UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 1, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission File number 333-376-17
DELTA MILLS, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 13-2677657
--------------- ---------------
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
233 North Main Street
Hammond Square, Suite 200
Greenville, South Carolina 29601
- ---------------------------- ---------
(Address of principal executive offices) (Zip Code)
864\232-8301
------------
(Registrant's telephone number, including area code)
(Not Applicable)
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(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ].
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. Common Stock, $.01 Par
Value--100 shares as of May 16, 2000.
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS H(1)(a)
AND H(1)(b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED
DISCLOSURE FORMAT.
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DELTA MILLS, INC.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets--
April 1, 2000 and July 3, 1999 3-4
Condensed consolidated statements of operations--
Three months and nine months ended April 1, 2000 and
March 27, 1999 5
Condensed consolidated statements of cash
flows-Nine months ended April 1, 2000
and March 27, 1999 6
Notes to condensed consolidated financial
statements-April 1, 2000 7-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-10
Item 3. Quantitative and Qualitative Disclosures About Risk 10
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DELTA MILLS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS April 1, July 3,
2000 1999
---------- ----------
(Unaudited)
(In Thousands)
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ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 8,330 $ 9,903
Accounts receivable:
Factor and other 60,474 69,881
Affiliates 2,822 12,994
-------- --------
63,296 82,875
Less allowances for doubtful accounts and returns 228 291
-------- --------
63,068 82,584
Inventories:
Finished goods 7,326 9,122
Work in process 32,525 29,201
Raw materials and supplies 8,485 7,144
-------- --------
48,336 45,467
Current assets of discontinued operations 319 780
Deferred income taxes 1,634 2,482
-------- --------
TOTAL CURRENT ASSETS 121,687 141,216
PROPERTY, PLANT AND EQUIPMENT
Cost 200,465 200,723
Accumulated depreciation 94,976 85,743
-------- --------
105,489 114,980
DEFERRED LOAN COSTS AND OTHER ASSETS 3,170 4,755
-------- --------
TOTAL ASSETS $230,346 $260,951
======== ========
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DELTA MILLS, INC
CONDENSED CONSOLIDATED BALANCE SHEETS-Continued
April 1, July 3,
2000 1999
---------- ----------
(Unaudited)
(In Thousands)
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LIABILITIES
CURRENT LIABILITIES
Trade accounts payable $ 12,965 $ 15,887
Payable to affiliates 4,795 571
Accrued employee compensation 1,548 4,014
Accrued and sundry liabilities 13,195 18,381
Accrued restructuring charges 290 750
-------- ---------
TOTAL CURRENT LIABILITIES 32,793 39,603
LONG-TERM DEBT 122,505 150,000
DEFERRED INCOME TAXES 15,994 15,547
OTHER LIABILITIES AND DEFERRED CREDITS 6,676 6,040
SHAREHOLDER'S EQUITY
Common Stock, par value $.01--authorized 0 0
3,000 shares, issued and outstanding 100 shares
Additional paid-in capital 51,792 51,792
Retained earnings (deficit) 586 (2,031)
-------- ---------
TOTAL SHAREHOLDER'S EQUITY 52,378 49,761
-------- ---------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $230,346 $260,951
======== =========
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DELTA MILLS, INC.
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Nine Months Ended
------------------- ------------------
April 1, March 27, April 1, March 27
2000 1999 2000 1999
-------- --------- -------- --------
(In Thousands) (In Thousands)
<S> <C> <C> <C> <C>
Net sales to non-affiliated parties $62,185 $73,329 $178,337 $236,164
Net sales to affiliated parties 8,439 7,720 24,046 24,240
-------- -------- --------- ---------
Net sales 70,624 81,049 202,383 260,404
Cost of goods sold 61,058 69,364 180,792 215,749
-------- -------- --------- ---------
Gross profit on sales 9,566 11,685 21,591 44,655
Selling, general and administrative 3,551 4,094 10,622 12,445
Other (income) 419 (59) 327 (62)
-------- -------- --------- ---------
OPERATING PROFIT 5,596 7,650 10,642 32,272
Interest expense (income):
Interest expense 4,267 3,999 12,867 13,002
Interest (income) (295) (48) (743) (115)
-------- -------- --------- ---------
3,972 3,951 12,124 12,887
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES 1,624 3,699 (1,482) 19,385
Income tax expense (benefit) 706 1,439 (597) 7,542
-------- -------- --------- ---------
INCOME (LOSS) FROM CONTINUING
OPERATIONS 918 2,260 (885) 11,843
Gain on disposal of discontinued operations
less applicable income taxes 0 1,141 0 3,773
Gain on extinguishment of debt
less applicable income taxes 3,502 0 3,502 0
-------- -------- --------- ---------
NET INCOME $ 4,420 $ 3,401 $ 2,617 $ 15,616
======== ======== ========= =========
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DELTA MILLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended
---------------------------
April 1, March 27,
2000 1999
---------- ----------
(In Thousands)
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OPERATING ACTIVITIES
Net Income $ 2,617 $ 15,616
Adjustments to reconcile net income to net cash
provided by operating activities:
Discontinued operations 0 14,289
Depreciation 10,403 10,541
Amortization 501 466
Write off of loan origination costs - line of credit 419 0
Gain on retirement of debt (pre-tax) (5,883) 0
Other 301 9,098
Changes in operating assets and liabilities 14,189 (21,653)
--------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 22,547 28,357
INVESTING ACTIVITIES
Property, plant and equipment:
Purchases (3,304) (6,086)
Proceeds of dispositions 131 1,086
Investing activities of discontinued operations 0 206
Other 0 (1)
--------- ---------
NET CASH USED BY
INVESTING ACTIVITIES (3,173) (4,795)
FINANCING ACTIVITIES
Proceeds from revolving lines of credit 0 90,365
Repayments on revolving lines of credit 0 (113,000)
Repurchase and retirement of long term debt (20,897) 0
Other (50) (170)
--------- ----------
NET CASH USED
BY FINANCING ACTIVITIES
(20,947) (22,805)
--------- ----------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (1,573) 757
Cash and cash equivalents at beginning of year 9,903 544
--------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 8,330 $ 1,301
========= ==========
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6
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DELTA MILLS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
April 1, 2000
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements of Delta
Mills, Inc. ("the Company") have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments consisting of only normal recurring
accruals considered necessary for a fair presentation have been included.
Operating results for the three and nine months ended April 1, 2000 are not
necessarily indicative of the results that may be expected for the year ending
July 1, 2000. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's annual report on Form
10-K for the year ended July 3, 1999.
NOTE B--DISCONTINUED OPERATIONS
On March 3, 1998, the Company made the decision to close its Stevcoknit Fabrics
division. Accordingly, results of that segment have been reported as
discontinued operations. During the first quarter of fiscal year 1999, the
Company reduced the estimate of the cost to close the business and recognized a
credit of $2.6 million in discontinued operations, net of income taxes of $1.8
million.
The assets of discontinued business at April 1, 2000 and July 3, 1999, are as
follows:
April 1, July 3,
(In thousands) 2000 1999
------- -------
Accounts Receivable (net of reserves) $ 302 $ 763
Other current assets 17 17
------- -------
Total current assets $ 319 $ 780
======= =======
NOTE C--SUMMARIZED FINANCIAL INFORMATION OF SUBSIDIARY
Delta Mills Marketing, Inc. (the "Guarantor") does not comprise a material
portion of the Company's assets or operations. The Guarantor is a wholly-owned
subsidiary of the Company and has fully and unconditionally guaranteed (the
"Guarantee") the Company's payment of principal, premium, if any, interest and
certain liquidated damages, if any, on the Company's senior notes (the "Notes").
The Guarantor's liability under the Guarantee is limited to such amount, the
payment of which would not have left the Guarantor insolvent or with
unreasonably small capital at the time its Guarantee was entered into, after
giving effect to the incurrence of existing indebtedness immediately prior to
such time.
The Guarantor is the sole subsidiary of the Company. All future subsidiaries of
the Company will provide guarantees identical to the one described in the
preceding paragraph unless such future subsidiaries are Receivables Subsidiaries
(as defined in the indenture relating to the Notes). Such additional guarantees
will be joint and several with the Guarantee of the Guarantor.
The Company has not presented separate financial statements or other disclosures
concerning the Guarantor because Company management has determined that such
information is not material to investors.
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NOTE C--SUMMARIZED FINANCIAL INFORMATION OF SUBSIDIARY - CONTINUED
Summarized financial information for the Guarantor is as follows (in thousands):
April 1, July 3,
2000 1999
-------- --------
Current assets $ 194 $ 194
Noncurrent assets 132 71
Current liabilities 462 560
Noncurrent liabilities 1,234 980
Stockholder's (deficit) (1,370) (1,275)
Summarized results of operations for the Guarantor are as follows (in
thousands):
Nine Months Ended
---------------------
April 1, March 27,
2000 1999
--------- ---------
Net sales - intercompany commissions $ 2,924 $ 3,896
Costs and expenses 3,101 3,435
Income (Loss) from continuing operations (177) 301
Net Loss (95) (394)
NOTE D--LONG-TERM DEBT, CREDIT ARRANGEMENTS, AND NOTES PAYABLE
On March 31, 2000, the Company replaced its existing bank credit facility with a
new revolving credit facility. The new facility currently has a maximum
availability limit of $65 million. Borrowings under the new credit facility
will be based on eligible accounts receivable and inventory subject to the
maximum availability limit. The new credit facility has a three-year term and
is secured by the accounts receivable, inventory, and capital stock of the
Company and Delta Mills Marketing, Inc., the Company's wholly owned subsidiary.
The interest rate of the new credit facility is based on a spread over either
LIBOR or a base rate. In connection with this new credit facility, the Company
terminated its prior credit facility. On March 31, 2000, there were no
borrowings outstanding under either the prior credit facility or the new credit
facility.
The new credit facility contains restrictive covenants which, among other
matters, require that the Company's Maximum Leverage Ratio not exceed specified
ratios. The agreement also restricts additional indebtedness, dividends and
capital expenditures. As of April 1, 2000, the Company was in compliance with
all covenants contained in the new facility.
During the quarter ended April 1, 2000, the Company acquired for $20,897,279 a
portion of its 9 5/8% Senior Notes. The aggregate principal face amount of the
acquired Senior Notes was $27,495,000. Subsequent to the end of the third
quarter, the Company acquired for the sum of $2,069,598 an additional portion of
its 9 5/8% Senior Notes, the aggregate principal face amount of which was
$2,926,000.
8
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NOTE E--COMMITMENTS AND CONTINGENCIES
On January 10, 2000, the North Carolina Department of Environment and Natural
Resources requested that Delta Mills, Inc. accept responsibility for
investigating the discharge of hazardous substances at an inactive hazardous
waste site known as the Glen Raven Mills Site, Kings Mountain, North Carolina
(the "Site"). A predecessor by merger of Delta Mills, Inc., Park Yarn Mills
Company, Inc. ("Park Yarn"), owned the Site for approximately six (6) years,
from approximately 1977 to 1983 (prior to the time Delta Mills, Inc. became a
subsidiary of Delta Woodside Industries, Inc.). Delta Mills, Inc. is aware of
no evidence that Park Yarn discharged or deposited any hazardous substance at
the Site or is otherwise a "responsible party" for the Site. Further, Park Yarn
filed bankruptcy and was discharged in 1983. Although no assurance can be
provided, any liability of Park Yarn for the Site may have been discharged by
the bankruptcy order. Accordingly, Delta Mills, Inc. has denied any
responsibility at the Site, has declined to undertake any activities
concerning the Site, and has not provided for any reserves for costs or
liabilities attributable to Park Yarn.
On January 13, 2000, Marion Mills, LLC, a supplier to the Company, brought an
action against the Company in North Carolina Superior Court in McDowell County,
North Carolina. The plaintiff seeks actual damages in excess of $1.8 million
and consequential and incidental damages in excess of $7.4 million. The actual
damages claim is based on an alleged failure by the Company to pay in excess of
$1.8 million of invoice amounts. The consequential and incidental damages claim
is based on the allegation that the Company's failure to pay caused Marion
Mills, LLC to shut down its business. The Company's position is that it paid
some of the invoices claimed to be unpaid and did not pay the other invoices
because of defects in the goods supplied by the plaintiff (which were returned
per the plaintiff's authorization). The Company, therefore, denies and is
vigorously contesting the claims. On February 23, 2000, the case was
transferred from the state court to the United States District Court for the
Middle District of North Carolina.
9
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion contains certain "forward-looking statements".
All statements, other than statements of historical fact, that address
activities, events or developments that the Company expects or anticipates will
or may occur in the future, including such matters as future revenues, future
costs, future capital expenditures, business strategy, competitive strengths,
competitive weaknesses, goals, plans, references to future success or
difficulties and other similar information are forward-looking statements. The
words "estimate", "project", "anticipate", "expect", "intend", "believes" and
similar expressions, and discussions of strategy and intentions, are intended to
identify forward-looking statements.
The forward-looking statements in this Quarterly Report are based on the
Company's expectations and are necessarily dependent upon assumptions, estimates
and data that the Company believes are reasonable and accurate but may be
incorrect, incomplete or imprecise. Forward-looking statements are also subject
to a number of business risks and uncertainties, any of which could cause actual
results to differ materially from those set forth in or implied by the
forward-looking statements. These risks and uncertainties include, among
others, changes in the retail demand for apparel products, the cost of raw
materials, competitive conditions in the apparel and textile industries, the
relative strength of the United States dollar as against other currencies,
changes in United States trade regulations and the discovery of unknown
conditions (such as with respect to environmental matters and similar items).
Accordingly, any forward-looking statements do not purport to be predictions of
future events or circumstances and may not be realized.
The Company does not undertake to publicly update or revise the
forward-looking statements even if it becomes clear that any projected results
will not be realized.
The Company manufactures and sells finished woven fabrics to non-affiliated
parties and manufactures and sells yarn, primarily to Delta Apparel, an
operation of another subsidiary of the Company's parent company, Delta Woodside
Industries, Inc.
Net sales to non-affiliated parties for the third quarter of fiscal year 2000
were $62.2 million as compared to $73.3 million in the same quarter of the prior
fiscal year, a decrease of 15.2%. For the nine months ended April 1, 2000, net
sales to non-affiliated parties were $178.3 million as compared to $236.2
million for the same period of fiscal 1999, a decrease of 24.5%. The decrease
in sales over last year's quarter reflects the elimination of the Company's
greige business, the downsizing of the synthetic product line, and some downward
adjustment in cotton product sales that started in the first half of the year
due to lower than expected demand from certain customers. Sales of cotton
products have decreased 15 % over last year's quarter but are improved over the
previous two quarters of the current year. The improvement in the cotton
product sales began in the third quarter and production for cottons was at or
near full capacity for the last two months of the quarter. The synthetic
product lines were running at approximately 90% of the downsized capacity.
Synthetic sales were down approximately 15% over the last year's quarter. Sales
decreases for the nine months of the year were primarily caused by the same
factors discussed above, except that the downward adjustments were more dramatic
in the first half of the year. For the nine months ended April 1, 2000, cotton
sales were down 19% and synthetic sales were down 44% from the nine months ended
March 27, 1999.
Net sales to affiliated parties for the third quarter of fiscal year 2000 were
$8.4 million as compared to $7.7 million in the same quarter of the prior fiscal
year. Affiliated party sales were $24.0 million for the nine months ended April
1, 2000 versus $24.2 million for the same nine-month period of fiscal 1999. The
increase was due to an increased demand at the affiliate. The Company believes
that the affiliate will continue to purchase yarn throughout the fourth quarter
of fiscal year 2000 or until the Rainsford yarn facility is sold to Delta
Apparel, Inc. This sale of the Rainsford facility is expected to occur in
connection with the Delta Apparel distribution described in the Form 10/A of
Delta Apparel, Inc (file no. 1-15583) filed with the Securities and Exchange
Commission on May 3, 2000. The Company currently anticipates that the record
date for the Delta Apparel distribution will be a date in June 2000 and that the
Delta Apparel distribution will be completed in June 2000.
10
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - CONTINUED
Gross profit as a percent of sales was 13.5% for the third quarter of fiscal
year 2000 compared to 14.4% in the prior year quarter. Gross profit as a
percentage of sales was 10.7% for the nine months ended April 1, 2000 as
compared to 17.2% for the same period of fiscal 1999. In addition to the sales
volume declines described above, gross profit declined as a result of some raw
material price increases in the synthetic product line and increased price
pressure in the cotton product category.
Selling, general and administrative costs for the third quarter were $3.6
million and 5.0% of sales compared to $4.1 million and 5.1% of sales in the
prior year quarter. Year to date selling, general and administrative costs for
fiscal 2000 were $10.6 million or 5.3% of sales as compared to $12.4 million or
4.8% of net sales for the same period of fiscal 1999. The increase in percent
of sales is a result of the decline in sales dollars.
The Company reported net income of $4.4 million for the third quarter of fiscal
year 2000 as compared to net income of $3.4 million in the prior year quarter.
The Company reported net income of $2.6 million for the nine months ended April
1, 2000 as compared to net income of $15.6 million for the nine months ended
March 27, 1999. The fiscal 2000 third quarter and nine month net income amounts
include $3.5 million of after-tax gain on the extinguishment of debt, due to the
Company's acquisition of a portion of its Senior Notes, as described below. The
$15.6 million net income figure for 1999 includes a $2.6 million pretax gain for
the reduction of restructuring reserves related to discontinued operations.
The Company's order backlog at April 1, 2000 was $79.9 million, down from the
$83.7 million order backlog at March 27, 1999 but up from $66.8 million as of
January 1, 2000. This increase over last quarter is reflective of improved
market conditions.
Inventory for the quarter ended April 1, 2000 was contained at $48.3 million,
in line with reduced sales volume. This compares with inventory of $45.5 at
July 3, 1999 and $55.5 million at March 27, 1999.
On March 31, 2000, the Company replaced its existing bank credit facility with a
new revolving credit facility. The new facility currently has a maximum
availability limit of $65 million. This level of borrowing availability is more
in line with the Company's needs and plans. Borrowings under the new credit
facility will be based on eligible accounts receivable and inventory subject to
the maximum availability limit. The new credit facility has a three-year term
and is secured by the accounts receivable, inventory, and capital stock of the
Company and Delta Mills Marketing, Inc., the Company's wholly owned subsidiary.
The interest rate of the new credit facility is based on a spread over either
LIBOR or a base rate. In connection with this new credit facility, Delta Mills
terminated its prior credit facility. This new credit agreement is more fully
described in the Delta Mills 8-K dated March 31, 2000 and filed with the
Securities and Exchange Commission on April 13, 2000. On March 31, 2000, there
were no borrowings outstanding under either the prior credit facility or the new
credit facility.
The new credit facility contains restrictive covenants which, among other
matters, require that the Company's Maximum Leverage Ratio not exceed specified
ratios. The agreement also restricts additional indebtedness, dividends and
capital expenditures. The new credit facility does not contain some of the
restrictions that caused defaults under the prior credit facility. As of April
1, 2000, the Company was in compliance with all covenants contained in the new
facility.
During the quarter ended April 1, 2000, the Company acquired for $20,897,279 a
portion of its 9 5/8% Senior Notes. The aggregate principal face amount of the
acquired Senior Notes was $27,495,000. In April 2000, the Company acquired for
the sum of $2,069,598 an additional portion of its 9 5/8% Senior Notes, the
aggregate principal face amount of which was $2,926,000.
The Company believes that cash flow generated by its operations will be
sufficient to service its debt, to satisfy its day to day working capital
requirements and to fund its planned capital expenditures.
11
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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a part of the Company's business of converting fiber to finished fabric, the
Company makes raw cotton purchase commitments and then fixes prices with cotton
merchants who buy from producers and sell to textile manufacturers. Daily price
fluctuations are minimal, yet long-term trends in price movement can result in
unfavorable pricing of cotton. Before fixing prices, the Company looks at
supply and demand fundamentals, recent price trends and other factors that
affect cotton prices. The Company also reviews the backlog of orders from
customers as well as the level of fixed price cotton commitments in the industry
in general. At April 1, 2000, a 10% decline in market price of the Company's
fixed price contracts would have a negative impact of approximately $3.2 million
on the value of the contracts.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
As previously reported in the Company's Form 10-Q for the fiscal quarter ended
January 1, 2000, on January 13, 2000, Marion Mills, LLC, a supplier to the
Company, brought an action against the Company in North Carolina Superior Court
in McDowell County, North Carolina. On February 23, 2000, the case was
transferred from the state court to the United States District Court for the
Middle District of North Carolina.
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Item 5 Other Information*
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits required by Item 601 of Regulation S-K
10.4.6 Amendment to the Delta Woodside Industries, Inc. Stock
Option Plan adopted April 25, 2000.
10.16.1 Revolving Credit and Security Agreement, dated as of
March 31, 2000, between GMAC Commercial Credit LLC as agent
and lender, and Delta Mills, Inc. as borrower: Incorporated
by reference to Exhibit 99.1 to the Company's Current Report
on Form 8-K dated March 31, 2000 and filed with the
Securities and Exchange Commission on April 13, 2000.
10.16.2 Guarantee, dated as of March 31, 2000, of Delta Mills
Marketing, Inc. in favor of GMAC Commercial Credit LLC as
agent: Incorporated by reference to Exhibit 99.2 to the
Company's Current Report on Form 8-K dated March 31, 2000
and filed with the Securities and Exchange Commission on
April 13, 2000.
10.16.3 General Security Agreement, dated as of March 31, 2000,
between Delta Mills Marketing, Inc. and GMAC Commercial
Credit LLC as agent: Incorporated by reference to Exhibit
99.3 to the Company's Current Report on Form 8-K dated March
31, 2000 and filed with the Securities and Exchange
Commission on April 13, 2000.
10.16.4 Stock Pledge and Security Agreement, dated as of March
31, 2000, by Alchem Capital Corporation in favor of GMAC
Commercial Credit LLC as agent: Incorporated by reference to
Exhibit 99.4 to the Company's Current Report on Form 8-K
dated March 31, 2000 and filed with the Securities and
Exchange Commission on April 13, 2000.
10.16.5 Stock Pledge and Security Agreement, dated as of March
31, 2000, by Delta Mills, Inc., in favor of GMAC Commercial
Credit LLC as agent: Incorporated by reference to Exhibit
99.5 to the Company's Current Report on Form 8-K dated March
31, 2000 and filed with the Securities and Exchange
Commission on April 13, 2000.
(b) The Company filed Form 8-K with date of March 31, 2000. Items
reported were:
Item 5. Other Events
Item 7. Financial Statements and Exhibits
*Item 5 is not applicable.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Delta Mills, Inc.
-------------------
(Registrant)
Date May 16, 2000 /s/ David R. Palmer
------------ ----------------------
David R. Palmer
Controller
(Authorized signatory and chief accounting officer)
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RESOLUTIONS REGARDING AMENDMENT OF STOCK OPTIONS AND STOCK OPTION PLAN
- -------------------------------------------------------------------------------
WHEREAS, the Company has granted stock options under the Delta Woodside
Industries, Inc. Stock Option Plan (the "DWI Stock Option Plan") that remain
outstanding and have not yet expired;
WHEREAS, the DWI Stock Option Plan is unclear as to the effect of a spin-off of
a subsidiary of the Company as an independent company on outstanding stock
options held by individuals who are employed by the subsidiary that is spun-off;
WHEREAS, the Board has determined that it is in the best interests of the
Company and its shareholders to amend the DWI Stock Option Plan to clarify the
effect of a spin-off on outstanding options held by employees of the subsidiary
that is spun-off;
NOW, THEREFORE, BE IT RESOLVED AS FOLLOWS:
RESOLVED, that Section 10., Exercise of Options, is amended by adding the
following to the end of the third paragraph:
"If a Subsidiary of the Company is spun-off from the Company by means
of (i) a distribution of the stock of the Subsidiary to the shareholders of
the Company or (ii) the distribution of the stock of a direct or indirect
parent corporation of the Subsidiary to the shareholders of the Company, no
employee of such Subsidiary shall be treated as having had his or her
employment with a Subsidiary of the Company terminated solely as a result
of such spin-off."
RESOLVED, that the officers of the Company, and each of them, are authorized and
directed to execute such documents and take such actions as any of them may deem
necessary or appropriate to amend the terms of any and all outstanding stock
options granted pursuant to the DWI Stock Option Plan to conform to the
substance of the foregoing amendment to the DWI Stock Option Plan.
Adopted April 25, 2000.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
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0
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