to a Stock Purchase Agreement dated October 6, 1994, as
subsequently amended (as so amended, the "Purchase Agreement"),
the Company acquired, as of November 22, 1994, all of the
outstanding capital stock of AMW from Kidd, Kamm Equity Partners,
L.P., a Delaware limited partnership ("KKEP"), MW Holdings, L.P.,
a California limited partnership ("MWH"), Marvin Winkler, Sherri
Winkler and certain investment companies (collectively, the "AMW
Shareholders"), in exchange for 1,400,000 shares of the Company's
Common stock, $.01 par value per share (the "AMW Acquisition").   
Included in the 1,400,000 shares were 150,000 unvested shares and
150,000 shares subject to being returned to the Company.  These
300,000 shares became fully vested (and nonreturnable) in 1995. 
An Amendment to the Purchase Agreement provided for the issuance
of an additional 10,000 shares of Common Stock to certain of the
AMW Shareholders in further consideration of the sale of their
entire equity interest in the Company.

The shares of the Company's Common stock issued in connection
with the AMW Acquisition were issued as unregistered, restricted
shares of stock pursuant to the rules and regulations of the
Securities and Exchange Commission.  As an additional inducement
to the AMW Shareholders to enter into the Purchase Agreement, the
Company entered into a Registration Rights Agreement dated
November 22, 1994 with KKEP as "nominee" for all of the AMW
Shareholders (other than Marvin Winkler and Sherri Winkler, who
did not receive any shares) under a separate agreement between
KKEP and such shareholders.  The Registration Rights Agreement
effectively grants KKEP (as "Holder," as defined therein, of a
majority of the "Registrable Securities" issued in the AMW
Acquisition) the right to require the Company, upon written
notice given anytime within two years after November 22, 1994, to
effect one registration of all "Registrable Securities" issued in
the AMW Acquisition for sale under the Securities Act of 1933, as
amended.

On November 30, 1994, KKEP, in its capacity as nominee for the
AMW Shareholders, notified the Company of its exercise of the
demand registration rights.  In accordance with the terms of the
Registration Rights Agreement, the Company has requested, and
KKEP has agreed to, a delay in the registration of shares
pursuant to such notice.

In connection with the AMW Acquisition, the Company agreed with
the other parties to the Purchase Agreement that (i) a
subordinated promissory note of AMW in the principal amount of
$1,560,000 from MWH and (ii)  a subordinated promissory note of
AMW in the principal amount of $750,000 from Marvin Winkler
(president of the general partner of MWH as well as former
Chairman and CEO of AMW) and his wife, Sherri Winkler
(collectively, the "Subordinated Notes") would be amended and
restated in principal amounts equal to the outstanding principal
plus accrued and unpaid interest on each of the Subordinated
Notes as of November 22, 1994 (totalling $1,635,400 and $798,300,
respectively) (said amended and restated notes, collectively, the
"Purchase Notes").   In 1995 the Company entered into an
agreement with Marvin and Sherri Winkler and MW Holdings whereby
the Purchase Notes were converted into 1,000,000 shares of Common
Stock.

The AMW acquisition was accounted for as a purchase in accordance
with Accounting Principles Board Opinion No. 16, and accordingly,
the purchase price has been allocated to the assets acquired and
liabilities assumed based on the estimated fair values as of the
acquisition date.  The net excess of the cost over the estimated
fair values of the acquired net assets as a result of the
acquisition was allocated to goodwill.

The results of operations of AMW are included in the accompanying
financial statements from the date of acquisition.  The following
summarized unaudited pro forma financial information gives effect
to the acquisition as if it had occurred on January 1 of each
period and has been prepared for comparative purposes only.  The
information does not purport to be indicative of the results of
operations had the transaction been in effect on the date
indicated or which may occur in the future:


                                          Year Ended
     Dollars in Thousands                December 31,
     (except per share data)          1994           1993
                                      ----           ----
                                          (unaudited)    
     Net sales                      $125,603       $169,018 
     Net loss applicable to
       common shareholders            71,407         38,770 
     Net loss per common share         6.99           3.80

3.  Inventories

  Inventories consisted of the following at December 31, 1995
and 1994:

(Dollars in thousands)            1995            1994  
-----------------------------------------------------------------
   Raw materials                $ 1,343         $   963 
   Work in process                2,855           5,639 
   Finished goods                16,742          25,392 
   Supplies                       1,182           1,356 
-----------------------------------------------------------------
                                $22,122         $33,350 
=================================================================

4.  Long-Term Debt

Long-term debt consisted of the following at December 31, 1995
and 1994:

(Dollars in thousands)                       1995        1994 
-----------------------------------------------------------------
Senior obligations:

  Revolving advance account under
    credit facility -- interest payable
    monthly at the alternate base rate 
    (as defined) plus 1.25% (9.911% at 
    December 31, 1995); secured by 
    accounts receivable, inventories 
    and certain machinery and equipment    $19,640     $28,924

  Senior term note -- interest payable
    monthly at the alternate base rate
    (as defined) plus 1.5% (10.161% at
    December 31, 1995); secured by real
    estate; payable in equal monthly 
    installments of $17,600 over a
    period through July 1999 with a
    balloon payment due August 1999          1,209       1,422

  Senior term note -- interest payable
    monthly at the alternate base rate
    (as defined) plus 1.5% (10.161% at 
    December 31, 1995); secured by 
    accounts receivable, inventories,
    and machinery and equipment; payable 
    in equal monthly installments of
    $49,500 over a period through
    July 1999 with a balloon payment
    due August 1999                          3,394       3,993

  Tranche A note -- interest payable 
    monthly at the commercial paper rate 
    (as defined) plus 4.75% (10.608% at
    December 31, 1995); secured by certain
    machinery and equipment and certain 
    issued and outstanding stock; payable
    on December 31, 1996                     4,750       4,750

  Tranche B note -- interest payable
    monthly at the commercial paper rate
    (as defined) plus 7.65% (13.508% at
    December 31, 1995); secured by certain
    machinery and equipment and certain 
    issued and outstanding stock; payable 
    on December 31, 1996                     1,750       1,750

  Senior secured subordinated promissory
    note -- interest at 25% (15% payable
    on December 31, 1995 and quarterly
    thereafter, and 10% payable at 
    maturity); secured by a second lien 
    on accounts receivable, inventory, 
    machinery and equipment, and certain 
    real estate; payable on 
    March 31, 1998                          20,000         -- 

  Obligations under capital leases             386         293

  Mortgage notes payable                       347         396

  Other                                        700         682
-----------------------------------------------------------------

Total                                       52,176      42,210

  Less: Current portion of senior
        obligations                         22,986       1,144
        Discretionary overadvances
           from bank                         8,349      10,849
-----------------------------------------------------------------

Senior obligations, excluding current 
  portion and discretionary overadvances    20,841      30,217

Subordinated debt to related parties 
  (Notes 2 and 5)                            3,000       5,434
-----------------------------------------------------------------

Total excluding current portion            $23,841     $35,651
=================================================================

On November 7, 1995, the financing arrangement with the Company's
senior lender was extended through December 31, 1997.  Under the
current financing arrangement, the Company's total outstanding
obligations (including the revolving advance account and senior
term notes) at any month-end cannot exceed the lower of
$40,000,000 or the borrowing base, as defined in the agreement. 
The borrowing base is generally equal to the sum of 85% of
eligible receivables (as defined), plus the lower of the
inventory cap ($16,000,000, subject to adjustment) or 50% of
eligible inventory (as defined), less certain reserves, plus the
discretionary overadvances and the senior term notes.

The senior lender has agreed to allow certain discretionary
overadvances in excess of the borrowing base.  At December 31,
1995, the discretionary overadvance facilities aggregated
$8,000,000, $4,000,000 of which is secured by a collateral pledge
by two principal shareholders, FS Signal Associates II and Walsh
Greenwood.  All such overadvance facilities with the senior
lender are discretionary.  The collateral pledge may only be
repaid after repayment of all outstanding borrowings under the
discretionary overadvance facility from the senior lender.  At
December 31, 1995, approximately $8,349,000 was overadvanced
against the overadvance arrangements of $8,000,000.  Such
overadvances are classified as current in the consolidated
balance sheet at December 31, 1995.  

Subsequent to December 31, 1995, a principal shareholder, Walsh
Greenwood, agreed to guarantee $5,000,000 in additional
overadvances from the senior lender.  Therefore, in the first
quarter of 1996, the Company's discretionary overadvance
borrowings aggregated $13,000,000.

Under the revolving advance account, interest is at the alternate
base rate plus 1.25%.  The alternate base rate is a fluctuating
rate equal to the higher of the prime rate (as defined) or the
federal funds rate plus .5%, and is payable monthly.  In addition
to the amounts due to the senior lender for interest, the Company
is obligated to pay a quarterly fee of .25% per annum on the
difference between $40,000,000 and the average amount of
obligations outstanding, as defined, to such lender.

The current financing arrangement requires, among other things,
the maintenance of minimum amounts of working capital, cumulative
pretax operating results and net worth, and also limits the
Company's ability to pay dividends and limits the amount of
indebtedness the Company may incur.  As of December 31, 1995, the
Company was not in compliance with various covenants of the
credit facility.  Due to the Company's noncompliance with certain
financial covenants, the long-term portion of the debt with the
senior lender is classified as a current liability in the
accompanying consolidated balance sheets at December 31, 1995.  

In connection with the AMW Acquisition, the senior lender amended
its agreement with the Company.  In connection with these
amendments, AMW granted security interests in all of its
inventory, equipment and trademarks to the senior lender.  The
Company pledged all the issued and outstanding stock of both AMW
and Shirt Shed to the senior lender.  Walsh Greenwood and
affiliates, principal shareholders of the Company, guaranteed up
to $250,000 of the obligations of AMW to the senior lender and to
AMW's prior fixed assets lender (in addition to the guarantees of
such AMW debt by the Company and KKEP, as discussed above).  FS
Signal Associates II, another of the Company's principal
shareholders, pledged 500,000 shares of the Company's Common
Stock to the senior lender to secure the obligations of AMW to
the senior lender.

In connection with the acquisition of AMW, the Company amended
and restated a credit agreement with AMW's former lender.  The
amended and restated credit agreement includes two promissory
notes ("Tranche A" and "Tranche B").  The notes are secured by a
first lien on AMW's machinery and equipment.  Additionally, the
Company pledged all of the issued and outstanding stock of AMW to
this lender as collateral.  A principal shareholder, FS Signal
Associates II, pledged 500,000 shares of the Company's Common
Stock to this lender to secure AMW's obligations.  Another
shareholder, KKEP pledged 1,400,000 shares of the Company's
Common Stock to this lender, also.

Effective March 31, 1994, the Company signed a promissory note
for $3,000,000 with a related party, FS Signal Associates I.  The
promissory note is due on April 30, 1997, subject to the terms of
the subordination agreement with the Company's senior lender. 
Interest is payable at maturity at the prime rate, as defined,
plus 3%.  In connection with this promissory note, accrued
interest payable at maturity to FS Signal Associates I was
approximately $638,000 and $276,000 at December 31, 1995 and
1994, respectively.

On March 31, 1995, the Company executed the Walsh Greenwood
Credit Agreement with Walsh Greenwood and affiliates.  The
related promissory note had a face amount of $15,000,000 or the
unpaid draws (subsequently amended to $20,000,000, effective
August 10, 1995).  At December 31, 1995, the Company had
$20,000,000 outstanding under the amended credit agreement, which
matures on March 31, 1998 and may be prepaid in whole or in part
at any time.  Interest is at a fixed rate of 25% of the face
amount.  Interest at the rate of 15% is payable on December 31,
1995, and quarterly thereafter.  The remaining 10% is payable on
March 31, 1998.  If any principal or interest payment is not paid
on the due date, the overdue amount earns interest at an annual
rate of 27% until such amount is paid.  Funds prepaid cannot be
redrawn.  The promissory note is secured by a security interest
immediately after the security interest of the Company's senior
lender and a first lien on any acquisition.  The funds received
from the promissory note could only be used for working capital
requirements and could not be used to repay any principal on debt
with the Company's senior lender.  The credit agreement
prohibits, among other things, the payment of cash dividends to
any class of stock, except required dividends on the Company's
Preferred Stock.  As additional conditions to the extension of
credit under this agreement, the Company obtained an agreement
from the holders of the Company's Preferred Stock (i) to waive
accrual and payment of all future dividends and dividend
accumulations from January 1, 1995 until the earlier of January
1, 2001, or such time as all outstanding principal and interest
under the credit agreement with Walsh Greenwood and affiliates
has been paid in full and (ii) to grant the Company the right,
upon payment in full of all principal and interest due under the
credit agreement with Walsh Greenwood and upon repayment of
$6,500,000 in outstanding senior notes, to redeem all of the
Company's outstanding Preferred Stock with shares of the
Company's Common Stock valued for such purposes at $7.00 per
share.  Such right of redemption extends until June 30, 1998.  In
connection with this promissory note, accrued interest payable at
maturity was approximately $1,429,000 at December 31, 1995, which
is classified as an other noncurrent liability in the
accompanying consolidated balance sheets.  Accrued interest
payable on December 31, 1995 was approximately $1,840,000.  Such
interest was not paid at year-end and is classified as accrued
interest in the accompanying consolidated balance sheets.  (See
Note 5 for discussion of warrants issued in conjunction with this
transaction.)  As of December 31, 1995, Walsh Greenwood Trading
Company Limited Partnership (as asignee under the Walsh Greenwood
Credit Agreement) agreed to waive certain defaults by the Company
under the Walsh Greenwood Credit Agreement, including payment
(but not the accrual) of interest charges and compliance with
financial covenants, which arise prior to January 1, 1997.

On November 5, 1995, Marvin and Sherri Winkler and MW Holdings,
L.P., converted outstanding promissory notes totalling
approximately $2,434,000 into 1,000,000 shares of the Company's
Common Stock (Note 2).

Interest expense in the Consolidated Statements of Operations
includes interest to related parties of $3,852,000, $298,000, and
$1,557,000 during 1995, 1994, and 1993, respectively.

The Company made cash payments for interest of $4,634,000,
$2,674,000, and $4,245,000 during 1995, 1994, and 1993,
respectively.  The aggregate future scheduled maturities of long-
term debt for the five years subsequent to December 31, 1995,
excluding the discretionary overadvances from the senior lender
in the amount of $8,349,000, are as follows:  1996 - $22,986,000;
1997 - $3,186,000; 1998 - $20,181,000; 1999 - $170,000; 2000 -
$304,000.

Due to the current financial condition (Note 1) and the ongoing
attempts to raise additional funds, it is not practical to
estimate the fair value of long-term debt.

5.  Capital Stock

On June 22, 1993, the shareholders approved amendments to the
Restated Articles of Incorporation to reclassify all outstanding
shares of Class B Common Stock as Class A Common Stock and to
redesignate the Class A Common Stock as Common Stock. 
Accordingly, the differences which had previously existed between
Class A Common Stock and Class B Common Stock as to voting rights
and dividend rights were eliminated.  

On May 11, 1995, the shareholders approved amendments to the
Restated Articles of Incorporation to increase the number of
authorized shares of Common Stock from 20,000,000 to 40,000,000
shares.

On May 11, 1995, the shareholders approved an amendment to the
Company's 1985 Stock Option Plan to increase the number of shares
of Common Stock available for grant thereunder from 1,160,000 to
1,910,000 shares.  The options have a term of 10 years and vest
over periods from one to four years from date of grant.  At
December 31, 1995, stock options available for grant totalled
962,514 and the number of shares exercisable was 201,786.  A
summary of stock option activity is as follows:

                                       Shares     Price Range
                                       ------     -----------
  Outstanding at December 31, 1992    503,000   $ 4.63 - $19.13
     Granted                          526,500   $ 7.06 - $ 7.50
     Exercised                         (2,000)           $ 4.63
     Canceled or Expired             (529,000)  $ 8.50 - $19.13
                                    ----------
  Outstanding at December 31, 1993    498,500   $ 7.06 - $ 7.50
     Granted                          150,000   $ 4.00 - $ 5.50
     Exercised                             --      
     Canceled or Expired             (165,000)  $ 7.06 - $ 7.50
                                    ----------
  Outstanding at December 31, 1994    483,500   $ 4.00 - $ 7.06
     Granted                          505,000   $ 4.00 - $ 6.19
     Exercised                        (13,750)           $ 7.06
     Canceled or Expired             (214,514)  $ 4.00 - $ 7.06
                                    ----------

  Outstanding at December 31, 1995    760,236   $ 4.00 - $ 7.06
                                    ==========
  
Under the restated articles of incorporation, the Company has the
authority to issue 1,600,000 shares of preferred stock having no
par value, issuable in series, with the designation, powers,
preferences, rights, qualifications and restrictions to be
established by the board of directors.  At December 31, 1995, the
Company had authorized 400 shares of Series A Preferred Stock,
250 shares of Series B Preferred Stock, 1,000 shares of Series C
Preferred Stock, 100 shares of Series D Preferred Stock and
20,000 shares of Series E Preferred Stock.

The Series A Preferred Stock bears a 15% cumulative, undeclared
dividend, compounded quarterly, and is senior to all other
classes or series of the Company's equity securities in all
regards, including dividends, distributions and redemptions.  The
Series B Preferred Stock bears a 12.5% cumulative, undeclared
dividend, compounded quarterly, and is junior to the Company's
Series A Preferred Stock, but senior to all other equity of the
Company in all regards, including dividends, distributions and
redemptions.  The Series C Preferred Stock bears a 12.5%
cumulative, undeclared dividend, compounded quarterly; is junior
to the Company's Series A Preferred Stock and is equivalent with
the Company's Series B Preferred Stock, but senior to all other
equity of the Company in all regards, including dividends,
distributions and redemptions.  The Series D Preferred Stock is
junior to the Series A, B and C Preferred Stock of the Company;
bears a cumulative dividend at an annual rate equal to ten
percent (10%) of the stated value of such stock, compounded
quarterly; and is required to be redeemed by the Company on
November 22, 1999 at a redemption price equal to the stated value
per share for such stock plus accrued and unpaid dividends,
subject to the rights of the holders of the Company's other
outstanding series of Preferred Stock which are senior to the
Series D Preferred Stock.  The Series A, B, C and D Preferred
Stock have a stated value of $100,000 per share and a liquidation
preference of $100,000 per share, plus cumulative unpaid
dividends.  

The Series E Preferred Stock is junior to all other series of
outstanding Preferred Stock of the Company and bears a cumulative
dividend at an annual rate equal to seven percent (7%) of the
stock's $1,000 stated value, to be paid quarterly.  The Series E
Preferred Stock is convertible into shares of Common Stock at the
price per share equal to the lower of (i) the product of .60
multiplied by the average daily closing bid prices of Common
Stock for the period of five (5) consecutive trading days
immediately preceding the date of conversion of the shares of
Series E Preferred Stock or (ii) the product of .60 multiplied by
the average daily closing bid prices of Common Stock for the
period of five (5) consecutive trading days immediately preceding
the date of closing of the offering of the Series E Preferred
Stock.

The Series A, B, C, D and E shareholders' voting rights are
limited to certain consent actions as defined in the Preferred
Stock certificates.  At December 31, 1995, there were no shares
of the Series B, D or E Preferred Stock outstanding.

Pursuant to a license agreement between the Company and an
affiliate of Time Warner, Inc., the Company canceled a warrant
previously issued to purchase 171,173 shares of Common Stock at
an exercise price of $12.61 per share and issued two new warrants
in 1994 to the same affiliate, one to purchase 193,386 shares of
Common Stock at $11.61 per share and expiring July 22, 2001, and
the other to purchase 38,674 shares of Common Stock at $8.52 per
share and expiring April 30, 2003.  Both of these new warrants
were exercisable as of the date of issuance.

In 1993, the Company, FS Signal and Walsh Greenwood entered into
a restructuring agreement pursuant to which outstanding debt and
unpaid fees owed to Walsh Greenwood and FS Signal were canceled
and extinguished.  Also, the outstanding warrants issued in
connection with all such debt were canceled.  In consideration of
this cancellation, the Company issued shares of Preferred Stock
at the rate of one share of Preferred Stock per $100,000
principal amount of debt extinguished, together with fractional
shares of such stock in consideration of accrued interest which
was extinguished.  This resulted in the issuance of an aggregate
of 176.587 shares of Series A Preferred Stock and 217.678 shares
of Series B Preferred Stock.  As an inducement to Walsh Greenwood
and FS Signal to enter into the restructuring agreement, the
Company issued warrants to acquire 675,000 shares of Common Stock
at a price of $7.06 per share to Walsh Greenwood and warrants to
acquire an aggregate of 2,047,500 shares of Common Stock at a
price of $7.06 per share to FS Signal.  The Company also agreed
to make available, by private placement, up to 200 additional
shares of Series A Preferred Stock at a price of $100,000 per
share.  As an inducement to purchase such Preferred Stock, the
Company granted FS Signal a warrant to acquire up to 2,000,000
additional shares of Common Stock at $7.06 per share, which vests
at the rate of 100,000 warrant shares per $1,000,000 invested in
Preferred Stock.  As of December 31, 1995, FS Signal had invested
an additional $15,050,000 in the Company in the form of purchases
of 150.5 shares of such Series A Preferred Stock, and warrants to
acquire 1,500,000 shares of Common Stock had vested.  

In February 1994, the Company exchanged 70 shares of the Series C
Preferred Stock for $7,000,000 of collateral pledged by Walsh
Greenwood to the senior lender at the rate of $100,000 per share. 

In conjunction with financing provided to the Company in March
1994 (Note 4), the Company issued warrants to FS Signal
Associates I to purchase 300,000 shares of the Company's Common
Stock at an exercise price of $7.06 per share, such warrants
expire on April 30, 1999.

In June 1994, the Company issued 130.334 shares of Series C
Preferred Stock to FS Signal Associates I, 9.375 shares to FS
Signal Associates II, and 77.969 shares to Walsh Greenwood in
exchange for 217.678 shares of Series B Preferred Stock
previously issued to these related parties.

In consideration of funding provided by the senior lender to AMW
(Note 4), the Company issued warrants, effective November 18,
1994, to the senior lender to purchase 100,000 shares of Common
Stock at $7.06 per share, expiring November 18, 1997.

In January 1995, Walsh Greenwood made an equity investment in the
Company of $3,000,000 for which they received 30 shares of Series
C Preferred Stock.  In connection with this investment, the
Company issued warrants to Walsh Greenwood to purchase 300,000
shares of the Company's Common Stock at an exercise price of
$7.625 per share, such warrants expire on February 1, 2000.

In conjunction with the Walsh Greenwood Credit Agreement executed
in March 1995 and later amended in August 1995 (Note 4), the
Company issued warrants to Walsh Greenwood to purchase 2,000,000
shares of Common Stock at an exercise price of $2.25 per share,
expiring on March 31, 1998.  Such warrants vested as funds were
drawn at the rate of 100,000 warrants for each $1,000,000 drawn. 
Additionally, Walsh Greenwood received a second warrant to
purchase 2,000,000 shares with an exercise price at a 25%
discount to the 20-day average trading price in December 1996. 
These warrants vested upon issuance and are exercisable for a
period of three years commencing on January 1, 1997.  The
warrants will be adjusted for dilution caused by certain dilutive
transactions.  Additionally, the warrants have registration
rights no more favorable than the equivalent provisions in the
currently outstanding warrants issued to principal shareholders
of the Company, except that the registration rights shall include
three demand registrations.   The issuance of these warrants in
conjunction with the Walsh Greenwood credit agreement was subject
to shareholder approval, which was obtained at the Company's
Annual Meeting of Shareholders on May 11, 1995.

Pursuant to the acquisition of American Marketing Works, Inc.
(AMW), the Company issued 1,410,000 shares of the Company's
Common Stock (Note 2).

On November 5, 1995, Marvin and Sherri Winkler and MW Holdings
agreed to convert outstanding promissory notes totaling
approximately $2,434,000 into 1,000,000 unregistered shares of
the Company's Common Stock.  The Company agreed to use its best
efforts to include such shares in the next registration statement
under the Securities Act of 1933 that the Company files, and, if
such registration does not occur by November 1996, the Company
agreed to pay interest at the rate of 7% per annum on the value
of the unregistered shares (half of said interest to be paid in
cash, half to be paid in shares of Common Stock) until such
shares are registered or disposed of.

Pursuant to the engagement of Grisanti, Galef and Goldress, Inc.
as interim manager of the Company in July 1993, the Company
issued warrants, effective August 13, 1993, to purchase up to
200,000 shares of the Company's Common Stock at an exercise price
of $7.06 per share, expiring on September 1, 1998.  In October
1994, the Company amended this warrant by decreasing the warrant
shares outstanding to 100,000 and immediately vesting the 50,000
shares not previously vested.  

Warrants to purchase 9,254,560 shares had vested at December 31,
1995.  A summary of warrant activity is as follows:

                                        Shares     Price Range
                                        -----------           -----------

    Outstanding at December 31, 1992    2,331,173             $12.61 - $20.875
       Issued                           5,485,000              $7.06 - $12.00
       Exercised                               --       
       Canceled or Expired             (2,722,500)            $11.25 - $20.875
                                       ----------
    Outstanding at December 31, 1993    5,093,673              $7.06 - $12.61
       Issued                             632,060              $7.06 - $11.16
       Exercised                               --  
       Canceled or Expired               (271,173)             $7.06 - $12.61
                                       ----------
    Outstanding at December 31, 1994    5,454,560              $7.06 - $11.16
       Issued                           4,300,000              $2.25 -  $7.625*
       Exercised                               --  
       Canceled or Expired                     --  
                                       ----------
    Outstanding at December 31, 1995    9,754,560              $2.25 - $11.16*
                                       ==========

    *As previously discussed, warrants to purchase 2,000,000
    shares were issued with an exercise price at a 25% discount
    to the 20-day average trading price in December 1996.

6.  Income Taxes

The Company recognizes deferred tax assets and liabilities for
the expected future tax consequences of events that have been
included in the financial statements or tax returns.  Under this
method, deferred tax assets and liabilities are determined based
on the differences between the financial reporting and income tax
bases using enacted tax rates in effect for the year in which the
differences are expected to reverse.  

There was no income tax provision or benefit recorded during the
years ended December 31, 1995, 1994, and 1993 due to the losses
sustained by the Company.

Deferred income tax assets and liabilities for 1995 and 1994
reflect the impact of temporary differences between the amount of
assets and liabilities for financial reporting and income tax
reporting purposes.  The Company has established a valuation
allowance for the entire amount of the net deferred tax asset due
to the uncertainty regarding the realizability of these assets. 
Temporary differences and carryforwards which give rise to
deferred tax assets at December 31, 1995 and 1994 are as follows
(in thousands):

                                            1995      1994
                                            ----      ----

     Deferred tax assets:
       Tax loss carryforwards             $61,767   $52,399 
       Inventory reserves                   1,208     2,253 
       Other reserves                       1,859     1,351 
       Multi-employer withdrawal liability    492       614 
       Other                                2,230     2,181 
                                          --------  --------
          Total deferred tax assets        67,556    58,798 
     Valuation allowance                  (66,602)  (57,605)
     Deferred tax liabilities:
        LIFO to FIFO change                  (954)   (1,193)
                                          --------  --------
     Net deferred tax asset               $     0  $      0 
                                          ======== =========

The Company and its subsidiaries file a consolidated federal
income tax return.  At December 31, 1995, the Company had tax
loss carryforwards of approximately $162,000,000 which expire in
years 1999 through 2010 if not utilized earlier.  At the time
Shirt Shed and AMW were acquired, they had tax loss carryforwards
of $17,400,000 and $11,800,000, respectively, which are included
above.  These tax loss carryforwards are subject to annual
limitations imposed for the change in ownership (as defined in
Section 382 of the Internal Revenue Code) and application of the
consolidated income tax return rules.

The Company did not pay any income taxes in 1995, 1994 and 1993.

7.  Pension and Retirement Plans

The Company sponsors defined contribution plans for employees. 
The Company makes contributions to the plans equal to a
percentage of the participants' contributions within certain
limitations.  The Company recognized expense related to these
plans of $109,000 in 1995, $154,000 in 1994 and $261,000 in 1993. 
The Company's policy is to fund amounts accrued annually.

Certain former employees of Signal participate in a defined
benefit pension plan negotiated with a union (multi-employer
plan) that no longer represents the Company.  In 1990, Signal
accrued an estimated withdrawal liability related to the
multiemployer plan of $2,500,000, which was payable in quarterly
installments of approximately $104,000, including interest,
beginning November, 1991.

Currently, the Company is renegotiating the payment schedule with
the union.  Due to the uncertainty of the timing of these
payments, the total multiemployer liability of $1,294,000 is
classified as a current liability at December 31, 1995.  The
total multiemployer withdrawal liability was $1,613,000 at
December 31, 1994.

8.  Commitments and Contingencies

Operating Leases

The Company occupies certain manufacturing facilities, sales and
administrative offices and uses certain equipment under operating
lease arrangements.  Rent expense aggregated approximately
$1,729,000 in 1995, $2,205,000 in 1994, and $2,137,000 in 1993. 

Approximate future minimum rental commitments for all
noncancelable operating leases as of December 31, 1995 are as
follows (dollars in thousands):

                 1996               $ 1,196
                 1997                   774
                 1998                   444
                 1999                    79
                                    -------
                                    $ 2,493
                                    =======

Real estate taxes, insurance, and maintenance expense are
generally obligations of the Company.

Royalty and Other Commitments

Pursuant to the terms of various license agreements, the Company
is obligated to pay future minimum royalties of $4,240,000 due in
1996, $310,000 due in 1997, and $250,000 due in 1998.  Of the
$4,800,000 million, $3,525,000 was accrued as of December 31,
1995.  

Legal Proceedings

The Company is a party to various legal proceedings incidental to
its business.  The ultimate disposition of these matters is not
presently determinable but will not, in the opinion of
management, have a material adverse effect on the Company's
financial condition or results of operations.

9.   Restructuring Costs and Asset Realization

During 1993, the Company recorded restructuring costs of
$4,785,000 (or $.53 per share).  The restructuring costs
primarily relate to the Company's attempts to reduce the overhead
costs, improve manufacturing efficiencies and eliminate an
unprofitable product line.  The restructuring costs include a
$1,700,000 charge for elimination of the Keds Apparel division,
$700,000 for a plant closing in Griffin, Georgia, $1,900,000 for
employee severance and related costs, and $500,000 in other
nonrecurring charges.  

Item 9.    Changes in and Disagreements with Accountants on
           Accounting and Financial Disclosure

      Not Applicable

                                 PART III

Those portions of the Company's Proxy Statement for its 1996
Annual Meeting of Shareholders described below are incorporated
herein by reference.


Item 10.   Directors and Executive Officers of the Registrant

Election of Directors and Executive Officers


Item 11.   Executive Compensation

Executive Compensation and Employment Agreements


Item 12.   Security Ownership of Certain Beneficial Owners and
           Management

Security Ownership of Certain Beneficial Owners and Management

Election of Directors



Item 13.   Certain Relationships and Related Transactions

Compensation Committee Interlocks and Insider Participation



                                  PART IV

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

(a)   1.   Financial Statements and Schedules

  The financial statements are incorporated by reference under
  Part II, Item 8 and are set forth in the Index to Financial
  Statements and Schedules found in Part II, Item 8.

(a)   2.   Financial Statement Schedules:

  Report of Independent Public Accountants

  Schedule II -- Valuation and Qualifying Accounts

  All other schedules are omitted as the required information
  is inapplicable or the information is presented in the
  consolidated financial statements or related notes.



                 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS




To the Board of Directors 
and Shareholders of Signal Apparel Company, Inc.:



We have audited, in accordance with generally accepted auditing
standards, the consolidated financial statements included in Part
II, Item 8 of this Form 10-K and have issued our report thereon
dated March 26, 1996.  Our audits were made for the purpose of
forming an opinion on those statements taken as a whole. 
Schedule II is the responsibility of the Company's management and
is presented for purposes of complying with the Securities and
Exchange Commission's rules and is not part of the basic
financial statements.  This schedule has been subjected to the
auditing procedures applied in the audits of the basic financial
statements and, in our opinion, fairly states in all material
respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.



                            /s/Arthur Anderson LLP
                            ARTHUR ANDERSEN LLP   



Chattanooga, Tennessee
March 26, 1996



<TABLE>
                       SIGNAL APPAREL COMPANY, INC.
                             AND SUBSIDIARIES

             SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                          (Dollars in Thousands)
<CAPTION>
                                                       Additions
                                                   ------------------
                                      Balance at   Charged to                           Balance
                                      Beginning    Costs and                            at End
                                      of Period     Expense     Other    Deductions    of Period
                                      ---------    --------     -----     ----------   ---------
                                       <C>         <C>         <C>         <C>         <C>

Year ended December 31, 1995
 Deducted from asset accounts:
  Allowance to reduce inventories
   to net realizable value             $ 5,933     $ 1,804     $           $ 4,558     $ 3,179
  Allowance for doubtful accounts        1,787         264                     348 (1)   1,703
                                       -------     -------     -------     -------     -------
                                       $ 7,720     $ 2,068     $           $ 4,906     $ 4,882
                                       =======     =======     =======     =======     =======

Year ended December 31, 1994
 Deducted from asset accounts:
  Allowance to reduce inventories
   to net realizable value             $ 7,886     $ 7,675     $           $ 9,628     $ 5,933
  Allowance for doubtful accounts        1,060         710         256 (2)     239 (1)   1,787
                                       -------     -------     -------     -------     -------
                                       $ 8,946     $ 8,385     $   256     $ 9,867     $ 7,720
                                       =======     =======     =======     =======     =======

Year ended December 31, 1993
 Deducted from asset accounts:
  Allowance to reduce inventories
   to net realizable value             $ 6,691     $10,082     $           $ 8,887     $ 7,886
  Allowance for doubtful accounts          313       1,191                     444 (1)   1,060
                                       -------     -------     -------     -------     -------
                                       $ 7,004     $11,273     $           $ 9,331     $ 8,946
                                       =======     =======     =======     =======     =======

<FN>
<F1>
(1) Uncollectible accounts written off, net of recoveries.
<F2>
(2) Represents allowance for doubtful accounts acquired in acquisition of AMW.
</FN>
</TABLE>


(a) 3.    Exhibits:

               (2.1) Stock Purchase Agreement dated October 6,
          1994, by and among the Company, Kidd, Kamm Equity
          Partners, L.P., MW Holdings, L.P., and the additional
          parties listed on the signature pages thereto.
          Incorporated by reference to Exhibit 2-1 to current
          report on Form 8-K dated November 22, 1994.

               (2.2) Amendment, dated November 1, 1994, to Stock
          Purchase Agreement dated October 6, 1994.  Incorporated
          by reference to Exhibit 2-2 to current report on Form   
          8-K dated November 22, 1994.

               (2.3) Amendment No. 2, dated November 21, 1994, to
          Stock Purchase Agreement dated October 6, 1994.
          Incorporated by reference to Exhibit 2-3 to current
          report on Form 8-K dated November 22, 1994.

               (3.1) Copy of Restated Articles of Incorporation,
          as amended November 15, 1995.

               (3.2) Copy of Bylaws as amended March 23, 1992.
          Incorporated by reference to Exhibit 3-2 to Form 10-K
          for the year ended December 31, 1991.

               (10.1) License Agreement, dated June 1, 1992,
          between the Company and Joan Vass, Inc.  Incorporated
          by reference to Exhibit 10-1 to Form 10-K for the year
          ended December 31, 1992.

               (10.2) Factoring Agreement dated as of May 23,
          1991 between the Company and BNY Financial Corporation,
          together with BNY Financial Corporation General
          Security Agreement, Inventory Security Agreement,
          Equipment Security Agreement, and related documents,
          all dated as of May 23, 1991 relating to a $60,000,000)
          credit facility.  Incorporated by reference to Exhibit
          10-10 to Form S-4 Registration Statement filed with the
          Commission on May 28, 1991.

               (10.3) Factoring Agreement dated as of July 25,
          1991 between The Shirt Shed, Inc. and BNY Financial
          Corporation.  Incorporated by reference to Exhibit 10-1
          to Current Report on Form 8-K dated July 22, 1991.

               (10.4) General Security Agreement, Inventory
          Security Agreement, Equipment Security Agreement, and
          related documents, all dated as of July 25, 1991
          between The Shirt Shed, Inc. and BNY Financial
          Corporation.   Incorporated by reference to Exhibit 
          10-10 to Form 10-K for the year ended December 31,      
          1991.

               (10.5) Promissory Note of Signal Apparel Company,
          Inc., for $5,000,000 dated as of November 12, 1992, and
          payable to BNY Financial Corporation and related letter
          dated October 15, 1992, canceling the Promissory Note
          for $3,500,000 payable to BNY Financial Corporation.
          Incorporated by reference to Exhibit 10-8 to Form 10-K
          for the year ended December 31, 1992.

               (10.6) June 12, 1991 Letter Agreement to Factoring
          Agreement dated as of May 23, 1991, between the Company
          and BNY Financial Corporation.  Incorporated by
          reference to Exhibit 10-12 to Form 10-K for the year
          ended December 31, 1991.

               (10.7) Letter Amendments, dated as of July 22,
          1991, to Factoring Agreements dated as of (i) May 23,
          1991, between the Company and BNY Financial
          Corporation, and (ii) July 25, 1991 between The Shirt
          Shed, Inc. and BNY Financial Corporation.  Incorporated
          by reference to Exhibit 10-13 to Form 10-K for the year
          ended December 31, 1991.

               (10.8) July 25, 1991 Letter Amendments to
          Factoring Agreement dated as of July 25, 1991, between
          The Shirt Shed, Inc. and BNY Financial Corporation.
          Incorporated by reference to Exhibit 10-14 to Form 10-K
          for the year ended December 31, 1991.

               (10.9) July 25, 1991 Letter Amendments to
          Factoring Agreements dated as of (i) May 23, 1991,
          between the Company and BNY Financial Corporation, and
          (ii) July 25, 1991, between The Shirt Shed, Inc. and
          BNY Financial Corporation.  Incorporated by reference
          to Exhibit 10-15 to Form 10-K for the year ended
          December 31, 1991.

               (10.10) Letter Amendment dated as of October 23,
          1991, to prior Letter Amendment, dated July 25, 1991,
          to factoring Agreements dated (i) May 23, 1991, between
          the Company and BNY Financial Corporation, and (ii)
          July 25, 1991, between The Shirt Shed, Inc. and BNY
          Financial Corporation.  Incorporated by reference to
          Exhibit 10-16 to Form 10-K for the year ended December
          31, 1991.

               (10.11) January 24, 1992 Letter Amendment to
          Factoring Agreements dated as of (i) May 23, 1991
          between the Company and BNY Financial Corporation and
          (ii) July 25, 1991, between The Shirt Shed, Inc. and
          BNY Financial Corporation.  Incorporated by reference
          to Exhibit 10-14 to Form 10-K for the year ended
          December 31, 1992.

               (10.12) January 31, 1992 Letter Amendment to
          Factoring Agreement dated as of May 23, 1991, between
          the Company and BNY Financial Corporation.
          Incorporated by reference to Exhibit 10-18 to Form 10-K
          for the year ended December 31, 1991.

               (10.13) February 21, 1992 Letter Amendments to
          Factoring Agreements dated as of (i) May 23, 1991,
          between the Company and BNY Financial Corporation, and
          (ii) July 25, 1991, between The Shirt Shed, Inc. and
          BNY Financial Corporation.  Incorporated by reference
          to Exhibit 10-19 to Form 10-K for the year ended
          December 31, 1991.

               (10.14) Guaranty by the Company of obligations of
          The Shirt Shed, Inc. to BNY Financial Corporation,
          dated July 25, 1991.  Incorporated by reference to
          Exhibit 10-21 to Form 10-K for the year ended December
          31, 1991.

               (10.15) Guaranty by The Shirt Shed, Inc. of
          obligations of the Company to BNY Financial
          Corporation, dated July 25, 1991.  Incorporated by
          reference to Exhibit 10-23 to Form 10-K for the year
          ended December 31, 1992.

               (10.16) Execution version (March 27, 1992) of
          Letter Amendment dated as of January 24, 1992 to
          Factoring Agreements dated as of (i) May 23, 1991,
          between the Company and BNY Financial Corporation, and
          (ii) July 25, 1991, between The Shirt Shed, Inc. and
          BNY Financial Corporation.  Incorporated by reference
          to Exhibit 10-1 to Form 10-Q for the quarter ended
          March 31, 1992.

               (10.17) March 20, 1992 Letter Amendment to
          Factoring Agreements dated as of (i) May 23, 1991,
          between the Company and BNY Financial Corporation, and
          (ii) July 25, 1991, between The Shirt Shed, Inc. and
          BNY Financial Corporation.  Incorporated by reference
          to Exhibit 10-2 to Form 10-Q for the quarter ended
          March 31, 1992.

               (10.18) March 28, 1992 Letter Amendment to
          Factoring Agreements dated as of (i) May 23, 1991,
          between the Company and BNY Financial Corporation, and
          (ii) July 25, 1991, between the Company and The Shirt
          Shed, Inc.  Incorporated by reference to Exhibit 10-3
          to Form 10-Q for the quarter ended March 31, 1992.

               (10.19) July 31, 1992 Letter concerning Factoring
          Agreements dated as of (i) May 23, 1991, between the
          Company and BNY Financial Corporation and (ii) July 25,
          1991, between The Shirt Shed, Inc. and BNY Financial
          Corporation.  Incorporated by reference to Exhibit 10-4
          to Form 10-Q for the quarter ended September 30, 1992.

               (10.20) November 12, 1992 Letter Amendment to
          Factoring Agreements dated as of (i) May 23, 1991,
          between the Company and BNY Financial Corporation and
          (ii) July 25, 1991, between The Shirt Shed, Inc. and
          BNY Financial Corporation.  Incorporated by reference
          to Exhibit 10-24 to Form 10-K for the year ended
          December 31, 1992.

               (10.21) March 29, 1993 Letter Amendment to
          Factoring Agreements dated as of (i) May 23, 1991,
          between the Company and BNY Financial Corporation, and
          (ii) July 25, 1991, between The Shirt Shed, Inc. and
          BNY Financial Corporation.  Incorporated by reference
          to Exhibit 10-25 to Form 10-K for the year ended
          December 31, 1992.

               (10.22) March 1, 1993 Letter concerning Factoring
          Agreements dated as of (i) May 23, 1991, between the
          Company and BNY Financial Corporation and (ii) July 25,
          1991, between The Shirt Shed, Inc. and BNY Financial
          Corporation.  Incorporated by reference to Exhibit 10-
          26 to Form 10-K for the year ended December 31, 1992.

               (10.23) May 14, 1993 Letter Amendment to Factoring
          Agreements dated as of (i) May 23, 1991, between the
          Company and BNY Financial Corporation, and (ii) July
          25, 1991, between The Shirt Shed, Inc. and BNY
          Financial Corporation.  Incorporated by reference to
          Exhibit 10-1 to Form 10-Q for the quarter ended March
          31, 1993.

               (10.24) August 12, 1993 Letter Amendment to
          Factoring Agreements dated as of (i) May 23, 1991,
          between the Company and BNY Financial Corporation, and
          (ii) July 25, 1991, between The Shirt Shed, Inc. and
          BNY Financial Corporation.  Incorporated by reference
          to Exhibit 10-5 to Form 10-Q for the quarter ended June
          30, 1993.

               (10.25) November 8, 1993 Waiver concerning
          Factoring Agreements dated as of (i) May 23, 1991,
          between the Company and BNY Financial Corporation, and
          (ii) July 25, 1991 between The Shirt Shed, Inc. and BNY
          Financial Corporation.  Incorporated by reference to
          Exhibit 10-7 to Form 10-Q for the quarter ended
          September 30, 1993.

               (10.26) Letter Agreement dated as of March 31,
          1994 to Factoring Agreements dated as of (i) May 23,
          1991, between the Company and BNY Financial
          Corporation, and (ii) July 25, 1991, between The Shirt
          Shed, Inc. and BNY Financial Corporation.  Incorporated
          by reference to Exhibit 10-28 to Form 10-K for the year
          ended December 31, 1993.

               (10.27) Subordination Agreement, dated March 31,
          1994 between the Company, FS Signal Associates I and
          BNY Financial Corporation.  Incorporated by reference
          to Exhibit 10-3 to Form 10-Q for the quarter ended
          March 31, 1994.

               (10.28) July 14, 1994 Letter Amendment to
          Factoring Agreements dated as of (i) May 23, 1991
          between the Company and BNY Financial Corporation and
          (ii) July 25, 1991, between The Shirt Shed, Inc., and
          BNY Financial Corporation.  Incorporated by reference
          to Exhibit 10-2 to Form 10-Q for the quarter ended June
          30, 1994.

               (10.29) July 29, 1994 Letter Amendment to
          Factoring Agreement, dated May 23, 1991 between the
          Company and BNY Financial Corporation, and The Shirt
          Shed, Inc. as guarantor.  Incorporated by reference to
          Exhibit 10-3 to the Form 10-Q for the quarter ended
          June 30, 1994.

               (10.30) Promissory Note of the Company for
          $4,157,000 dated July 29, 1994 and payable to BNY
          Financial Corporation.  Incorporated by reference to
          Exhibit 10-4 to the Form 10-Q for the quarter ended
          June 30, 1994.

               (10.31) Promissory Note of the Company for
          $1,480,000 dated July 29, 1994 and payable to BNY
          Financial Corporation.  Incorporated by reference to
          Exhibit 10-5 to the Form 10-Q for the quarter ended
          June 30, 1994.

               (10.32) Guaranty by The Shirt Shed, Inc. of the
          obligations of the Company to pay a Promissory Note in
          the amount of $1,480,000 to BNY Financial Corporation.
          Incorporated by reference to Exhibit 10-6 to the Form
          10-Q for the quarter ended June 30, 1994.

               (10.33) Deed to Secure Debt and Security Agreement
          dated July 29, 1994 between the Company and BNY
          Financial Corporation.  Incorporated by reference to
          Exhibit 10-7 to the Form 10-Q for the quarter ended
          June 30, 1994.

               (10.34) Real Estate Mortgage, Security Agreement,
          Assignment of Leases and Rents, and Fixture Filing
          dated July 29, 1994 between the Shirt Shed, Inc. and
          BNY Financial Corporation. Incorporated by reference to
          Exhibit 10-8 to the Form 10-Q for the quarter ended
          June 30, 1994.

               (10.35) Deed of Trust, Assignment of Leases and
          Security Agreement dated July 29, 1994 between the
          Company and BNY Financial Corporation. Incorporated by
          reference to Exhibit 10-9 to the Form 10-Q for the
          quarter ended June 30, 1994.

               (10.36) Letter Agreement dated September 1, 1994
          between the Company, BNY Financial Corporation, FS
          Signal Associates II and WG Trading Co.  Incorporated
          by reference to Exhibit 10-4 to the Form 10-Q for the
          quarter ended September 30, 1994.

               (10.37) November 14, 1994 Letter Amendment to
          Factoring Agreements dated as of (i) May 23, 1991
          between the Company and BNY Financial Corporation and
          (ii) July 25, 1991 between The Shirt Shed, Inc. and BNY
          Financial Corporation.  Incorporated by reference to
          Exhibit 10-3 to current report on Form 8-K dated
          November 22, 1994.

               (10.38) November 22, 1994 Letter Amendments to
          Factoring Agreements dated as of (i) May 23, 1991
          between the Company and BNY Financial Corporation and
          (ii) July 25, 1991 between The Shirt Shed, Inc. and BNY
          Financial Corporation.  Incorporated by reference to
          Exhibit 10-4 to current report on Form 8-K dated
          November 22, 1994.

               (10.39) Factoring Agreement dated as of November
          22, 1994 between American Marketing Works, Inc. and BNY
          Financial Corporation, together with Equipment Security
          Agreement, Inventory Security Agreement and Trademark
          Assignment of Security related thereto, all dated as of
          November 22, 1994 relating to a $14,000,000 credit
          facility.  Incorporated by reference to Exhibit 10-5 to
          current report on form 8-K dated November 22, 1994.

               (10.40) November 22, 1994 Letter Amendment to
          Factoring Agreement dated as of November 22, 1994
          between American Marketing Works, Inc. and BNY
          Financial Corporation.  Incorporated by reference to
          Exhibit 10-6 to current report on Form 8-K dated
          November 22, 1994.

               (10.41) November 22, 1994 Letter Amendments to
          Factoring Agreements dated as of (i) May 23, 1991
          between the Company and BNY Financial Corporation; (ii)
          July 25, 1991 between the Shirt Shed, Inc. and BNY
          Financial Corporation; and (iii) November 22, 1994
          between American Marketing Works, Inc. and BNY
          Financial Corporation.  Incorporated by reference to
          Exhibit 10-7 to current report on Form 8-K dated
          November 22, 1994.

               (10.42) Guaranty by the Company of obligations of
          American Marketing Works, Inc. to BNY Financial
          Corporation, dated November 22, 1994.  Incorporated by
          reference to Exhibit 10-8 to current report on Form 8-K
          dated November 22, 1994.

               (10.43) Guaranty by The Shirt Shed, Inc. of
          obligations of American Marketing Works, Inc. to BNY
          Financial Corporation, dated November 22, 1994.
          Incorporated by reference to Exhibit 10-9 to current
          report on Form 8-K dated November 22, 1994.

               (10.44) Guaranty by American Marketing Works, Inc.
          of obligations of the Company to BNY Financial
          Corporation, dated November 22, 1994.  Incorporated by
          reference to Exhibit 10-10 to current report on Form 8-
          K dated November 22, 1994.

               (10.45) Guaranty by American Marketing Works, Inc.
          of obligations of The Shirt Shed, Inc. to BNY Financial
          Corporation, dated November 22, 1994.  Incorporated by
          reference to Exhibit 10-11 to current report on Form 8-
          K dated November 22, 1994.

               (10.46) Pledge Agreement, dated November 22, 1994,
          between the Company and BNY Financial Corporation re:
          capital stock of The Shirt Shed, Inc. and American
          Marketing Works, Inc. Incorporated by reference to
          Exhibit 10-12 to current report on Form 8-K dated
          November 22, 1994.

               (10.47) Letter Agreement dated March 30, 1995
          amending the Factoring Agreement dated as of May 23,
          1991 by and between BNY Financial Corp. and the Company
          waiving compliance with certain provisions thereof.
          Incorporated by reference to Exhibit 10-1 to Form 10-Q
          for the quarter ended June 30, 1995.

               (10.48) Letter Amendment dated November 7, 1995
          amending the Factoring Agreements dated as of May 23,
          1991 by and between BNY Financial Corp. and the
          Company, dated July 25, 1991 by and between BNY
          Financial Corp. and Shirt Shed and dated November 22,
          1994 by and between BNY Financial Corp. and AMW waiving
          compliance with certain provisions thereof.

               (10.49) Letter Amendment dated March 14, 1996
          amending the Factoring Agreements dated as of May 23,
          1991 by and between BNY Financial Corp. and the
          Company, and dated July 25, 1991 by and between BNY
          Financial Corp. and Shirt Shed waiving compliance with
          certain provisions thereof.

               (10.50) Warrant Certificate covering 100,000
          shares of Common Stock of the Company, issues to BNY
          Financial Corporation in connection with transactions
          related to the Company's acquisition of American
          Marketing Works, Inc. Incorporated by reference to
          Exhibit 10-13 to current report on Form 8-K dated
          November 22, 1994.

               (10.51) Amended and Restated Credit Agreement
          dated as of February 16, 1995 among American Marketing
          Works, Inc., certain Lenders and Greyrock Capital
          Group, Inc. Incorporated by reference to Exhibit 10.48
          to Form 10-K for the year ended December 31, 1995.

               (10.52) Tranche A Note of American Marketing
          Works, Inc. for $4,750,000 to Greyrock Capital Group,
          Inc. dated February 16, 1993. Incorporated by reference
          to Exhibit 10.49 to Form 10-K for the year ended
          December 31, 1995.

               (10.53) Tranche B Note of American Marketing
          Works, Inc. for $1,750,000 to Greyrock Capital Group,
          Inc. dated February 16, 1993. Incorporated by reference
          to Exhibit 10.50 to Form 10-K for the year ended
          December 31, 1995.

               (10.54) Security Agreement dated February 16, 1993
          between American Marketing Works, Inc. and Greyrock
          Capital Group, Inc. Incorporated by reference to
          Exhibit 10.51 to Form 10-K for the year ended December
          31, 1995.

               (10.55) Guaranty and Security Agreement dated as
          of November 22, 1994 between the Company and Greyrock
          Capital Group, Inc. guaranteeing the obligations of
          American Marketing Works, Inc. to Greyrock Capital
          Group, Inc. Incorporated by reference to Exhibit 10.52
          to Form 10-K for the year ended December 31, 1995.

               (10.56) Guaranty and Security Agreement dated as
          of November 22, 1994 between The Shirt Shed and
          Greyrock Capital Group, Inc. guaranteeing the
          obligations of American Marketing Works, Inc. to
          Greyrock Capital Group, Inc. Incorporated by reference
          to Exhibit 10.53 to Form 10-K for the year ended
          December 31, 1995.

               (10.57)  Agreement dated as of March 31, 1995
          among AMW, The Shirt Shed, the Company, certain lenders
          and Greyrock Capital Group, Inc. amending the Amended
          and Restated Credit Agreement dated as of February 16,
          1993 between AMW, certain lenders and Greyrock.
          Incorporated by reference to Exhibit 10.8 to Form 10-Q
          for the quarter ended March 31, 1995.

               (10.58) License Agreement between the Company, The
          Shirt Shed, Inc. and LCA Entertainment (as agent for DC
          Comics, Inc.) dated as of February 1, 1991, regarding
          exclusive rights to use certain elements from "BATMAN
          II" sequel motion picture, "BATMAN' comic books and
          planned "BATMAN" television series in connection with
          certain categories of apparel products.  Incorporated
          by reference to Exhibit 10-4 to Form 10-K for the year
          ended December 31, 1991.

               (10.59) Warrant Purchase Agreement, dated as of
          March 1, 1991, between the Company, The Shirt Shed,
          Inc. and Licensing Corporation of America.
          Incorporated by reference to Exhibit 10-25 to Form 10-K
          for the year ended December 31, 1991.

               (10.60) Warrant No. 002 issued to Licensing
          Corporation of America, covering 193,386 shares of the
          Company's Common Stock, dated as of July 27, 1991 and
          expiring July 22, 2001.  Incorporated by reference to
          Exhibit 10-1 to the Form 10-Q for the quarter ended
          September 30, 1994.

               (10.61) Warrant No. 003 issued to Licensing
          Corporation of America, covering 38,674 shares of the
          Company's Common Stock, dated as of April 30, 1993 and
          expiring April 30, 2003.  Incorporated by reference to
          Exhibit 10-2 to the Form 10-Q for the quarter ended
          September 30, 1994.

               (10.62) Restructuring Agreement, dated as of
          August 13, 1993 by and among the Company, FS Signal
          Associates, and Walsh Greenwood & Co. Incorporated by
          reference to Exhibit 10-3 to Form 10-Q for the quarter
          ended September 30, 1993.

               (10.63) Waiver Letter, dated as of June 12, 1992,
          pertaining to Credit Agreement dated as of October 23,
          1991, as amended, between the Company and FS Signal
          Associates.  Incorporated by reference to Exhibit 10-1
          to Form 10-Q for the quarter ended September 30, 1992.

               (10.64) Waiver Letter, dated as of June 12, 1992,
          pertaining to Credit Agreement dated as of October 23,
          1991, as amended, between the Company and WG Partners,
          L.P.  Incorporated by reference to Exhibit 10-2 to Form
          10-Q for the quarter ended September 30, 1992.

               (10.65) Subordination Agreement, dated as of June
          12, 1992, between the Company, FS Signal Associates and
          BNY Financial Corporation.  Incorporated by reference
          to Exhibit 10-3 to Form 10-Q for the quarter ended
          September 30, 1992.

               (10.66) Subordination Agreement, dated March 30,
          1994, between the Company, FS Signal Associates and BNY
          Financial Corporation.  Incorporated by reference to
          Exhibit 10-47 to Form 10-K for the year ended December
          31, 1993.

               (10.67) Promissory Note dated March 31, 1994
          between the Company and FS Signal Associates I.
          Incorporated by reference to Exhibit 10-2 to Form 10-Q
          for the quarter ended March 31, 1994.

               (10.68) Warrant Certificate covering 2,047,500
          shares of Common Stock of the Company, issued to FS
          Signal Associates in connection with the Restructuring
          Agreement dated as of August 13, 1993.  Incorporated by
          reference to Exhibit 10-4 to Form 10-Q for the quarter
          ended September 30, 1993.

               (10.69) Warrant Certificate covering 2,000,000
          shares of Common Stock of the Company, issued to FS
          Signal Associates in connection with the Restructuring
          Agreement dated as of August 13, 1993.  Incorporated by
          reference to Exhibit 10-5 to Form 10-Q for the quarter
          ended September 30, 1993.

               (10.70) Warrant Certificate dated April 1, 1994 to
          purchase 300,000 shares of Common Stock of the Company,
          issued to FS Signal Associates I in connection with the
          promissory note dated March 31, 1994.  Incorporated by
          reference to Exhibit 10-4 to Form 10-Q for the quarter
          ended March 31, 1994.

               (10.71) Warrant Certificate covering 675,000
          shares of Common Stock of the Company, issued to Walsh
          Greenwood in connection with the Restructuring
          Agreement dated as of August 13, 1993.  Incorporated by
          reference to Exhibit 10-6 to Form 10-Q for the quarter
          ended September 30, 1993.

               (10.72) License Agreement between the Company and
          RHC Licensing Corporation dated June 2, 1992.
          Incorporated by reference to Exhibit 10-52 to Form 10-K
          for the year ended December 31, 1992.

               (10.73) Warrant Certificate covering 200,000
          shares of Common Stock of the Company issued to
          Grissanti, Galef & Goldress, Inc. in connection with
          their engagement.  Incorporated by reference to Exhibit
          10-1 to Form 10-Q for the quarter ended September 30,
          1993.

               (10.74) Amendment to Warrant Certificate dated
          October 18, 1994 reducing the shares issuable from
          200,000 to 100,000 to Grisanti, Galef & Goldress, Inc.
          Incorporated by reference to Exhibit 10-3 to Form 10-Q
          for the quarter ended September 30, 1994.

               (10.75) Agreement dated June 21, 1994 by and among
          the Company, FS Signal Associates I, and Walsh
          Greenwood & Co. exchanging all outstanding shares of
          the Company's Series B Preferred Stock on a one-per-one
          basis for shares of the Company's Series C Preferred
          Stock.  Incorporated by reference to Exhibit 10-1 to
          form 10-Q for the quarter ended June 30, 1994.

               (10.76) Put/Call Agreement dated November 22,
          1994, among the Company, MW Holdings, L.P., Marvin
          Winkler and Sherri Winkler.  Incorporated by reference
          to Exhibit 10-1 to current report on Form 8-K dated
          November 22, 1994.

               (10.77) Registration Rights Agreement dated
          November 22, 1994, between the Company and Kidd, Kamm
          Equity Partners, Inc. Incorporated by reference to
          Exhibit 10-2 to current report on Form 8-K dated
          November 22, 1994.

               (10.78) Employment Agreement with Marvin Winkler
          dated as of April 1, 1995. Incorporated by reference to
          Exhibit 10.1 to Form 10-Q for the quarter ended March
          31, 1995.

               (10.79) Agreement dated May 10, 1995 by and
          between the Company and Sherri Winkler and MW Holdings,
          Inc.  Incorporated by reference to Exhibit 10.4 to Form
          10-Q for the quarter ended March 31, 1995 .

               (10.80) Employment Agreement with Leon Ruchlamer
          dated as of March 27, 1995.  Incorporated by reference
          to Exhibit 10.5 to Form 10-Q for the quarter ended
          March 31, 1995.

               (10.81) Employment Agreement with William Watts
          dated as of March 15, 1995.  Incorporated by reference
          to Exhibit 10.81 to Form 10-Q for the quarter ended
          March 31, 1995.

               (10.82) Agreement dated April 24, 1995 between the
          Company and MC Properties I. L.P.  Incorporated by
          reference to Exhibit 10.7 to Form 10-Q for the quarter
          ended March 31, 1995.

               (10.83) Settlement Agreement dated as of March 1,
          1995 with Glenn Grandin.  Incorporated by reference to
          Exhibit 10.9 to Form 10-Q for the quarter ended March
          31, 1995.

               (10.84) Settlement Agreement dated as of April 13,
          1995 with Daniel Cox.  Incorporated by reference to
          Exhibit 10.10 to Form 10-Q for the quarter ended March
          31, 1995.

               (10.85) Credit Agreement dated as of March 31,
          1995 between the Company and Walsh Greenwood & Co.
          Incorporated by reference to Exhibit 4.1 to current
          report on Form 8-K filed on May 10, 1995.

               (10.86) Promissory Note in face amount of
          $15,000,000 dated March 31, 1995 issued to Walsh
          Greenwood by the Company.  Incorporated by reference to
          Exhibit 4.2 to current report on Form 8-K filed on May
          10, 1995.

               (10.87) Fixed Rate Warrant Certificate for
          1,500,000 Warrants dated March 31, 1995 issued to Walsh
          Greenwood by the Company.  Incorporated by reference to
          Exhibit 4.3 to current report on Form 8-K filed on May
          10, 1995.

               (10.88) Discount Rate Warrant Certificate for
          1,500,000 Warrants dated March 31, 1995 issued to Walsh
          Greenwood by the Company.  Incorporated by reference to
          Exhibit 10.1 to current report on Form 8-K filed on May
          10, 1995.

               (10.89) Agreement among Signal Apparel Company,
          Inc. and certain shareholders of Signal Apparel
          Company, Inc.  Incorporated by reference to Exhibit 10.
          1 to current report on Form 8-K filed on May 10, 1995.

               (10.90) Tennessee Deed of Trust and Security
          Agreement dated March 31, 1995 between the Company and
          Walsh Greenwood.  Incorporated by reference to Exhibit
          10.2 to current report on Form 8-K filed on May 10,
          1995.

               (10.91) Deed to Secure Debt and Security Agreement
          dated March 31, 1995 between the Company and Walsh
          Greenwood.  Incorporated by reference to Exhibit 10.3
          to current report on Form 8-K filed on May 10, 1995.

               (10.92) Real Estate Mortgage, Security Agreement,
          Assignment of Lease and Rents and Fixture filing dated
          March 31, 1995 between The Shirt Shed and Walsh
          Greenwood.  Incorporated by reference to Exhibit 10.4
          to current report on Form 8-K filed on May 10, 1995.

               (10.93) Severance Agreement dated November 5, 1995
          with Marvin Winkler.

               (10.94) Employment Agreement with Bruce Krebs
          dated November 27, 1995.

               (10.95) Employment Agreement with Gary LaBelle
          dated November 30, 1995.

               (10.96) First Amendment dated August 10, 1995, to
          Credit Agreement dated March 31, 1995, between the
          Company and Walsh Greenwood.

               (10.97) Replacement Promissory Note in the face
          amount of $20,000,000 dated August 10, 1995, between
          the Company and Walsh Greenwood.

               (10.98) Fixed Rate Warrant Certificate for 500,000
          Warrants dated August 10, 1995, issued to Walsh
          Greenwood by the Company.

               (10.99) Discount Rate Warrant Certificate for
          500,000 Warrants dated August 10, 1995, issued to Walsh
          Greenwood by the Company.

               (10.100) First Amendment dated August 10, 1995, to
          Tennessee Deed of Trust and Security Agreement dated
          March 31, 1995, between the Company and Walsh
          Greenwood.

               (10.101) First Amendment dated August 10, 1995, to
          Secured Debt and Security Agreement dated March 31,
          1995, between the Company and Walsh Greenwood.

               (10.102) First Amendment dated August 10, 1995, to
          Real Estate Mortgage, Security Agreement, Assignment of
          Lease and Rents and Fixture Filing dated March 31,
          1995, between The Shirt Shed and Walsh Greenwood.

               (10.103) Letter Agreement dated March 27, 1996
          waiving certain defaults under the Walsh Greenwood
          Credit Agreement.

               (21)  List of Subsidiaries

               (23)  Consent of Arthur Andersen LLP, Independent  
                     Public Accountants

               (27)  Financial Data Schedule


(b)  Reports on Form 8-K

               None

                                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.

                                   SIGNAL APPAREL COMPANY, INC.


                                   By /s/Bruce Krebs
                                   ------------------------------
                                   Bruce Krebs
                                   President and 
                                   Chief Operating Officer

Date:  March 29, 1996

Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below or on counterparts
thereof by the following persons on behalf of the registrant in
the capacities and on the dates indicated.

Name                   Capacity                   Date
----                   --------                   ----


/s/Bruce Krebs         President and Chief        March 29, 1996
---------------------  Operating Officer          --------------
Bruce Krebs            

/s/William H. Watts    Executive Vice President   March 29, 1996
---------------------  and Chief Financial        --------------
William H. Watts       Officer

/s/James V. Elkins     Controller                 March 29, 1996
---------------------                             --------------
James V. Elkins

/s/Jacob I. Feigenbaum Director                   March 29, 1996
---------------------                             --------------
Jacob I. Feigenbaum

/s/Paul R. Greenwood   Director                   March 29, 1996
---------------------                             --------------
Paul R. Greenwood

/s/Gregory Murphy      Director                   March 29, 1996
---------------------                             --------------
Gregory Murphy

/s/Leon Ruchlamer      Director                   March 29, 1996
---------------------                             --------------
Leon Ruchlamer

/s/Stephen Walsh       Director                   March 29, 1996
---------------------                             --------------
Stephen Walsh

                       EXHIBIT INDEX

Exhibit No. 
per Item 601 
of Reg. S-K    Description of Exhibit  


(3.1)          Copy of Restated Articles of
               Incorporation as amended November
               15, 1995

(10.48)        Letter Amendment dated November 7,
               1995 amending the Factoring
               Agreements dated as of May 23, 1991
               by and between BNY Financial Corp.
               and the Company, dated July 25,
               1991 by and between BNY Financial
               Corp. and Shirt Shed and dated
               November 22, 1994 by and between
               BNY Financial Corp. and AMW waiving
               compliance with certain provisions
               thereof

(10.49)        Letter Amendment dated March 14,
               1996 amending the Factoring
               Agreements dated as of May 23, 1991
               by and between BNY Financial Corp.
               and the Company, and dated July 25,
               1991 by and between BNY Financial
               Corp. and Shirt Shed waiving
               compliance with certain provisions
               thereof

(10.93)        Severance Agreement dated November
               5, 1995 with Marvin Winkler

(10.94)        Employment Agreement with Bruce
               Krebs dated November 27, 1995

(10.95)        Employment Agreement with Gary
               LaBelle dated November 30, 1995

(10.96)        First Amendment dated August 10,
               1995, to Credit Agreement dated
               March 31, 1995, between the Company
               and Walsh Greenwood

(10.97)        Replacement Promissory Note in the
               face amount of $20,000,000 dated
               August 10, 1995, between the
               Company and Walsh Greenwood

(10.98)        Fixed Rate Warrant Certificate for
               500,000 Warrants dated August 10,
               1995, issued to Walsh Greenwood by
               the Company

(10.99)        Discount Rate Warrant Certificate
               for 500,000 Warrants dated August
               10, 1995, issued to Walsh Greenwood
               by the Company

(10.100)       First Amendment dated August 10,
               1995, to Tennessee Deed of Trust
               and Security Agreement dated March
               31, 1995, between the Company and
               Walsh Greenwood

(10.101)       First Amendment dated August 10,
               1995, to Deed to Secure Debt and
               Security Agreement dated March 31,
               1995, between the Company and Walsh
               Greenwood

(10.102)       First Amendment dated August 10,
               1995, to Real Estate Mortgage,
               Security Agreement, Assignment of
               Lease and Rents and Fixture Filing
               dated March 31, 1995, between Shirt
               Shed and Walsh Greenwood

(10.103)       Letter Agreement dated March 27,
               1996 waiving certain defaults under
               the Walsh Greenwood Credit
               Agreement                          

(21)           List of Subsidiaries

(23)           Consent of Arthur Andersen LLP,    
               Independent Public Accountants

(27)           Financial Data Schedule