UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Soliciting Material Pursuant to
[_] Confidential, For Use of the SS.240.14a-11(c) or SS.240.14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
Delta Apparel, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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[_] Fee paid previously with preliminary materials:
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[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:
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<PAGE>
DELTA APPAREL, INC.
2750 PREMIERE PARKWAY, SUITE 100
DULUTH, GEORGIA 30097
TELEPHONE (678) 775-6900
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
NOVEMBER 7, 2000
TO OUR SHAREHOLDERS:
Notice is hereby given that the Annual Meeting of Shareholders of Delta
Apparel, Inc., a Georgia corporation ("Delta Apparel"), will be held at the
Gunter Theatre, 320 South Main Street, Greenville, South Carolina, on Tuesday,
November 7, 2000, at 10:30 a.m., local time, for the following purposes:
1. To elect seven directors to serve until the next annual meeting of
shareholders of Delta Apparel or until their successors have been duly
elected and qualified;
2. To vote on the ratification of the appointment of KPMG LLP as
independent auditors for Delta Apparel for fiscal 2001; and
3. To act on such other business as may properly come before the Annual
Meeting or any adjournment or adjournments thereof.
The Board of Directors of Delta Apparel recommends that shareholders
vote FOR the nominees for director listed in the Delta Apparel proxy statement
enclosed with this notice and FOR approval of the proposal described in item 2
above.
Delta Apparel has fixed the close of business on October 9, 2000 as the
record date for the determination of the shareholders of Delta Apparel entitled
to receive notice of and to vote at the Annual Meeting. Only shareholders of
record of Delta Apparel at the close of business on October 9, 2000 will be
entitled to vote at the Annual Meeting and any adjournment or adjournments
thereof.
Whether or not you expect to be present at the Annual Meeting, please
complete, date and sign the enclosed form of proxy and return it promptly in the
enclosed envelope, which requires no additional postage if mailed in the United
States.
By Order of the Board of Directors,
/s/ Herbert M Mueller
-----------------
Herbert M. Mueller
October 16, 2000 Secretary
<PAGE>
DELTA APPAREL, INC.
2750 Premiere Parkway, Suite 100
Duluth, Georgia 30097
Telephone (678) 775-6900
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
NOVEMBER 7, 2000
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Delta Apparel, Inc., a Georgia corporation
("Delta Apparel" or the "Company"), to be voted at the Annual Meeting of
Shareholders (the "Annual Meeting") of the Company to be held at the Gunter
Theatre, 320 South Main Street, Greenville, South Carolina, at 10:30 a.m. on
Tuesday, November 7, 2000. The approximate date of first mailing this Proxy
Statement and the accompanying proxy is October 16, 2000.
Only shareholders of record at the close of business on October 9, 2000 are
entitled to receive notice of and to vote at the Annual Meeting. As of such
date, there were outstanding 2,411,643 shares of common stock, $.01 par value
(the only voting securities), of the Company. Each share is entitled to one
vote.
Each shareholder described above will be sent this Proxy Statement, the
accompanying Notice of Annual Meeting and a proxy card. Any proxy given pursuant
to this solicitation may be revoked by the person giving it at any time before
it is voted. A proxy may be revoked by (i) delivering to the Secretary of the
Company, at or before the Annual Meeting, a written notice of revocation bearing
a later date than the proxy, (ii) duly executing a subsequent proxy relating to
the same shares and delivering it to the Secretary of the Company at or before
the Annual Meeting or (iii) attending the Annual Meeting and giving notice of
revocation to the Secretary of the Company or giving notice of revocation in
open meeting prior to the proxy being voted (although attendance at the Annual
Meeting will not in and of itself constitute a revocation of a proxy). Any
written notice revoking a proxy should be sent to: Delta Apparel, Inc., 2750
Premiere Parkway, Suite 100, Duluth, Georgia 30097, Attention: Secretary.
All shares represented by valid proxies received pursuant to the
solicitation and prior to voting at the meeting and not revoked before they are
exercised will be voted, and, if a choice is specified with respect to any
matter to be acted upon, the shares will be voted in accordance with such
specification. If no contrary instructions are indicated, all shares represented
by a proxy will be voted (1) FOR election to the Board of Directors of the
nominees described herein, (2) FOR ratification of the appointment of KPMG LLP
as independent auditors for the Company for fiscal year 2001, and in the
discretion of the proxy holders as to all other matters that may properly come
before the Annual Meeting.
The presence, either in person or by proxy, of the holders of two-thirds of
the outstanding shares of common stock at October 9, 2000 is necessary to
constitute a quorum at the Annual Meeting. Directors will be elected by a
plurality of the votes cast at the Annual Meeting. Shareholders do not have the
right to cumulate their votes with respect to the election of directors.
Abstentions and broker non-votes, which are separately tabulated, are included
in the determination of the number of shares present for quorum purposes, but
have no effect on the votes respecting the matters to be voted upon at the
meeting. Shareholders do not have any dissenters' rights or appraisal rights
with respect to any matter described in this proxy statement.
2
<PAGE>
THE SPIN-OFF FROM DELTA WOODSIDE INDUSTRIES, INC.
The business of the Company was originally conducted by the Delta Apparel
Company division of various subsidiaries of Delta Woodside Industries, Inc., a
South Carolina corporation ("Delta Woodside"), whose common stock is traded on
the New York Stock Exchange under the symbol "DLW." The Company was formed as an
indirect subsidiary of Delta Woodside in December 1999. In May of 2000, Delta
Woodside reorganized its subsidiaries and divisions, and all of the assets and
operations of the Delta Apparel Company division were transferred to the
Company, which became a direct subsidiary of Delta Woodside, or to a subsidiary
of the Company. Then on June 30, 2000, Delta Woodside spun-off the Company by
means of a pro rata distribution of all of the outstanding common stock of the
Company to Delta Woodside's stockholders of record on June 19, 2000. Also on
June 30, 2000, Delta Woodside similarly spun-off Duck Head Apparel Company,
Inc., a Georgia corporation ("Duck Head"), to which had been transferred the
Duck Head Apparel Company division of Delta Woodside and various subsidiaries of
Delta Woodside. After the spin-offs, Delta Woodside's sole operating division
was its Delta Mills Marketing Company division owned and operated by its
subsidiary Delta Mills, Inc. ("Delta Mills"). Historical data contained in this
proxy statement for the periods prior to June 30, 2000 pertain to the Delta
Apparel Company division of Delta Woodside's subsidiaries or the Company prior
to the spin-off.
ELECTION OF DIRECTORS
(ITEM 1)
The by-laws of the Company provide that the number of Directors to be
elected at any meeting of shareholders may be determined by the Board of
Directors. The Board has determined that seven Directors shall be elected at the
Annual Meeting. The shareholders' common stock may not be voted cumulatively in
the election of Directors.
The following seven persons are nominees for election as Directors at the
Annual Meeting to serve until the next annual meeting of shareholders of the
Company or until their successors are duly elected and qualified. Unless
authority to vote at the election of Directors is withheld, it is the intention
of the persons named in the enclosed form of proxy to nominate and vote for the
persons named below, all of whom are currently Directors of the Company. Except
as otherwise noted below, the business address of each nominee is Delta Apparel,
Inc., 2750 Premiere Parkway, Suite 100, Duluth, Georgia 30097. Each such person
is a citizen of the United States. There are no family relationships among the
Directors and the executive officers of the Company.
Management of the Company believes that all of the nominees will be
available and able to serve as Directors, but in the event any nominee is not
available or able to serve, the shares represented by the proxies will be voted
for such substitute as shall be designated by the Board of Directors.
<TABLE>
<CAPTION>
NAME, AGE AND PRINCIPAL OCCUPATION DIRECTOR SINCE
BUSINESS ADDRESS
<S> <C> <C>
William F. Garrett (59) President and Chief Executive 1998(1)
1071 Avenue of the Americas Officer of Delta Woodside
New York, NY 10018 Greenville, South Carolina (2)
C. C. Guy (67) Retired Businessman 1984(1)
918 Elizabeth Road Shelby, North Carolina (3) (9) (10)
Shelby, NC 28150
Robert W. Humphreys (43) President and Chief Executive Officer 1999
2750 Premiere Pkwy, Suite 100 of Delta Apparel (4)
Duluth, GA 30097
3
<PAGE>
Dr. James F. Kane (68) Dean Emeritus of the College of 1986(1)
1705 College Street Business Administration of the
Columbia, SC 29208 University of South Carolina
Columbia, South Carolina (5) (9) (10)(11)
Dr. Max Lennon (60) President of Mars Hill College 1986(1)
Post Office Box 1775 Mars Hill, North Carolina (6) (9) (10)(11)(12)
Mars Hill, NC 28754
E. Erwin Maddrey, II (59) President of Maddrey & Associates 1984(1)
233 N. Main Street, Suite 200 Greenville, South Carolina (7)(12)
Greenville, SC 29601
Buck A. Mickel (44) President and Chief Executive Officer 1984(1)
Post Office Box 6721 of RSI Holdings, Inc.
Greenville, SC 29606 Greenville, South Carolina (8) (10)(12)
<FN>
(1) Includes service as a director of Delta Woodside, a South Carolina
corporation, and Delta Woodside's predecessor by merger, Delta Woodside
Industries, Inc., a Delaware corporation ("Old Delta Woodside"), or any
predecessor company to Old Delta Woodside.
(2) William F. Garrett served as a divisional Vice President of J. P.
Stevens & Company, Inc. from 1982 to 1984, and as a divisional President of J.
P. Stevens & Company, Inc. from 1984 until 1986, at which time the Delta Mills
Marketing Company division was acquired by a predecessor of Old Delta Woodside.
From 1986 until June 2000 he served as the President of Delta Mills Marketing
Company, a division of a subsidiary of Delta Woodside. Mr. Garrett became
President and Chief Executive Officer of Delta Woodside in June 2000. Delta
Woodside is in the business of manufacturing and selling textile fabric. Mr.
Garrett is also a director of Delta Woodside and Duck Head.
(3) C. C. Guy served as Chairman of the Board of Old Delta Woodside or its
predecessors from the founding of Old Delta Woodside's predecessors in 1984
until November 1989. Since before the November 15, 1989 merger (the "RSI
Merger") of Old Delta Woodside into RSI Corporation, a South Carolina
corporation which changed its name to Delta Woodside Industries, Inc. and is now
Delta Woodside, he has been a director of RSI Holdings, Inc., and from before
the RSI Merger until January 1995 he also served as President of RSI Holdings,
Inc. RSI Holdings, Inc. until 1992 was engaged in the sale of outdoor power
equipment, until 1994 was engaged in the sale of turf care products, until
January 2000 was engaged in the consumer finance business and currently has
ceased business operations but is evaluating other business opportunities. Prior
to November 15, 1989, RSI Holdings, Inc. was a subsidiary of RSI Corporation.
Mr. Guy served from October 1979 until November 1989 as President, Treasurer and
a director of RSI Corporation. Prior to the RSI Merger, RSI Corporation owned
approximately 40% of the outstanding shares of common stock of Old Delta
Woodside and, among other matters, was engaged in the office supply business, as
well as the businesses of selling outdoor power equipment and turf care
products. Mr. Guy also serves as a director of Delta Woodside and Duck Head.
(4) Robert W. Humphreys was elected President and Chief Executive Officer
of Delta Apparel in December 1999. He was elected President of the Delta Apparel
Company division of Delta Woodside in April 1999. He served as Vice
President-Finance and Assistant Secretary of Delta Woodside from May 1998 to
November 1999. From January 1987 to May 1998, Mr. Humphreys was President of
Stevcoknit Fabrics Company, the knit fabrics division of a subsidiary of Delta
Woodside.
(5) Dr. James F. Kane is Dean Emeritus of the College of Business
Administration of the University of South Carolina, having retired in 1993 as
Dean, in which capacity he had served since 1967. He also serves as a director
of Delta Woodside, Duck Head and Glassmaster Company.
(6) Dr. Max Lennon was President of Clemson University from March 1986
until August 1994. He was President and Chief Executive Officer of Eastern
Foods, Inc., which was engaged in the business of manufacturing and distributing
food products, from August 1994 until March 1996. He commenced service in March
4
<PAGE>
1996 as President of Mars Hill College. He also serves as a director of Delta
Woodside, Duck Head and Duke Power Company.
(7) E. Erwin Maddrey, II was President and Chief Executive Officer of Old
Delta Woodside or its predecessors from the founding of Old Delta Woodside's
predecessors in 1984 until the RSI Merger and he served in these positions with
Delta Woodside from the RSI Merger until June 2000. He is currently the
President of Maddrey & Associates, which oversees its investments and provides
consulting services. He also serves as a director of Delta Woodside, Duck Head
and Kemet Corporation.
(8) Buck A. Mickel was a Vice President of Old Delta Woodside or its
predecessors from the founding of Old Delta Woodside's predecessors until
November 1989, Secretary of Old Delta Woodside from November 1986 to March 1987,
and Assistant Secretary of Old Delta Woodside from March 1987 to November 1988.
He served as Vice President and a director of RSI Holdings, Inc. from before the
RSI Merger until January 1995 and as Vice President of RSI Holdings, Inc. from
September 1996 until July 1998 and has served as President, Chief Executive
Officer and a director of RSI Holdings, Inc. from July 1998 to the present. He
served as Vice President of RSI Corporation from October 1983 until November
1989. Mr. Mickel also serves as a director of Delta Woodside and Duck Head.
(9) Member of Audit Committee.
(10) Member of Compensation Committee.
(11) Member of Compensation Grants Committee.
(12) Member of the Corporate Governance Committee.
</FN>
</TABLE>
The Company's Directors hold office until the next annual meeting of
shareholders or until their successors are duly elected and qualified.
The Board of Directors of the Company met physically or by telephone five
times during the fiscal year ended July 1, 2000. During fiscal 2000, the Audit
Committee of the Board of Directors met twice, the Compensation Committee met
once and the Compensation Grants Committee met once either in person or
telephonically. The Corporate Governance Committee did not meet in fiscal 2000.
Each Director attended or participated in at least 75 percent of the meetings of
the Board and of any committee of which he was a member.
The Audit Committee reviews the Company's annual financial statements and
any reports or other financial information submitted to any governmental body or
the public, makes recommendations to the Board regarding the selection of the
Company's independent public accountants, reviews the independence of such
accountants, approves the scope of the annual audit, approves the fee payable to
the independent accountants, reviews the audit results, reviews the integrity of
the Company's internal and external financial reporting process, will establish
and maintain a code of ethical conduct for the Company's management and performs
other functions set forth in its charter. The Compensation Committee reviews and
submits to the Board of Directors suggested executive officers' salaries and
bonuses, other than bonuses under the Company's Short-Term Incentive
Compensation Plan (the "Short-Term Incentive Compensation Plan"). The
Compensation Grants Committee will grant awards under the Company's Incentive
Stock Award Plan (the "Incentive Stock Award Plan"), options under the Company's
2000 Stock Option Plan (the "Stock Option Plan"), and bonuses under the
Company's Short-Term Incentive Compensation Plan. The Corporate Governance
Committee identifies, interviews and recommends to the Board candidates for
election to the Board. The Corporate Governance Committee will also review and
report to the Board as to various corporate governance matters.
The Corporate Governance Committee will consider director nominees
recommended by holders of the Company's common stock. Shareholder nominations
must be in writing and otherwise comply with the requirements of the Company's
bylaws. If the election of directors is to take place at an annual meeting of
shareholders, then a shareholder nomination must be received by the Company (A)
no later than 120 days prior to the first anniversary of the previous year's
annual meeting or (B) if there was no annual shareholders meeting the previous
year or the date of the annual shareholders' meeting has been moved more than 30
days from the date of the previous year's meeting then no later than ten days
5
<PAGE>
after notice or public disclosure of the date of the annual meeting is first
given or made to shareholders. If the election of directors is to take place at
a special meeting of shareholders, then a shareholder nomination must be
received by the Company no later than ten days after notice or public disclosure
of the date of the special meeting is first given or made to shareholders. The
written nomination must include (a) the name and address of the shareholder who
intends to make the nomination and the name and address of each of his nominees,
(b) the class and number of shares held by the nominator as of the record date
of the meeting and as of the date of the notice (including shares held of record
or beneficially and shares represented by proxy), certain information about
record ownership and a representation that the nominator intends to appear in
person at the meeting to make the nominations, (c) a description of all
arrangements between the nominator and the nominee(s) relating to the
nomination, (d) the same information about the nominee(s) that the Company would
be required to include in a proxy statement under the Securities and Exchange
Commission's proxy rules if the Company were making the nomination, (e) the
written consent of each nominee to serve as a director of the Company and (f)
any other information the Company may reasonably request. Copies of the
Company's bylaws may be obtained by writing or calling the Company at 2750
Premiere Parkway, Suite 100, Duluth, Georgia, 30097, tel: (678) 775-6900,
attention: Herbert M. Mueller, Vice President.
STOCK OWNERSHIP OF PRINCIPAL SHAREHOLDERS
AND MANAGEMENT
The following table sets forth certain information as of October 5, 2000,
regarding the beneficial ownership of the Company's common stock by (i) persons
beneficially owning in any case more than five percent of the common stock, (ii)
the directors, (iii) the executive officers named in the Summary Compensation
Table under "Management Compensation", and (iv) all current directors and
executive officers as a group. Unless otherwise noted in the notes to the table,
the Company believes that the persons named in the table have sole voting and
investment power with respect to all shares of common stock of the Company shown
as beneficially owned by them.
<TABLE>
<CAPTION>
SHARES
------
BENEFICIALLY
------------
BENEFICIAL OWNER OWNED PERCENTAGE
---------------- ----- ----------
<S> <C> <C>
Reich & Tang Asset Management L. P. (1) 284,300 11.8%
600 Fifth Avenue
New York, New York 10020
Franklin Resources, Inc. (2) 224,000 9.3%
Franklin Advisory Services, LLC
Charles B. Johnson
Rupert H. Johnson, Jr.
777 Mariners Island Boulevard
San Mateo, California 94404
Dimensional Fund Advisors Inc. (3) 194,291 8.1%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Royce & Associates (4) 187,440 7.8%
1414 Avenue of the Americas
Ninth Floor
New York, NY 10019
E. Erwin Maddrey, II (5) 347,593 14.4%
233 North Main Street
Suite 200
Greenville, SC 29601
6
<PAGE>
Bettis C. Rainsford (6) 334,218 13.9%
108-1/2 Courthouse Square
Post Office Box 388
Edgefield, SC 29824
Buck A. Mickel (7) (8) 158,742 6.6%
Post Office Box 6721
Greenville, SC 29606
Micco Corporation (8) 124,063 5.1%
Post Office Box 795
Greenville, SC 29602
Minor H. Mickel (8)(9) 157,804 6.5%
415 Crescent Avenue
Greenville, SC 29605
Minor M. Shaw (8)(10) 150,560 6.2%
Post Office Box 795
Greenville, SC 29602
Charles C. Mickel (8) (11) 149,694 6.2%
Post Office Box 6721
Greenville, SC 29606
William F. Garrett (12) 17,671 (19)
C. C. Guy (13) 3,849 (19)
Robert W. Humphreys (14) 6,010 (19)
Dr. James F. Kane (15) 4,055 (19)
Dr. Max Lennon (16) 2,881 (19)
Herbert M. Mueller (17) 3,834 (19)
All current directors and executive officers
as a group (8 Persons) (18) 544,635 22.6%
<FN>
(1) Reich & Tang Asset Management L.P. ("Reich & Tang") has not yet filed
with the Securities and Exchange Commission any document related specifically to
its ownership of the securities of the Company. The information set forth above
is based on an amendment to Schedule 13G that was filed with the Securities and
Exchange Commission on February 15, 2000 by Reich & Tang pertaining to its
ownership solely of Delta Woodside common stock and confirmation obtained on
September 20, 2000 from Reich & Tang. However, based on the confirmation
obtained from Reich & Tang, the Company understands that Reich & Tang possesses
the same ownership, voting and dispositive power with respect to the Company's
shares as it does for the shares of Delta Woodside (adjusted to reflect that one
Delta Apparel share was distributed for every 10 Delta Woodside shares in the
spin-off with cash paid in lieu of fractional shares). In the amendment, Reich &
Tang reported that, with respect to the common stock of Delta Woodside, it has
shared voting power and shared dispositive power with respect to all of the
shares shown. The amendment reported that the shares of Delta Woodside common
stock were held on behalf of certain accounts for which Reich & Tang provides
investment advice and as to which Reich & Tang has full voting and dispositive
power for as long as it retains management of the assets. According to the
amendment, each account has the right to receive and the power to direct receipt
of dividends from, or the proceeds from the sale of, the Delta Woodside shares.
The amendment reported that none of such accounts has an interest with respect
to more than 5% of the outstanding shares of Delta Woodside.
7
<PAGE>
(2) Franklin Resources, Inc. ("FRI") has not yet made a filing with the
Securities and Exchange Commission related specifically to the securities of the
Company. The information set forth above is based on an amendment to Schedule
13G that was filed by FRI with the Securities and Exchange Commission on January
20, 2000 with respect to Delta Woodside common stock and on confirmation
obtained on September 20, 2000. However, based on the confirmation, the Company
understands that FRI possesses the same ownership, voting and dispositive power
with respect to the Company's shares as it does for the shares of Delta Woodside
(adjusted to reflect that one Delta Apparel share was distributed for every 10
Delta Woodside shares in the spin-off with cash paid in lieu of fractional
shares). In the amendment FRI reported that, with respect to Delta Woodside
common stock, the shares are beneficially owned by one or more investment
companies or other managed accounts that are advised by one or more direct and
indirect investment advisory subsidiaries of FRI. The amendment reported that
the advisory contracts grant to the applicable investment advisory
subsidiary(ies) all investment and/or voting power over the securities owned by
their investment advisory clients. Accordingly, such subsidiary(ies) may be
deemed to be the beneficial owner of the shares shown in the table. The
amendment reported that Charles B. Johnson and Rupert H. Johnson, Jr. (the "FRI
Principal Shareholders") (each of whom has the same business address as FRI)
each own in excess of 10% of the outstanding common stock and are the principal
shareholders of FRI and may be deemed to be the beneficial owners of securities
held by persons and entities advised by FRI subsidiaries. The amendment reported
that one of the investment advisory subsidiaries, Franklin Advisory Services,
LLC (whose address is One Parker Plaza, Sixteenth Floor, Fort Lee, New Jersey
07024), has sole voting and dispositive power with respect to all of the shares
shown. FRI, the FRI Principal Shareholders and the investment advisory
subsidiaries disclaim any economic interest or beneficial ownership in the
shares and are of the view that they are not acting as a "group" for purposes of
the Securities Exchange Act of 1934, as amended. The amendment reported that
Franklin Balance Sheet Investment Fund, a series of Franklin Value Investors
Trust, a company registered under the Investment Company Act of 1940, has an
interest in more than 5% of the class of securities reported in the amendment.
(3) Dimensional Fund Advisors Inc. ("Dimensional") has not yet made a
filing with the Securities and Exchange Commission specifically related to its
ownership of securities of the Company. The information set forth above is based
on an amendment to Schedule 13G that was filed by Dimensional with the
Securities and Exchange Commission on February 3, 2000 with respect to its
ownership of shares of Delta Woodside and on confirmation obtained on September
20, 2000. However, based on the confirmation, the Company understands that
Dimensional possesses the same ownership, voting and dispositive power for the
shares of the Company as it does for those of Delta Woodside (adjusted to
reflect that one Delta Apparel share was distributed for every 10 Delta Woodside
shares in the spin-off with cash paid in lieu of fractional shares). Dimensional
reported that it had sole voting power and sole dispositive power with respect
to all of the shares. The amendment reports that Dimensional furnishes
investment advice to four investment companies and serves as investment manager
to certain other commingled group trusts and separate accounts, that all of the
shares of Delta Woodside's common stock were owned by such investment companies,
trusts or accounts, that in its role as investment adviser or manager
Dimensional possesses voting and/or investment power over the Delta Woodside
shares reported, that Dimensional disclaims beneficial ownership of such
securities and that, to the knowledge of Dimensional, no such investment
company, trust or account client owned more than 5% of the outstanding shares of
Delta Woodside's common stock.
(4) This information was provided to the Company by telephone on October 9,
2000 by an employee of Royce & Associates.
(5) Mr. Maddrey is a director of the Company, Delta Woodside and Duck Head
and was the President and Chief Executive Officer of Delta Woodside until June
2000. The number of shares shown as beneficially owned by Mr. Maddrey includes
43,147 shares held by the E. Erwin and Nancy B. Maddrey, II Foundation, a
charitable trust, as to which shares Mr. Maddrey holds sole voting and
investment power but disclaims beneficial ownership and approximately 107 shares
allocated to the account of Mr. Maddrey in Delta Woodside's Savings and
Investment Plan (the "Delta Woodside 401(k) Plan"). Mr. Maddrey is fully vested
in the shares allocated to his account in the Delta Woodside 401(k) Plan.
(6) Mr. Rainsford was a director of the Company and Delta Woodside until
September 14, 2000, is currently a director of Duck Head and was the Executive
Vice President, Treasurer and Chief Financial Officer of Delta Woodside until
October 1, 1999. The number of shares shown as beneficially owned by Mr.
Rainsford includes 4,794 shares held by The Edgefield County Foundation, a
8
<PAGE>
charitable trust, as to which shares Mr. Rainsford holds sole voting and
investment power but disclaims beneficial ownership, and approximately 16 shares
allocated to the account of Mr. Rainsford in the Delta Woodside 401(k) Plan. Mr.
Rainsford is fully vested in the shares allocated to his account in the Delta
Woodside 401(k) Plan.
(7) Buck A. Mickel is a director of the Company, Delta Woodside and Duck
Head. The number of shares shown as beneficially owned by Buck A. Mickel
includes 34,392 shares directly owned by him, all of the 124,063 shares owned by
Micco Corporation, and 287shares held by him as custodian for a minor. See Note
(8).
(8) Micco Corporation owns 124,063 shares of the Company's common stock.
The shares of common stock of Micco Corporation are owned in equal parts by
Minor H. Mickel, Buck A. Mickel (a director of the Company), Minor M. Shaw and
Charles C. Mickel. Buck A. Mickel, Minor M. Shaw and Charles C. Mickel are the
children of Minor H. Mickel. Minor H. Mickel, Buck A. Mickel, Minor M. Shaw and
Charles C. Mickel are officers and directors of Micco Corporation. Each of Minor
H. Mickel, Buck A. Mickel, Minor M. Shaw and Charles C. Mickel disclaims
beneficial ownership of three quarters of the shares of the Company's common
stock owned by Micco Corporation. Minor H. Mickel directly owns 33,741 shares of
the Company's common stock. Buck A. Mickel, directly or as custodian for a
minor, owns 34,679 shares of the Company's common stock. Charles C. Mickel,
directly or as custodian for his children, owns 25,621 shares of the Company's
common stock. Minor M. Shaw, directly or as custodian for her children, owns
25,049 shares of the Company's common stock. Minor M. Shaw's husband, through an
individual retirement account and as custodian for their children, beneficially
owns approximately 1,448 shares of the Company's common stock, as to which
shares Minor M. Shaw may also be deemed a beneficial owner. Minor M. Shaw
disclaims beneficial ownership with respect to these shares and with respect to
the 274 shares of the Company's common stock held by her as custodian for her
children. The spouse of Charles C. Mickel owns 10 shares of the Company's common
stock, as to which shares Charles C. Mickel may also be deemed a beneficial
owner. Charles C. Mickel disclaims beneficial ownership with respect to these
shares and with respect to the 351 shares of the Company's common stock held by
him as custodian for his children. Buck A. Mickel disclaims beneficial ownership
with respect to the 287 shares of the Company's common stock held by him as
custodian for a minor.
(9) The number of shares shown as beneficially owned by Minor H. Mickel
includes 33,741shares directly owned by her and all of the 124,063 shares owned
by Micco Corporation. See Note (8).
(10) The number of shares shown as beneficially owned by Minor M. Shaw
includes 25,621 shares owned by her directly or as custodian for her children,
approximately 1,448 shares beneficially owned by her husband through an
individual retirement account or as custodian for their children, and all of the
124,063 shares owned by Micco Corporation. See Note (8).
(11) The number of shares shown as beneficially owned by Charles C. Mickel
includes 25,621 shares owned by him directly or as custodian for his children,
10 shares owned by his wife and all of the 124,063 shares owned by Micco
Corporation. See Note (8).
(12) William F. Garrett is a director of the Company, Delta Woodside and
Duck Head. The number of shares shown as beneficially owned by Mr. Garrett
includes 208 shares allocated to the account of Mr. Garrett in the Delta
Woodside 401(k) Plan. Mr. Garrett is fully vested in the shares allocated to his
account in the Delta Woodside 401(k) Plan.
(13) C. C. Guy is a director of the Company, Delta Woodside and Duck Head.
The number of shares shown as beneficially owned by C. C. Guy includes 1,896
shares owned by his wife, as to which shares Mr. Guy disclaims beneficial
ownership.
(14) Robert W. Humphreys is President and Chief Executive Officer and a
director of the Company. Excluded from the table are 62,500 shares covered by
options that are not exercisable within 60 days after October 5, 2000 and 16,000
shares subject to awards under the Company's Incentive Stock Award Plan which
will not vest within 60 days after October 5, 2000.
9
<PAGE>
(15) Dr. James F. Kane is a director of the Company, Delta Woodside and
Duck Head. The shares shown as beneficially owned by him are held in a Keogh
account or an IRA account.
(16) Dr. Max Lennon is a director of the Company, Delta Woodside and Duck Head.
(17) Herbert M. Mueller is Vice President, Chief Financial Officer and
Treasurer of the Company. Excluded from the table are 14,000 shares covered by
options that are not exercisable within 60 days after October 5, 2000 and 4,800
shares subject to awards under the Company's Incentive Stock Award Plan which
will not vest within 60 days after October 5, 2000.
(18) Includes all shares deemed to be beneficially owned by any current
director or executive officer.
(19) Less than one percent.
</FN>
</TABLE>
CERTAIN OTHER INFORMATION
On April 30, 1999, Micco Corporation, of which Mr. Mickel is an officer,
director and one-fourth owner, pledged 170,000 shares of common stock of Delta
Woodside to First Union National Bank as security for a line of credit in the
amount of $500,000. Additionally, on December 15, 1999, Micco Corporation
pledged an additional 279,234 shares of common stock of Delta Woodside as
security for the same line of credit. The bank accepted 44,923 shares of Delta
Apparel common stock received by Micco Corporation in the spin-off of Delta
Apparel as collateral for this pledge. Under certain circumstances, the number
of shares pledged by Micco Corporation may be changed. The consent of First
Union National Bank must be obtained in order for Micco Corporation to dispose
of these Delta Apparel shares or to pledge such shares to any other entity.
On January 6, 1994, Mr. Maddrey pledged 724,987 shares of common stock of
Delta Woodside to the Wachovia Bank, N.A. (f/k/a South Carolina National Bank)
as security for a line of credit in the amount of $5,000,000. This arrangement
is now governed by a Commitment Letter dated December 1, 1999. Under certain
circumstances, the number of shares pledged by Mr. Maddrey to Wachovia Bank,
N.A. may be increased. In the spin-off of Delta Apparel, Mr. Maddrey received
72,498 Delta Apparel shares with respect to the pledged Delta Woodside shares.
At this time the bank has not required Mr. Maddrey to deliver to it the stock
certificates for his Delta Apparel stock.
Except as disclosed in this Proxy Statement, neither the Company nor any
current director or officer of the Company is, or since the beginning of fiscal
year 2000 has been, a party to any contract, arrangement or understanding with
any person with respect to the Company's stock, including but not limited to any
joint venture, loan or option arrangement, put or call, guaranty against loss or
guaranty of profit, division of losses or profits or giving or withholding of a
proxy, except for a contract to which the Company is a party establishing the
transfer agent relationship with the transfer agent for the Company's common
stock.
Set forth below is certain information regarding transactions in the
Company's common stock by the current directors and executive officers of the
Company since the spin-off of the Company from Delta Woodside.
TRANSACTIONS IN COMPANY SECURITIES SINCE JUNE 30, 2000
BY CURRENT DIRECTORS AND EXECUTIVE OFFICERS (a)
<TABLE>
<CAPTION>
ACQUIRED/ DATE OF AMOUNT
NAME DISPOSED OF (A/D) TRANSACTION (# SHARES)
<S> <C> <C> <C>
William F. Garrett A(b) 6/30/00 17,671(f)
C.C. Guy A(b) 6/30/00 3,849(g)
Dr. James F. Kane A(b) 6/30/00 4,055
Dr. Max Lennon A(b) 6/30/00 2,881
10
<PAGE>
ACQUIRED/ DATE OF AMOUNT
NAME DISPOSED OF (A/D) TRANSACTION (# SHARES)
E. Erwin Maddrey, II A(b) 6/30/00 347,593(h)
Buck A. Mickel A(b) 6/30/00 158,742(i)
Robert W. Humphreys A(b) 6/30/00 1,910
A(c) 6/30/00 100
A(d) 8/17/00 62,500
A(e) 8/1/00 20,000
Herbert M. Mueller A(b) 6/30/00 234
A(d) 8/17/00 14,000
A(e) 8/1/00 6,000
A(c) 9/18/00 300
A(c) 9/19/00 1,500
A(c) 9/20/00 600
-------------------
<FN>
(a) Delta Apparel was incorporated on December 10, 1999. Prior to June 30,
2000, Delta Apparel was a wholly-owned subsidiary of Delta Woodside, and
prior to May 2000, the business of Delta Apparel was conducted by certain
subsidiaries of Delta Woodside other than Delta Apparel.
(b) These shares were acquired from Delta Woodside in the spin-off of Delta
Apparel.
(c) These shares were purchased.
(d) Option to acquire Delta Apparel shares granted pursuant to the Stock Option
Plan. The shares covered by the option shall vest with respect to 20% of
the shares covered thereby on July 14, 2001 and each of the next four
anniversaries thereof, if certain conditions are met.
(e) Incentive Stock Award granted under the Incentive Stock Award Plan. 20% of
each award vested on the date of grant. An additional 20% of each award
will vest on the last day of each of the 2001 and 2002 fiscal years if the
recipient remains an employee of the Company. The remaining 40% of each
award will vest on the date the Company files its Annual Report on Form
10-K for fiscal 2002 if the recipient remains an employee of the Company on
that date and the Company meets certain performance criteria.
(f) The amount shown includes 208 shares allocated to Mr. Garrett's account in
Delta Woodside's 401(k) Plan, in which Mr. Garrett is fully vested.
(g) The amount shown includes 1,896 shares owned by Mr. Guy's wife. Mr. Guy
disclaims beneficial ownership of these shares.
(h) The amount shown includes 43,147 shares held by the E. Erwin and Nancy B.
Maddrey, II Foundation, a charitable trust, as to which shares Mr. Maddrey
holds sole voting and investment power but disclaims beneficial ownership
and 107 shares allocated to Mr. Maddrey's account in the Delta Woodside
401(k) Plan, in which Mr. Maddrey is fully vested.
(i) The amount shown includes 287 shares held by Mr. Mickel as a custodian for
a minor, as to which shares Mr. Mickel disclaims beneficial ownership, and
124,063 shares owned by Micco Corporation, of which Mr. Mickel is a
director, officer, and 25% shareholder. Mr. Mickel disclaims beneficial
ownership of three-quarters of the shares owned by Micco Corporation.
</FN>
</TABLE>
11
<PAGE>
EXECUTIVE OFFICERS
The following provides certain information regarding the current executive
officers of the Company. The business address of each executive officer listed
below is Delta Apparel, Inc., 2750 Premiere Parkway, Suite 100, Duluth, Georgia,
30097. Marjorie F. Rupp served as a Vice President and the Secretary of the
Company during fiscal 2000; however, she resigned as an officer of the Company
effective September 30, 2000.
<TABLE>
<CAPTION>
Name and Age Position
------------ --------
<S> <C>
Robert W. Humphreys (43) President and Chief Executive Officer (1)
Herbert M. Mueller (43) Vice President, Chief Financial Officer and Treasurer (2)
<FN>
----------------------
(1) See information under the subheading "Election of Directors".
(2) Herbert M. Mueller was elected to serve as Vice President, Chief
Financial Officer and Treasurer of Delta Apparel in December 1999. He was
elected to serve as Vice President of the Delta Apparel Company division of
Delta Woodside in April 1998. Prior to joining the Delta Apparel Company
division, Mr. Mueller served as Corporate Controller (from June 1991 to June
1997 and from October 1997 to April 1998) and Senior Director of Business
Planning (from July 1997 to October 1997) of Swift Denim, a manufacturer of
denim fabric.
</FN>
</TABLE>
The Company's executive officers are appointed by the Board of Directors
and serve at the pleasure of the Board.
MANAGEMENT COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information for the fiscal years ended July
1, 2000 and July 3, 1999 respecting the compensation from Delta Woodside or any
of its subsidiaries that was earned by Delta Apparel's current Chief Executive
Officer and by the other executive officers of Delta Apparel who earned salary
and bonus in fiscal 2000 from Delta Woodside or any of its subsidiaries in
excess of $100,000 (the "Named Executives"). Except as described in the notes to
the table with respect to Robert W. Humphreys, each individual listed in the
table worked exclusively for the Delta Apparel Company division of various
subsidiaries of Delta Woodside during fiscal year 2000 and fiscal year 1999.
12
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
---------
Annual Compensation Compensation
----------------------------- ------------
Payouts
-------
Other
Annual All Other
Compen- LTIP Compens-
Name and Salary Bonus sation Awards sation
Principal Position Year ($)(a) ($)(a)(b) ($) ($) ($)
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert W. Humphreys 2000 300,000 908,700 7,007(e) 117,000 (f) 15,579(g)(f)
President & Chief
Executive Officer(c) 1999 223,077 94,286 14,733(e) 0 543,449
Herbert M. Mueller 2000 148,654 212,030 0 0 2,004(h)(j)
Vice President, Chief
Financial Oficer & 1999 140,000 23,080 3,880(e) 0 372
Treasurer
Marjorie F. Rupp 2000 73,458 151,450 0 0 1,208(i)(j)
Former Vice President
& Secretary(d) 1999 73,094 11,540 0 0 1,122
-------------------------------
<FN>
(a) The amounts shown in the column include sums the receipt of which were
deferred pursuant to the Delta Woodside Savings and Investment Plan (the "Delta
Woodside 401(k) Plan") or the Delta Woodside deferred compensation plan.
(b) Amounts in this column are cash bonuses paid to reward performance.
(c) Mr. Humphreys became the President and chief executive officer of the
Delta Apparel Company division of Delta Woodside in April 1999 and President and
chief executive officer of the Company in December 1999. He was elected Vice
President-Finance and Assistant Secretary of Delta Woodside in May 1998 but
resigned from service as an officer of Delta Woodside in November 1999. The
information in the table includes Mr. Humphreys' compensation from Delta
Woodside and its subsidiaries, including the Company, for all of fiscal 1999 and
2000.
(d) Marjorie F. Rupp was elected Vice President and Secretary of Delta
Apparel in December 1999. She resigned from employment with the Company
effective September 30, 2000. She had previously served as Vice President of
Human Resources of the Delta Apparel Company division of Delta Woodside starting
in July 1998. She served as Director of Human Resources for the Delta Apparel
Company division of Delta Woodside from May 1992 until July 1998.
(e) The amounts shown were paid by Delta Woodside in connection with the
vesting of awards under the Delta Woodside Incentive Stock Award Plan and were
in each case approximately sufficient, after the payment of all applicable
income taxes, to pay the participant's federal and state income taxes
attributable to the vesting of the award. Service awards to Mr. Humphreys and
Mr. Mueller vested on the last day of fiscal 1999. The tax assistance related to
the vesting of these awards was earned in, and recorded above for, fiscal 1999,
though such amounts were actually paid in fiscal 2000. A performance award of
Mr. Humphreys vested in, and the related tax assistance was paid in, fiscal
2000.
(f) 62% of this award constituted a grant of Delta Woodside common stock
valued at $1.50 per share, the closing price for Delta Woodside common stock on
March 15, 2000, the date the Delta Woodside board of directors authorized its
issuance. The remainder of this award consisted of cash to pay expected income
taxes on the value of the total award. The award was made in connection with the
termination of Delta Woodside's Long Term Incentive Plan prior to the spin-offs
of the Company and Duck Head on June 30, 2000.
13
<PAGE>
(g) The fiscal 2000 amount represents a $696 Delta Woodside contribution
allocated to Mr. Humphrey's account in the Delta Woodside 401(k) Plan, $532
contributed by Delta Woodside to Delta Woodside's deferred compensation plan as
payment for the amount of Delta Woodside contributions to the Delta Woodside
401(k) Plan for fiscal year 1999 that were not made for Mr. Humphreys because of
Internal Revenue Code contribution limitations, $2,100 contributed by Delta
Woodside to the Delta Woodside 401(k) Plan for Mr. Humphreys with respect to his
compensation deferred under the Delta Woodside 401(k) Plan, and $2,407 earned on
Mr. Humphreys' deferred compensation at a rate in excess of 120% of the federal
mid-term rate.
(h) The fiscal 2000 amount represents a $632 Delta Woodside contribution
allocated to Mr. Mueller's account in the Delta Woodside 401(k) Plan and $1,372
contributed by Delta Woodside to the Delta Woodside 401(k) Plan for Mr. Mueller
with respect to his compensation deferred under the Delta Woodside 401(k) Plan.
(i) The fiscal 2000 amount represents a $327 Delta Woodside contribution
allocated to Ms. Rupp's account in the Delta Woodside 401(k) Plan and $881
contributed by Delta Woodside to the Delta Woodside 401(k) Plan for Ms. Rupp
with respect to her compensation deferred under the Delta Woodside 401(k) Plan.
(j) The Delta Woodside 401(k) Plan allocation shown for the fiscal year was
allocated to the participant's account during that fiscal year, although all or
part of the allocation may have been determined in whole or in part on the basis
of the participant's compensation during the prior fiscal year.
</FN>
</TABLE>
The amounts shown in the table above do not include reimbursement by Delta
Woodside, the Company or their subsidiaries for certain automobile expenses and
other items. The non-business personal benefit to any Named Executive of these
amounts does not exceed the lesser of $50,000 or 10% of the Named Executive's
total salary and bonus.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table provides certain information respecting the exercise by
any Named Executive during fiscal 2000 of awards granted under Delta Woodside's
Incentive Stock Award Plan and options granted under Delta Woodside's Stock
Option Plan, and the fiscal year end value of any unexercised outstanding awards
and options under these plans. For purposes of this table, awards under Delta
Woodside's Incentive Stock Award Plan are treated as options. No options or
awards covering shares of the Company were granted pursuant to any plan of the
Company in fiscal 2000.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND FY-END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at FY-End (#) FY-End ($)(c)
Shares ------------------------------- ------------------------------
Acquired
on Value
Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
Name (#)(a) ($)(b)
----------------- ------------ ------------ --------------- --------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Robert W.
Humphreys 3,227 8,439 22,500 0 0 --
Herbert M.
Mueller 0 0 6,000 0 0 --
Marjorie F.
Rupp 0 0 4,000 0 0 --
<FN>
-----------------------
(a) All amounts in this column represent shares acquired by vesting of incentive
stock awards.
(b) Based on the closing price of Delta Woodside common stock on October 1,
1999, the date of vesting of the applicable incentive stock awards, of
$2.625 per share.
(c) Based on the closing price of Delta Woodside common stock on June 30, 2000
of $2.125 per share, none of the unexercised options was in-the-money.
</FN>
</TABLE>
14
<PAGE>
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
In 1997, Delta Woodside's board of directors adopted and Delta Woodside's
stockholders approved the Delta Woodside long term incentive plan ("LTIP").
Under that plan, award grants could be made to key executives and non-employee
directors of Delta Woodside that, depending on the attainment of certain
performance measurement goals over a three-year period, could translate into
stock options for Delta Woodside's shares being granted to participants in the
plan. In connection with the exercise of any option granted under the plan,
Delta Woodside would pay cash to the participant to offset the income taxes
attributable to the option exercise and to such cash payment, using an assumed
38% income tax rate.
No award grants complying with all the terms of the plan were made. Around
the time of adoption of the plan, however, Delta Woodside did identify the
individuals who would be plan participants, determined performance targets for
these individuals and communicated these actions to the affected individuals.
These communications also informed the participants that new three-year
performance goals would be established annually.
To take account of the communications previously made to the plan
participants, the fact that all three-year performance periods contemplated by
the plan would expire following the record date for the spin-offs of Delta
Apparel and Duck Head and the efforts of the key executives and directors on
behalf of Delta Woodside leading up to the spin-offs of Delta Apparel and Duck
Head, Delta Woodside's board (based on resolutions of its compensation grants
and compensation committees) decided that Delta Woodside shares would be issued
and cash would be paid prior to the record date for the Delta Apparel and Duck
Head spin-offs to those individuals who were intended participants in the plan.
These actions, which were reflected in an amendment to the long term incentive
plan, provided that (a) Delta Woodside would issue its shares and make cash
payments to the individuals identified for participation in the plan, (b) as a
condition to receipt of those Delta Woodside shares and that cash, those
individuals would surrender any rights they may have under the plan and (c) no
further awards, options or Delta Woodside shares would be granted or issued
under the LTIP.
The number of Delta Woodside shares to be issued and the cash amounts to be
paid were determined by Delta Woodside's compensation grants and compensation
committees and Delta Woodside's board. In determining the number of Delta
Woodside shares to be issued to each participant, Delta Woodside's compensation
grants committee, compensation committee and board used the closing sale price
of Delta Woodside common stock on March 15, 2000 ($1.50 per share).
The table below sets forth Delta Woodside shares that were thereby issued
and the cash that was thereby paid to any Named Executive Officers.
LONG-TERM INCENTIVE PLAN
AWARDS IN LAST FISCAL YEAR
Number of Amount of
Shares Cash
Name (#) ($)
--------------------------------------- ----------------- ---------------------
Robert W. Humphreys 48,380 44,460
EMPLOYMENT CONTRACTS AND SEVERANCE ARRANGEMENTS
During fiscal 1999, Delta Woodside's board of directors began to consider
strategic alternatives to enhance stockholder value, some of which might have
led to a change in control of all or a significant part of Delta Woodside. In
order to provide an incentive for certain of Delta Woodside's key executives to
remain in Delta Woodside's employ while these alternatives were examined, Delta
Woodside entered into severance agreements in December 1998 with, among others,
Robert W. Humphreys (President and Chief Executive Officer of Delta Apparel),
who at that time was Vice President-Finance and Assistant Secretary of Delta
15
<PAGE>
Woodside. Pursuant to each of these agreements, Delta Woodside agreed that, if
the applicable officer's position were eliminated because of downsizing,
restructuring or a change of control between the date of the letter and the end
of December 2000, the officer would be paid a severance equal to two years'
salary at the time of termination, in addition to the officer's regular
severance.
In April 1999, Mr. Humphreys was appointed president and chief executive
officer of the Delta Apparel Company division of Delta Woodside. In connection
with this new position, Delta Woodside agreed in an April 1999 letter that (a)
Mr. Humphreys' salary was $300,000 effective with the pay period beginning April
26, 1999, (b) he would be paid a bonus of at least $300,000 for the 2000 fiscal
year if he remained in his new position during that year, (c) for fiscal 1999 he
would be on the corporate bonus plan for the first ten months, then at the
guaranteed minimum annual $300,000 rate for the eleventh and twelfth months of
fiscal 1999, (d) Delta Woodside would pay his travel and lodging expenses for
commuting to the division's headquarters in Duluth, Georgia, (e) if he remained
as President and Chief Executive Officer of the Delta Apparel business as a
spun-off separate public company, he would participate in a Delta Apparel bonus
plan commencing with the 2001 fiscal year and he would be granted options under
a Delta Apparel performance based stock option plan for shares equal to
approximately five percent of the post-spin-off outstanding shares of Delta
Apparel, (f) the December 1998 severance agreement was modified to provide that
the two years' severance amount, based on a $200,000 annual salary rate, was
earned in fiscal 1999 and he would no longer be entitled to Delta Woodside's
regular severance and (g) if the restructuring/spin-offs under consideration of
the Delta Apparel business and the Duck Head Apparel business did not occur, he
would be elected as a member of Delta Woodside's board of directors. Delta
Apparel assumed all of Delta Woodside's obligations under this letter in
connection with the spin-off of Delta Apparel.
DIRECTOR COMPENSATION
Delta Apparel did not pay any directors fees in fiscal 2000. In fiscal
2001, Delta Apparel expects to pay each director who is not an officer of Delta
Apparel a fee of $8,000 and provide to each of these directors approximately
$4,000 with which shares of Delta Apparel's common stock will be purchased.
These Delta Apparel shares may be either newly issued or acquired in the open
market for this purpose. Delta Apparel also expects that each non-officer
director will also be paid $500 ($750 for the committee chair) for each
committee meeting attended, $250 for each telephonic board and committee meeting
in which the director participates and $500 for each board meeting attended in
addition to four quarterly board meetings. Each director will also be reimbursed
for reasonable travel expenses in attending each meeting.
Delta Apparel anticipates that any non-officer director subsequently added
to the Delta Apparel Board will be paid a fee of $13,334 per year, plus be
provided approximately $6,666 per year with which shares of Delta Apparel's
common stock will be purchased. Each of these additional directors will be paid
the same meeting fees as payable to Delta Apparel's current directors. Delta
Apparel anticipates that the fees payable to Delta Apparel's existing directors
will increase over a five year period to be the same as the fees payable to any
additional directors.
Until August 1999, Delta Woodside had in place a Directors' Charitable
Giving Program covering each director of Delta Woodside. The seven directors of
Delta Woodside also constituted seven of the directors of the Company in fiscal
2000. Under the program, after the death of a director, Delta Woodside would
make an aggregate donation of $500,000, to be paid in 10 annual installments
commencing no later than six months after the director's death, to one or more
charitable organizations selected by such director. With respect to Max Lennon,
E. Erwin Maddrey, II and Bettis C. Rainsford, the program was to be funded by
life insurance policies owned and to be paid for by Delta Woodside on the lives
of such directors. In August 1999, the program was terminated, and cash in the
amount of the actuarial value of the future donation was donated by Delta
Woodside to the charitable organization or organizations selected by each
director. The amounts so donated to charitable organizations were selected as
follows: $105,000 by Mr. Garrett, $145,000 by Mr. Guy, $170,000 by Dr. Kane,
$105,000 by Dr. Lennon, $100,000 by Mr. Maddrey, $70,000 by Mr. Mickel, and
$62,000 by Mr. Rainsford.
As described above under the subheading "Long-Term Incentive Plan Awards in
Last Fiscal Year", Delta Woodside shares and cash were paid to the intended
participants in Delta Woodside's LTIP in connection with the spin-offs of Delta
Apparel and Duck Head and the termination of the LTIP. The table below sets
16
<PAGE>
forth the Delta Woodside shares that were issued as described above and the cash
that was paid to the non-employee directors of the Company in connection
therewith:
DELTA WOODSIDE LONG TERM INCENTIVE PLAN AWARDS
TO NON-EMPLOYEE COMPANY DIRECTORS IN LAST FISCAL YEAR
Shares of
Name Cash Award Common Stock
--------------------------------- ----------------- ---------------------
E. Erwin Maddrey, II $190,000.00 206,667
Bettis C. Rainsford (a) $136,800.00 148,800
William F. Garrett $116,280.00 126,480
C.C. Guy $12,397.50 13,485
Dr. James F. Kane $12,397.50 13,485
Dr. Max Lennon $12,255.00 13,330
Buck A Mickel $12,017.50 13,072
Estate of Buck Mickel (b) $11,780.00 12,813
(a) Mr. Rainsford resigned as a director of the Company effective September 14,
2000.
(b) Shares were issued and cash was paid to Minor H. Mickel, as personal
representative of the estate of Buck Mickel (father of Buck A. Mickel).
Buck Mickel was a member of the Delta Woodside board of directors until his
death in 1998 and participated in the early stages of that board's
strategic planning.
PERFORMANCE GRAPH
The Company's common stock began trading on the American Stock Exchange on
June 30, 2000, the last trading day of fiscal year 2000. Prior to that date, no
securities of the Company were publicly traded. Accordingly, no performance
graph is included in this proxy statement.
NOTWITHSTANDING ANY STATEMENT IN ANY OF THE COMPANY'S PREVIOUS FILINGS
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED, INCORPORATING FUTURE FILINGS, INCLUDING THIS PROXY STATEMENT,
IN WHOLE OR IN PART, THE COMPENSATION COMMITTEE REPORT BELOW SHALL NOT BE
INCORPORATED BY REFERENCE INTO ANY SUCH FILING.
REPORT OF THE COMPENSATION COMMITTEE
AND COMPENSATION GRANTS COMMITTEE
OF THE BOARD OF DIRECTORS
This report of the Compensation Committee and the Compensation Grants
Committee (collectively, the "Committees") of the Board of Directors of the
Company sets forth the Committees' policies with regard to compensation of the
executive officers of the Company, including the relationship of corporate
performance to executive compensation.
17
<PAGE>
EXECUTIVE COMPENSATION POLICIES
Decisions regarding certain aspects of the compensation of the Company's
executive officers are made by the four member Compensation Committee or the two
member Compensation Grants Committee of the Board. Each Committee member is a
non-employee director. During fiscal year 2000, certain compensation decisions
were made by the comparable committees of the Delta Woodside Board. Currently,
the members of these committees of the Company's Board are identical to the
members of these committees of Delta Woodside's Board. The Committees believe
that their respective compensation practices are designed to attract, retain,
and motivate key Company executives to achieve short-, medium-, and long-term
goals which the Committees believe will enhance the value of the shareholders'
investment in the Company. Generally, these objectives are implemented through:
A. Cash bonuses to reward the achievement of specific performance goals,
B. Grants of stock awards under an incentive stock award plan,
C. Grants of stock options under a stock option plan, and
D. Payment of base salaries at levels that are competitive with those
paid by a peer group of companies.
COMPENSATION OF EXECUTIVE OFFICERS OTHER THAN MR. HUMPHREYS
The Company's executive officers other than Mr. Humphreys, its Chief
Executive Officer (the "Other Officers"), received compensation for fiscal 2000
that included both fixed and performance-based components. In fiscal 2000, the
Other Officers were Mr. Mueller and Ms. Rupp. The Other Officers' compensation
for fiscal 2000 consisted of base salary, cash bonuses and the vesting of
options under the Delta Woodside Stock Option Plan.
Cash bonuses to the Other Officers were paid based on the operating
earnings and return on capital employed and other performance criteria of the
Delta Apparel Company division of Delta Woodside. For fiscal 2000, the total
cash bonuses awarded to the Other Officers above amounted to 164% of their
combined base salaries.
Pursuant to the Company's new Short-Term Incentive Compensation Plan, the
Compensation Grants Committee has awarded potential bonuses to the Company's
executive officers (and other Company employees) for fiscal 2001 which will be
payable solely upon the Company's attainment of certain performance criteria set
by the Compensation Grants Committee. The performance criteria are objective,
meaning that a third party having knowledge of the relevant facts will be able
to determine whether the performance goals have been met.
The Company's new Incentive Stock Award Plan is generally similar to the
Delta Woodside Incentive Stock Award Plan in effect prior to the spin-off.
Awards that have been made under the new Incentive Stock Award Plan to the Other
Officers since the spin-off have been structured so that sixty percent of each
individual's award vests if he remains in service with the Company through
predetermined dates and up to forty percent of each individual's award vests if
the Company meets specified performance targets respecting cumulative operating
profits and he remains an employee of the Company. The number of shares covered
by an award was not determined by specific, non-subjective criteria, but the
determination of such numbers took into account the level and responsibility of
the executive's position, the executive's performance, the executive's
compensation, the assessed potential of the executive, and any other factors
deemed relevant to the accomplishment of the purposes of the plan. The
Committees expect that any future awards under the new plan to Other Officers
will be similarly structured. The Committees believe that the new Company plan
will be an important tool to the achievement of medium-term goals.
Each Other Officer also participated in the Delta Woodside Stock Option
Plan. The purpose of this plan was to promote the growth and profitability of
Delta Woodside over a longer term by enabling Delta Woodside to attract and
retain key and middle level managers of outstanding competence and by increasing
the personal participation of its executives in Delta Woodside's performance by
providing these executives with an additional equity ownership opportunity in
Delta Woodside. In making option grants to the Other Officers, no specific,
non-subjective criteria were used, but the factors taken into account included
18
<PAGE>
the level and responsibility of the executive's position, the executive's
performance, the executive's compensation, the assessed potential of the
executive, and any other factors that were deemed relevant to the accomplishment
of the purposes of the plan. Each option granted under the plan to an Other
Officer provided that the option would become exercisable in stages over a
period of four years. No new stock option grants were made under the Delta
Woodside Stock Option Plan during fiscal 2000 due to the pendency of the
spin-offs of Duck Head and the Company.
The Company's new 2000 Stock Option Plan is similar to the Delta Woodside
Stock Option Plan in effect prior to the spin-off. The Committees currently
believe that awards made under the new plan since the spin-off have been, and
expect that future awards under the plan will be, similar in structure to awards
made under the old Delta Woodside plan.
Section 162(m) of the Internal Revenue Code ("Section 162(m)") imposes
limits on the ability of the Company to claim income tax deductions for
compensation paid to the Named Executives. Section 162(m) generally denies a
corporate income tax deduction for annual compensation in excess of $1,000,000
paid to any of the Named Executives. Certain types of compensation, including
performance-based compensation, are generally excluded from this deduction
limit. The Committees believe that all grants and awards to date to the Other
Officers under the Company's Short-Term Incentive Compensation Plan, Stock
Option Plan and Incentive Stock Award Plan either comply with the requirements
for exemption from the $1,000,000 limit under Section 162(m) or else will not
cause the aggregate non-exempt compensation paid to any Other Officer to exceed
the $1,000,000 limit in any fiscal year.
The Committees expect that future grants and awards made to the Other
Officers prior to the 2001annual meeting of the Company's shareholders (the
"2001 Annual Meeting") under the Stock Option Plan and the Incentive Stock Award
Plan and bonuses actually paid to the Other Officers prior to the 2001 Annual
Meeting under the Short-Term Incentive Compensation Plan will be similarly
exempt or will similarly not cause the $1,000,000 threshold to be exceeded.
Because of certain special transition rules under Section 162(m) relating to the
spin-off, grants and awards made to the Other Officers after the 2001 Annual
Meeting under the Stock Option Plan and the Incentive Stock Award Plan and
bonuses actually paid to the Other Officers after the 2001 Annual Meeting under
the Short-Term Incentive Compensation Plan will be exempt from Section 162(m)
only if the pertinent plan is approved by the Company's shareholders at or
before the 2001 Annual Meeting.
COMPENSATION PAID TO THE CHIEF EXECUTIVE OFFICER
The compensation of Mr. Humphreys, the Company's Chief Executive Officer,
includes both fixed and performance-based components.
Pursuant to the terms of a letter agreement entered into between Mr.
Humphreys and Delta Woodside, whose obligations were assumed by Delta Apparel in
connection with the spin-off of Delta Apparel by Delta Woodside, Mr. Humphreys'
base salary was set at $300,000, and he was promised that he would receive a
minimum bonus of $300,000 for fiscal year 2000 if he remained in the employment
of the Company during fiscal year 2000.
The fiscal 2000 cash bonus to Mr. Humphreys was paid based on the fiscal
2000 operating earnings and return on capital employed of the Delta Apparel
Company division of Delta Woodside. This bonus was actually paid in fiscal 2001
to Mr. Humphreys by the Company.
Mr. Humphreys participated in the Delta Woodside Incentive Stock Award Plan
and the Delta Woodside Stock Option Plan. No grants were made to Mr. Humphreys
in fiscal 2000 under either the Delta Woodside Incentive Stock Award Plan or the
Delta Woodside Stock Option Plan due to the pendency of the spin-offs of Duck
Head and the Company. The performance-based portion of an award made to Mr.
Humphreys under Delta Woodside's Incentive Stock Award Plan vested in fiscal
2000. The number of shares that vested under that award was determined based on
the ratio of (1) the aggregate number of shares actually vesting under all
performance-based awards to employees of all the divisions of Delta Woodside to
19
<PAGE>
(2) the aggregate maximum number of shares available for vesting to all
employees of all the divisions of Delta Woodside if maximum performance criteria
had been achieved. The number of shares actually vesting under performance
awards to the employees of each operating division of Delta Woodside was
determined based on the annual return on capital employed in that division for
fiscal 1997, 1998 and 1999.
Mr. Humphreys was also a potential participant in Delta Woodside's LTIP. As
described above under "Management Compensation - Long-Term Incentive Plan Awards
in Last Fiscal Year," Delta Woodside stock was granted and cash was paid to Mr.
Humphreys in connection with the termination of the LTIP.
Since the spin-off, options have been granted to Mr. Humphreys under the
Company's new Stock Option Plan, awards have been made to Mr. Humphreys under
the Incentive Stock Award Plan and a grant of a potential bonus has been made to
Mr. Humphreys under the Short-Term Incentive Compensation Plan. The Committees
believe that options granted to date to Mr. Humphreys under the Company's new
Stock Option Plan, awards made to date to Mr. Humphreys under the Short-Term
Incentive Compensation Plan and performance-based awards to date under the
Incentive Stock Award Plan will qualify as "performance-based compensation"
exempt from the $1 million cap on executive compensation paid to Mr. Humphreys
which is deductible by the Company for federal income tax purposes under Section
162(m) of the Internal Revenue Code. The Committees believe that the
non-performance based awards to date to Mr. Humphreys under the Incentive Stock
Award Plan will not cause Mr. Humphreys' total compensation that is subject to
the Section 162(m) limit to exceed such limit.
The Committees expect that future grants and awards made to Mr. Humphreys
prior to the 2001 Annual Meeting under the Stock Option Plan and the Incentive
Stock Award Plan and bonuses actually paid to Mr. Humphreys prior to the 2001
Annual Meeting under the Short-Term Incentive Compensation Plan will be
similarly exempt or will similarly not cause the $1,000,000 threshold to be
exceeded. Because of certain special transition rules under Section 162(m)
relating to the spin-off, grants and awards made to Mr. Humphreys after the 2001
Annual Meeting under the Stock Option Plan and the Incentive Stock Award Plan
and bonuses actually paid to Mr. Humphreys after the 2001 Annual Meeting under
the Short-Term Incentive Compensation Plan will be exempt from Section 162(m)
only if the pertinent plan is approved by the Company's shareholders at or
before the 2001 Annual Meeting.
COMPENSATION COMMITTEE COMPENSATION GRANTS COMMITTEE
Dr. James F. Kane, Chair Dr. James F. Kane, Co-Chair
Dr. Max Lennon Dr. Max Lennon, Co-Chair
C.C. Guy
Buck A. Mickel
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The following directors serve on the Compensation Committee of Delta
Apparel's board of directors: C.C. Guy, Dr. James F. Kane, Dr. Max Lennon and
Buck A. Mickel.
The following directors serve on the Compensation Grants Committee of Delta
Apparel's board of directors: Dr. James F. Kane and Dr. Max Lennon.
C.C. Guy served as Chairman of the Board of Delta Woodside or its
predecessors (and their respective subsidiaries) from the founding of Delta
Woodside's predecessors in 1984 until November 1989. Buck A. Mickel was a Vice
President of Delta Woodside or its predecessors (and their respective
subsidiaries) from the founding of Delta Woodside's predecessors until November
1989, Secretary of Delta Woodside or its predecessors (and their respective
subsidiaries) from November 1986 to March 1987, and Assistant Secretary of Delta
Woodside or its predecessors (and their respective subsidiaries) from March 1987
to November 1988.
20
<PAGE>
RELATED PARTY TRANSACTIONS
RELATIONSHIPS OR TRANSACTIONS WITH DELTA WOODSIDE AND DUCK HEAD
BOARDS OF DIRECTORS OF DELTA APPAREL, DELTA WOODSIDE AND DUCK HEAD
The following directors of Delta Apparel are also directors of Delta
Woodside and Duck Head: William F. Garrett, C. C. Guy, Dr. James F. Kane, Dr.
Max Lennon, E. Erwin Maddrey, II and Buck A. Mickel. In the event that any
material issue were to arise between Delta Apparel, on the one hand, and either
Delta Woodside or Duck Head, on the other hand, these directors could be deemed
to have a conflict of interest with respect to that issue. In that circumstance,
Delta Apparel anticipates that it will proceed in a manner that is determined by
a majority of those members of Delta Apparel's board of directors who are not
also members of the board of directors of Delta Woodside or the board of
directors of Duck Head (as applicable).
PRINCIPAL STOCKHOLDERS
Delta Apparel and Duck Head were spun-off from Delta Woodside by means of a
pro rata distribution on June 30, 2000 of their stock to Delta Woodside's
shareholders of record on June 19, 2000 (the "Delta Apparel distribution" and
the "Duck Head distribution" respectively). Therefore, immediately following the
Delta Apparel distribution, Delta Woodside's principal stockholders were the
same individuals and entities as Delta Apparel's and Duck Head's principal
stockholders, and those principal stockholders had the same respective
percentages of outstanding beneficial ownership in each of Delta Woodside, Delta
Apparel and Duck Head (assuming no acquisitions or dispositions of shares by
those stockholders between the record date for the Delta Apparel distribution or
the Duck Head distribution and the completion of either distribution).
AGREEMENTS BETWEEN DELTA WOODSIDE, DELTA APPAREL AND DUCK HEAD
In connection with the spin-offs, Delta Woodside, Delta Apparel and Duck
Head entered into a Distribution Agreement and a Tax Sharing Agreement. In
addition, Delta Woodside sold its Rainsford Plant to Delta Apparel. The
principal provisions of the Distribution Agreement, the Tax Sharing Agreement
and the sale of the Rainsford Plant are set forth below.
Distribution Agreement
----------------------
Delta Apparel entered into a distribution agreement with Delta Woodside and
Duck Head as of March 15, 2000. The distribution agreement provided for the
procedures for effecting the Delta Apparel distribution and the Duck Head
distribution. For this purpose, as summarized below, the distribution agreement
provided for the principal corporate transactions and procedures for separating
the Delta Apparel Company division's business and the Duck Head Apparel Company
division's business from each other and the rest of Delta Woodside. Also, as
summarized below, the distribution agreement defines the relationships among
Delta Apparel, Delta Woodside and Duck Head after the Delta Apparel distribution
and the Duck Head distribution with respect to, among other things,
indemnification arrangements and employee benefit arrangements.
Intercompany Reorganization
---------------------------
Pursuant to the distribution agreement, Delta Woodside, Delta Apparel and
Duck Head caused the following to be effected:
(a) Delta Woodside and its subsidiaries (other than Delta Mills)
contributed, as contributions to capital, all net debt amounts owed to
any of them by the corporations that conducted the Delta Apparel
Company division's business and the Duck Head Apparel Company
division's business, with the exceptions of (i) the intercompany debt
that was attributable to the portion of the amounts borrowed since
January 1, 2000 for use by the Delta Apparel Company division's
business or the Duck Head Apparel Company division's business from
Delta Woodside's credit agreement lender that were repaid to that
lender or to Delta Woodside with borrowings under Delta Apparel's and
21
<PAGE>
Duck Head's new credit facilities (which repayments cancelled such
intercompany debt) and (ii) any amounts owed by Delta Apparel to Delta
Mills for yarn sold by Delta Mills to Delta Apparel, which amounts were
to be paid in the ordinary course of business. These intercompany
contributions of debt did not, however, affect any obligation that
Delta Woodside, Delta Apparel or Duck Head may have under the
distribution agreement or the tax sharing agreement. Prior to
completion of the intercompany reorganization, the Delta Apparel
Company division's assets were owned by several of Delta Woodside's
wholly-owned subsidiaries, and the Duck Head Apparel Company division's
assets were owned by Delta Woodside and several of its wholly-owned
subsidiaries.
(b) All the assets used in the operations of the Delta Apparel Company
division's business were transferred to Delta Apparel or a subsidiary
of Delta Apparel to the extent not already owned by Delta Apparel or
its subsidiaries. This transfer included the sale by Delta Mills to
Delta Apparel of the Rainsford plant, located in Edgefield, SC, which
is described below under the subheading "Purchase of Rainsford Plant".
(c) Delta Apparel assumed all of the liabilities of the Delta Apparel
Company division of Delta Woodside, and caused all holders of
indebtedness for borrowed money that were part of the assumed Delta
Apparel liabilities and all lessors of leases that were part of the
assumed Delta Apparel liabilities to agree to look only to Delta
Apparel or a subsidiary of Delta Apparel for payment of that
indebtedness or lease (except where Delta Woodside or Duck Head, as
applicable, consented to not being released from the obligations).
(d) All the assets used in the operations of the Duck Head Apparel Company
division's business were transferred to Duck Head or a subsidiary of
Duck Head to the extent not already owned by Duck Head or its
subsidiaries.
(e) Duck Head assumed all of the liabilities of the Duck Head Apparel
Company division of Delta Woodside, and caused all holders of
indebtedness for borrowed money that were part of the assumed Duck Head
liabilities and all lessors of leases that were part of the assumed
Duck Head liabilities to agree to look only to Duck Head or a
subsidiary of Duck Head for payment of that indebtedness or lease
(except where Delta Woodside or Delta Apparel, as applicable, consented
to not being released from the obligations).
(f) Delta Woodside caused all holders of indebtedness for borrowed money
and all lessors of leases that were not part of the liabilities assumed
by Delta Apparel or the liabilities assumed by Duck Head to agree to
look only to Delta Woodside or a remaining subsidiary of Delta Woodside
for payment of that indebtedness or lease (except where Delta Apparel
or Duck Head, as applicable, consented to not being released from the
obligations).
Indemnification
---------------
Each of Delta Woodside, Delta Apparel and Duck Head has agreed to indemnify
each other and their respective directors, officers, employees and agents
against any and all liabilities and expenses incurred or suffered that arise out
of or pertain to:
(a) any breach of the representations and warranties made by it in the
distribution agreement;
(b) any breach by it of any obligation under the distribution agreement;
(c) the liabilities assumed or retained by it under the distribution
agreement; or
(d) any untrue statement or alleged untrue statement of a material fact or
omission or alleged omission of a material fact contained in any of
its disclosure documents filed by it with the SEC, except insofar as
the misstatement or omission was based upon information furnished to
the indemnifying party by the indemnified party.
22
<PAGE>
Employee Matters
----------------
Delta Woodside has caused the employees of the Delta Apparel Company
division to become employees of Delta Apparel, Delta Apparel has assumed the
accrued employee benefits of these employees and Delta Woodside has caused the
account balance of each of these employees in any and all of Delta Woodside's
employee benefit plans (other than the Delta Woodside stock option plan, the
Delta Woodside incentive stock award plan and the Delta Woodside long term
incentive plan, if any) to be transferred to a comparable employee benefit plan
of Delta Apparel.
Intercompany Accounts
---------------------
Until May 6, 2000, the effective date of the transfer of title from Delta
Mills to Delta Apparel of the Rainsford plant (see the subheading "Purchase of
Rainsford Plant" below), yarn produced by the Rainsford plant for use in the
Delta Apparel business was sold by Delta Mills to Delta Apparel. The amounts
owed by Delta Apparel to Delta Mills from these sales, which aggregated $2.8
million at May 6, 2000, have subsequently been paid in full in the ordinary
course of business.
Other than any obligations described in or arising under the distribution
agreement or the tax sharing agreement, each of Delta Woodside, Delta Apparel
and Duck Head has represented to each other that it is not aware of any other
intercompany receivable, payable or loan balance that existed as of the time of
the Delta Apparel distribution and the Duck Head distribution between any of
them.
Transaction Expenses
--------------------
Generally, all costs and expenses incurred in connection with the Delta
Apparel distribution, the Duck Head distribution and related transactions shall
be paid by Delta Woodside, Duck Head and Delta Apparel proportionately in
accordance with the respective benefits received by Delta Woodside, Duck Head
and Delta Apparel as determined in good faith by the parties; provided that the
holders of the Delta Woodside shares shall pay their own expenses, if any,
incurred in connection with the Delta Apparel distribution and the Duck Head
distribution.
Tax Sharing Agreement
---------------------
Delta Apparel entered into a tax sharing agreement dated as of June 30,
2000 with Delta Woodside and Duck Head that describes, among other things, each
company's rights and obligations relating to tax payments and refunds for
periods before and after the Delta Apparel distribution and related matters like
the filing of tax returns and the handling of audits and other tax proceedings.
The tax sharing agreement also describes the indemnification arrangements with
respect to tax matters among Delta Apparel and its subsidiaries (which this
document refers to as the Delta Apparel tax group), Delta Woodside and its
subsidiaries after the Delta Apparel distribution and the Duck Head distribution
(which this document refers to as the Delta Woodside tax group) and Duck Head
and its subsidiaries (which this document refers to as the Duck Head tax group).
Under the tax sharing agreement, the allocation of tax liabilities and
benefits is generally as follows:
- With respect to federal income taxes:
(a) For each taxable year that ends prior to the Delta Apparel
distribution, Delta Woodside is responsible for paying any
increase in federal income taxes, and is entitled to receive
the benefit of any refund of or saving in federal income
taxes, that results from any tax proceeding with respect to
any returns relating to federal income taxes of the Delta
Woodside consolidated federal income tax group.
(b) For the taxable period ending on the date of the Delta Apparel
distribution, Delta Woodside is responsible for paying any
federal income taxes, and is entitled to any refund of or
saving in federal income taxes, with respect to the Delta
Woodside consolidated federal income tax group.
23
<PAGE>
- With respect to state income, franchise or similar taxes, for each
taxable period that ends prior to or on the date of the Delta Apparel
distribution, each corporation that is a member of the Delta Woodside
tax group, the Duck Head tax group or the Delta Apparel tax group is
responsible for paying any of those state taxes, and any increase in
those state taxes, and is entitled to receive the benefit of any refund
of or saving in those state taxes, with respect to that corporation (or
any predecessor by merger of that corporation) or that results from any
tax proceeding with respect to any returns relating to those state
taxes of that corporation (or any predecessor by merger of that
corporation).
- With respect to federal employment taxes:
(a) Delta Woodside is responsible for the federal employment taxes
payable with respect to the compensation paid, whether before,
on or after the date of the Delta Apparel distribution, by any
member of the Delta Woodside federal income tax consolidated
group for any period ending prior to or on the date of the
Delta Apparel distribution or by any member of the Delta
Woodside tax group for any period after that date to all
individuals who are past or present employees of any business
of Delta Woodside other than the business of Delta Apparel or
the business of Duck Head.
(b) Duck Head is responsible for the federal employment taxes
payable with respect to the compensation paid, whether before,
on or after the date of the Duck Head distribution, by any
member of the Delta Woodside federal income tax consolidated
group for any period ending prior to or on the date of the
Duck Head distribution or by any member of the Duck Head tax
group for any period after that date to all individuals who
are past or present employees of the business of Duck Head.
(c) Delta Apparel is responsible for the federal employment taxes
payable with respect to the compensation paid, whether before,
on or after the date of the Delta Apparel distribution, by any
member of the Delta Woodside federal income tax consolidated
group for any period ending prior to or on the date of the
Delta Apparel distribution or by any member of the Delta
Apparel tax group for any period after that date to all
individuals who are past or present employees of the business
of Delta Apparel.
- With respect to any taxes, other than federal employment taxes,
federal income taxes and state income, franchise or similar taxes:
(a) Delta Woodside is responsible for any of these taxes,
regardless of the time period or circumstance with respect to
which the taxes are payable, arising from or attributable to
any business of Delta Woodside other than the business of
Delta Apparel or the business of Duck Head;
(b) Duck Head is responsible for any of these taxes, regardless of
the time period or circumstance with respect to which the
taxes are payable, arising from or attributable to the
business of Duck Head; and
(c) Delta Apparel is responsible for any of these taxes,
regardless of the time period or circumstance with respect to
which the taxes are payable, arising from or attributable to
the business of Delta Apparel.
- The Delta Woodside tax group is responsible for all taxes, and shall
receive the benefit of all tax items, of any member of the Delta
Woodside tax group that relate to any taxable period after the Delta
Apparel distribution and the Duck Head distribution. The Duck Head tax
group is responsible for all taxes, and shall receive the benefit of
all tax items, of any member of the Duck Head tax group that relate to
any taxable period after the Duck Head distribution. The Delta Apparel
tax group is responsible for all taxes, and shall receive the benefit
of all tax items, of any member of the Delta Apparel tax group that
relate to any taxable period after the Delta Apparel distribution.
24
<PAGE>
Under the tax sharing agreement, the Delta Apparel tax group and the Duck
Head tax group have irrevocably designated Delta Woodside as their agent for
purposes of taking a broad range of actions in connection with taxes for
pre-distribution periods. Those actions include the settlement of tax audits and
other tax proceedings. In addition, the tax sharing agreement provides that all
disagreements and disputes relating to the agreement are to be resolved by Delta
Woodside. These arrangements may result in conflicts of interest among Delta
Apparel, Delta Woodside and Duck Head concerning such matters as whether a tax
relates to the business of Delta Woodside, Delta Apparel or Duck Head. Delta
Woodside might determine that a tax was a liability of Delta Apparel even though
Delta Apparel disagreed with that determination.
Under the tax sharing agreement, the Delta Apparel tax group, the Delta
Woodside tax group and the Duck Head tax group have agreed to indemnify one
another against various tax liabilities, generally in accordance with the
allocation of tax liabilities and benefits described above.
Purchase of Rainsford Plant
---------------------------
The Rainsford plant in Edgefield, South Carolina, manufactures yarn for use
in knitting operations. In April 1998, control of the operations and management
of the Rainsford plant was transferred from Delta Mills to the Delta Apparel
Company division of Delta Woodside, which converted the assets to produce yarn
products for use in Delta Apparel's products.
Pursuant to the distribution agreement, Delta Mills sold to Delta Apparel
the Rainsford plant and related inventory effective as of May 6, 2000. Delta
Mills and Delta Apparel agreed that the purchase price for these assets would be
the assets' book value as of the effective date of the sale. The purchase price
for the real property, furniture, fixtures and equipment was approximately $12.0
million and the purchase price for the inventory and other tangible personal
property was approximately $1.4 million. This purchase price was paid in cash in
the amount of approximately $12.5 million and by the assumption by Delta Apparel
of certain liabilities aggregating approximately $0.9 million as of the
effective date of the sale. Delta Apparel paid the cash portion of the purchase
price with borrowings under its credit facility. In connection with the closing,
Delta Apparel agreed to assume any environmental liability that may arise with
respect to the Rainsford plant regardless of the time period with respect to
which that liability arises.
Until the effective date of the transfer of title from Delta Mills to Delta
Apparel of the Rainsford plant, all yarn produced by the Rainsford plant for use
in the Delta Apparel business was sold by Delta Mills to Delta Apparel. The
amounts owed by Delta Apparel to Delta Mills from these sales, which aggregated
$2.8 million at May 6, 2000, have been subsequently paid in full in the ordinary
course of business.
OTHER TRANSACTIONS BETWEEN DELTA WOODSIDE, DELTA APPAREL AND DUCK HEAD
Sales to Delta Apparel and Duck Head of Goods or Manufacturing Services
-----------------------------------------------------------------------
In the ordinary course of their respective businesses, the Delta Apparel
and Duck Head businesses have purchased fabrics from Delta Mills, the Delta
Apparel business has purchased yarn from Delta Mills, and the Delta Apparel and
Duck Head businesses have produced t-shirts for each other and purchased
t-shirts from each other. The following table shows these transactions for the
last three fiscal years:
25
<PAGE>
<TABLE>
<CAPTION>
(in thousands of dollars)
Fiscal Year
---------------------------------------
1998 1999 2000
---- ---- ----
<S> <C> <C> <C>
Delta Apparel business purchases from Delta Mills (1) 17,683 0 0
Duck Head business purchases from Delta Mills 1,824 662 0
Duck Head business purchases from Delta Apparel business 156 481 28
Delta Apparel business purchases from Duck Head business 132 0 0
---------------------------------------
<FN>
(1) For purposes of this table, yarn produced by the Rainsford plant and used
by the Delta Apparel business, prior to the transfer from Delta Mills to
the Delta Apparel Company division of Delta Woodside in April 1998 of
operational control of the Rainsford plant, is treated as sold by Delta
Mills to the Delta Apparel business, and yarn produced by the Rainsford
plant and used by the Delta Apparel business, after that transfer, is not
treated as sold by Delta Mills to the Delta Apparel business.
</FN>
</TABLE>
Effective May 7, 1997, Delta Woodside adopted a written policy statement
governing the pricing of intercompany transactions. Among other things, this
policy statement provides that all intercompany sales and purchases will be
settled at market value and terms. All sales between Delta Mills, the Delta
Apparel business and the Duck Head business listed in the table above were made
at prices deemed by the companies to approximate market value.
Delta Apparel anticipates that future purchases from Delta Mills and Duck
Head and future sales to Duck Head will not be material.
Management Services
-------------------
Delta Woodside provided various services to the operating divisions of its
subsidiaries, including the Delta Mills Marketing Company, Duck Head Apparel
Company and Delta Apparel Company divisions. These services include financial
planning, SEC reporting, payroll, accounting, internal audit, employee benefits
and services, stockholder services, insurance, treasury, purchasing, cotton
procurement, management information services and tax accounting. These services
were charged on the basis of Delta Woodside's cost and allocated to the various
divisions based on employee headcount, computer time, projected sales and other
criteria. During fiscal years 1998, 1999 and 2000, Delta Woodside charged the
Delta Apparel Company division $1,048,000, $1,135,000 and $0, respectively, for
these services.
OTHER TRANSACTIONS IN CONNECTION WITH THE DELTA APPAREL DISTRIBUTION AND THE
DUCK HEAD DISTRIBUTION
DELTA WOODSIDE'S SEVERANCE PLAN AND OTHER SEVERANCE ARRANGEMENTS
E. Erwin Maddrey, II was a participant in Delta Woodside's severance plan.
Upon the termination of Mr. Maddrey's services as an officer with Delta Woodside
on June 29, 2000, Delta Woodside paid Mr. Maddrey $147,115 of severance in July
of 2000 in accordance with the normal provisions of this plan.
In connection with the termination of Bettis C. Rainsford's employment with
Delta Woodside, Delta Woodside paid to or for Mr. Rainsford severance of
$529,808, which was one and one-half years of his then-current base salary. Of
this amount, $213,462 was paid to the Rainsford Development Corporation, a
company wholly owned by Mr. Rainsford.
On June 29, 2000, William F. Garrett became the President and Chief
Executive Officer of Delta Woodside. In recognition of Mr. Garrett's past
service to Delta Woodside and in order to provide him with an additional
incentive to remain with Delta Woodside, the Delta Woodside board authorized the
payment to him of $100,000 in connection with the Delta Apparel distribution and
26
<PAGE>
the Duck Head distribution and the payment to him of six additional annual
payments of $150,000 each, with the first of these annual payments to be made in
October 2000. Mr. Garrett will forfeit any of these payments remaining to be
made in the event that he voluntarily leaves employment with Delta Woodside or
such employment is terminated by Delta Woodside for cause. Any remaining amounts
payable to him under the arrangement will be paid to him in the event of his
death or disability or in the event there is a change of control of Delta
Woodside and he does not remain with Delta Woodside.
Jane H. Greer was the Vice President and Secretary of Delta Woodside until
June 29, 2000. In connection with her resignation, Delta Woodside paid Ms. Greer
$53,846 of severance in accordance with the normal provisions of Delta
Woodside's severance plan and $400,000 of severance pursuant to the terms of an
employment agreement. Pursuant to amendments to Delta Woodside's Old Stock
Option Plan and her stock options, all of Ms. Greer's outstanding stock options
for Delta Woodside shares (covering an aggregate of 22,500 Delta Woodside
shares) will remain exercisable until their stated expiration dates
notwithstanding the termination of Ms. Greer's employment with Delta Woodside.
In connection with the termination of the LTIP, as described above under
"Management Compensation - Long-Term Incentive Plan Awards in Last Fiscal Year",
Ms. Greer was granted 43,028 shares of Delta Woodside common stock and was paid
$39,558.
David R. Palmer was the Controller of Delta Woodside until June 29, 2000.
In connection with his resignation, Delta Woodside paid Mr. Palmer $61,250 of
severance pursuant to the terms of an employment agreement. Pursuant to
amendments to Delta Woodside's Old Stock Option Plan and his stock options, all
of Mr. Palmer's unexercisable stock options for Delta Woodside shares (covering
an aggregate of 1,250 Delta Woodside shares) became exercisable in full prior to
the record date for the Delta Apparel and Duck Head distributions, and all of
Mr. Palmer's outstanding stock options for Delta Woodside shares (covering an
aggregate of 5,000 Delta Woodside shares) will remain exercisable until their
stated expiration dates notwithstanding the termination of Mr. Palmer's
employment with Delta Woodside.
Brenda L. Jones was the Assistant Secretary of Delta Woodside until June
2000. In connection with her resignation, Delta Woodside paid Ms. Jones $37,019
of severance in accordance with the normal provisions of Delta Woodside's
severance plan and $37,019 pursuant to the terms of an employment agreement.
Pursuant to amendments to Delta Woodside's Old Stock Option Plan and her stock
options, all of Ms. Jones' unexercisable stock options for Delta Woodside shares
(covering an aggregate of 375 Delta Woodside shares) became exercisable in full
prior to the record date for the Delta Apparel and Duck Head distributions, and
all of Ms. Jones' outstanding stock options for Delta Woodside shares (covering
an aggregate of 1,375 Delta Woodside shares) will remain exercisable until their
stated expiration dates notwithstanding the termination of Ms. Jones' employment
with Delta Woodside.
EARLY EXERCISABILITY AND OTHER AMENDMENTS OF DELTA WOODSIDE STOCK OPTIONS
Pursuant to the distribution agreement, Delta Woodside provided the holders
of outstanding options granted under the Delta Woodside stock option plan,
whether or not those options were currently exercisable, with the opportunity to
amend the terms of their Delta Woodside stock options. All holders of
outstanding Delta Woodside stock options entered into the proposed amendments,
which provided that:
(i) all then unexercisable portions of the holder's Delta Woodside stock
options became immediately exercisable in full prior to the record date
(June 19, 2000) for the Delta Apparel distribution and the Duck Head
distribution, which permitted the holder to exercise all or part of the
holder's Delta Woodside stock options prior to the Delta Apparel record
date and the Duck Head record date (and thereby receive Delta Apparel
shares in the Delta Apparel distribution and Duck Head shares in the
Duck Head distribution); and
(ii)any Delta Woodside stock option that remained unexercised as of the
record date for the Delta Apparel distribution and the Duck Head
distribution would remain exercisable for only Delta Woodside shares,
and for the same number of Delta Woodside shares at the same exercise
price, after the Delta Apparel distribution and the Duck Head
distribution as before the Delta Apparel distribution and the Duck Head
distribution (and not for a combination of Delta Woodside shares, Delta
Apparel shares and Duck Head shares).
27
<PAGE>
As a result of these amendments, options for Delta Woodside shares became
exercisable earlier than they otherwise would have for the following directors
and Named Executives of the Company:
<TABLE>
<CAPTION>
Number of Delta Woodside shares covered
by portion of stock options the
Name exercisability of which was accelerated
---- ---------------------------------------
<S> <C>
Herbert M. Mueller 4,500
Marjorie F. Rupp 3,000
William F. Garrett 37,500
</TABLE>
Also, in connection with the Delta Apparel distribution, Delta Woodside
added a provision to the Delta Woodside stock option plan that provided that
Delta Woodside stock options held by a Delta Apparel employee would not expire
solely as a result of the Delta Apparel distribution.. This amendment applies to
all Delta Woodside stock options currently held by Mr. Humphreys (under which he
can acquire an aggregate of 22,500 Delta Woodside shares), Mr. Mueller (under
which he can acquire an aggregate of 6,000 Delta Woodside shares) and Ms. Rupp
(under which she can acquire an aggregate of 4,000 Delta Woodside shares).
AMENDMENTS TO DELTA WOODSIDE DEFERRED COMPENSATION PLAN
In connection with the Delta Apparel and Duck Head distributions, each
participant in Delta Woodside's deferred compensation plan was provided with the
opportunity to receive all or part of his or her vested deferred compensation
account in cash in exchange for consenting to an amendment to the deferred
compensation plan. Under the plan amendment, only Delta Apparel, and not any
other member of Delta Woodside's pre-spin-off group of corporations, is
responsible in the future for the deferred compensation benefits to which Delta
Apparel employees are entitled under the Delta Woodside deferred compensation
plan. Each director and officer of Delta Apparel who participated in the plan
consented to the proposed plan amendment and chose to continue to defer his or
her vested deferred compensation account under the amended plan.
OTHER RELATED PARTY TRANSACTIONS
LEASES
Corporate Office Space at 233 Hammond Square, Greenville, South Carolina
------------------------------------------------------------------------
Until June 30, 2000, Delta Woodside leased its principal corporate office
space and space for its benefits department, purchasing department and financial
accounting department from a corporation (233 North Main, Inc.), one-half of the
stock of which is owned by each of E. Erwin Maddrey, II (a director and
significant stockholder of Delta Apparel and Delta Woodside and Delta Woodside's
President and Chief Executive Officer until June 29, 2000) and Jane H. Greer
(Delta Woodside's Vice President and Secretary until June 29, 2000). Mr. Maddrey
and Ms. Greer are also the directors and executive officers of 233 North Main,
Inc. The lease of this space was executed effective September 1, 1998, covered
approximately 9,662 square feet at a rental rate of $13.50 per square foot per
year (plus certain other expenses) and had an expiration date of August 2003. In
connection with the Delta Apparel distribution and the Duck Head distribution,
233 North Main, Inc. and Delta Woodside agreed to terminate this lease on June
30, 2000 (the Delta Apparel and Duck Head distribution date) in exchange for the
payment by Delta Woodside to 233 North Main, Inc. of $135,268. Following the
Delta Apparel and Duck Head distribution date, Delta Woodside was permitted to
continue to use the space on an as needed month-to-month basis at the rental
rate of $14.00 per square foot per year (plus certain other expenses); however,
Delta Woodside did not need to use the space after June 30, 2000. In addition to
the $135,268 termination fee, Delta Woodside paid an aggregate of $297,804 in
rent and other expenses under this lease during fiscal 2000.
28
<PAGE>
Office Space in Edgefield, South Carolina
-----------------------------------------
Until June 30, 2000, Delta Woodside leased office space in Edgefield, South
Carolina from The Rainsford Development Corporation, a corporation wholly owned
by Bettis C. Rainsford (a significant stockholder of Delta Apparel and Delta
Woodside, until October 1, 1999, Delta Woodside's Executive Vice President,
Chief Financial Officer and Treasurer and until September 14, 2000 a director of
Delta Apparel and Delta Woodside). Mr. Rainsford was a director and executive
officer and Brenda L. Jones was an executive officer of The Rainsford
Development Corporation. Ms. Jones was Delta Woodside's Assistant Secretary
until June 2000. In connection with the Delta Apparel distribution and the Duck
Head distribution, The Rainsford Development Corporation and Delta Woodside
agreed to terminate this lease on June 30, 2000 (the Delta Apparel and Duck Head
distribution date) in exchange for the payment by Delta Woodside to The
Rainsford Development Corporation of $33,299.08. In addition to this termination
fee, Delta Woodside paid an aggregate of $55,392 in rent and other expenses
under this lease during fiscal 2000.
Lease of Retail Sales Space by Duck Head in Edgefield, South Carolina
---------------------------------------------------------------------
Duck Head leases a building in Edgefield, South Carolina from Bettis C.
Rainsford (a significant stockholder of Delta Apparel and Delta Woodside, until
October 1, 1999, Delta Woodside's Executive Vice President, Chief Financial
Officer and Treasurer and until September 14, 2000 a director of Delta Apparel
and Delta Woodside) pursuant to an agreement involving rental payments equal to
3% of gross sales of the Edgefield store, plus 1% of gross sales of the store
for utilities. Under this lease agreement $10,835 was paid to Mr. Rainsford
during fiscal 2000.
TRANSFERS OF LIFE INSURANCE POLICIES
In February 1991, each of E. Erwin Maddrey, II (a director and significant
stockholder of Delta Apparel and Delta Woodside and President and Chief
Executive Officer of Delta Woodside until June 29, 2000) and Bettis C. Rainsford
(a significant stockholder of Delta Apparel and Delta Woodside, until October 1,
1999, Delta Woodside's Executive Vice President, Chief Financial Officer and
Treasurer and until September 14, 2000 a director of Delta Apparel and Delta
Woodside) entered into a stock transfer restrictions and right of first refusal
agreement (a "First Refusal Agreement") with Delta Woodside. Pursuant to each
First Refusal Agreement, each of Mr. Maddrey and Mr. Rainsford granted Delta
Woodside a specified right of first refusal with respect to any sale of that
individual's Delta Woodside shares owned at death for five years after the
individual's death. In connection with the First Refusal Agreements, life
insurance policies were established on the lives of Mr. Maddrey and Mr.
Rainsford. Under the life insurance policies on the life of each of them, $30
million was payable to Delta Woodside and $10 million was payable to the
beneficiary or beneficiaries chosen by the individual. Nothing in either First
Refusal Agreement restricted the freedom of Mr. Maddrey or Mr. Rainsford to sell
or otherwise dispose of any or all of his Delta Woodside shares at any time
prior to his death or prevented Delta Woodside from canceling the life insurance
policies payable to it for $30 million on either Mr. Maddrey's or Mr.
Rainsford's life. A First Refusal Agreement terminated if the life insurance
policies payable to the applicable individual's beneficiaries for $10 million
were canceled by reason of Delta Woodside's failure to pay the premiums on those
policies.
In connection with the Delta Apparel distribution and the Duck Head
distribution, Delta Woodside agreed with each of Mr. Maddrey and Mr. Rainsford
to terminate their First Refusal Agreements on June 30, 2000, and to transfer to
each individual the $10 million life insurance policy on his life the proceeds
of which are payable to the beneficiary or beneficiaries he selects. After this
transfer, the recipient individual became responsible for payment of the
premiums on these life insurance policies. Delta Woodside allowed the remaining
$30 million of life insurance payable to Delta Woodside to lapse.
EMPLOYEE BENEFIT SERVICES
Delta Apparel has engaged Carolina Benefit Services, Inc. to provide
payroll processing and 401(k) plan administration services for Delta Apparel.
Carolina Benefit Services, Inc. is owned by E. Erwin Maddrey, II (a director and
significant stockholder of Delta Apparel and Delta Woodside and President and
Chief Executive Officer of Delta Woodside until June 29, 2000) and Jane H. Greer
(Vice President and Secretary of Delta Woodside until June 29, 2000). Mr.
Maddrey and Ms. Greer are also directors and executive officers of Carolina
Benefit Services, Inc.
29
<PAGE>
For the services to be provided by Carolina Benefit Services, Delta Apparel
will pay fees based on the numbers of employees, 401(k) plan participants and
plan transactions and other items. Delta Apparel anticipates that on an annual
basis these fees will be approximately $84,000. The initial term of the
engagement will be one year running from May 15, 2000. Delta Apparel elected to
engage Carolina Benefit Services to provide these services after receiving
proposals from other providers of similar services and determining that Carolina
Benefit Services' proposal was Delta Apparel's best alternative.
MINORITY OWNERSHIP OF FOREIGN SUBSIDIARIES
Delta Apparel Honduras, S.A., a Honduran sociedad anonima ("Delta Apparel
Honduras"), conducts the Company's Honduran operations. Honduran law requires
that a Honduran sociedad anonima have at least five shareholders. As a result,
the Company owns 2,496 shares, and each of E. Erwin Maddrey, II, Buck A. Mickel,
William F. Garrett and Robert W. Humphreys owns one share, of Delta Apparel
Honduras. Each of these individual shareholders has agreed that, at the request
of the Company for any reason or in the event the individual ceases to be a
member of the Company's board for any reason, the one share owned by him shall
be transferred to another individual selected by the Company or, if so requested
by the Company, to the Company in exchange for $100.
Delta Campeche, S.A., a Mexican sociedad anonima ("Delta Campeche"), will
conduct the Company's Mexican operations. Mexican law requires that a sociedad
anonima have at least two shareholders. As a result, the Company owns 49 shares,
and Robert W. Humphreys owns one share, of Delta Campeche. Mr. Humphreys has
agreed that, at the request of the Company for any reason or in the event he
ceases to be a member of the Company's board for any reason, the one share owned
by him shall be transferred to another individual selected by the Company or, if
so requested by the Company, to the Company in exchange for $100.
OTHER
Any transaction entered into between Delta Apparel and any officer,
director, principal stockholder or any of their affiliates has been on terms
that Delta Apparel believes are comparable to those that would be available to
Delta Apparel from non-affiliated persons.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
There were no late filings of reports for fiscal year 2000 pursuant to
Section 16(a) of the Securities Exchange Act of 1934, as amended.
RATIFICATION OF SELECTION OF AUDITORS
(ITEM 2)
The Board of Directors recommends the ratification of the appointment of
KPMG LLP, independent certified public accountants, as auditors for the Company
and its subsidiaries for fiscal year 2001 and to audit and report to the
shareholders upon the financial statements of the Company as of and for the
period ending June 30, 2001.
KPMG LLP currently serves as the Company's independent auditors and was
originally engaged by Delta Woodside on August 19, 1994 to serve as principal
accountants for Delta Woodside's 1995 fiscal year.
Representatives of KPMG LLP will be present at the Annual Meeting and such
representatives will have the opportunity to make a statement if they desire to
do so and will be available to respond to appropriate questions that the
shareholders may have. Neither the firm nor any of its members has any relation
with the Company except in the firm's capacity as auditors or as advisors.
30
<PAGE>
The decision of the Board to appoint KPMG LLP was based on the
recommendation of the Audit Committee. The Company expects that, in the future,
the Board will continue to appoint the Company's auditors annually based on the
recommendation of the Audit Committee and subsequently submit the appointment to
the shareholders for ratification.
OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors was not
aware of any business that will be presented for consideration at the Annual
Meeting other than the election of directors and the ratification of the
appointment of auditors. If any other business properly comes before the
meeting, it is intended that the shares represented by proxies will be voted
with respect thereto in accordance with the judgment of the person or persons
voting them.
FINANCIAL INFORMATION
THE COMPANY'S FISCAL 2000 ANNUAL REPORT IS BEING MAILED TO SHAREHOLDERS ON
OR ABOUT OCTOBER 16, 2000. THE COMPANY WILL PROVIDE WITHOUT CHARGE TO ANY
SHAREHOLDER OF RECORD AS OF OCTOBER 9, 2000, AND TO EACH PERSON TO WHOM THIS
PROXY STATEMENT IS DELIVERED IN CONNECTION WITH THE ANNUAL MEETING OF
SHAREHOLDERS, UPON WRITTEN REQUEST OF SUCH SHAREHOLDER OR PERSON, A COPY OF SUCH
FISCAL 2000 ANNUAL REPORT OR THE COMPANY'S FISCAL 2000 ANNUAL REPORT ON FORM
10-K, INCLUDING FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES (BUT
EXCLUDING EXHIBITS), FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. ANY SUCH
REQUEST SHOULD BE DIRECTED TO DELTA APPAREL, INC., 2750 PREMIERE PARKWAY, SUITE
100, DULUTH, GEORGIA, 30097, ATTENTION: HERBERT M. MUELLER, VICE PRESIDENT.
NOTWITHSTANDING ANY STATEMENT IN ANY OF THE COMPANY'S PREVIOUS FILINGS
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED, INCORPORATING FUTURE FILINGS, INCLUDING THIS PROXY STATEMENT,
IN WHOLE OR IN PART, THE AUDIT COMMITTEE REPORT BELOW SHALL NOT BE INCORPORATED
BY REFERENCE INTO ANY SUCH FILING.
The Audit Committee is responsible for the duties set forth in its charter
(which is attached to this proxy statement as APPENDIX 1) but is not responsible
for either the preparation of the financial statements or the auditing of the
financial statements. The Company's management has the responsibility for
preparing the financial statements and implementing internal controls, and the
Company's independent accountants have the responsibility for auditing the
financial statements. The review of the financial statements by the Audit
Committee is not the equivalent of an audit.
REPORT OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
The Board of Directors adopted a written Audit Committee Charter on
February 17, 2000, a copy of which is included as APPENDIX 1 to this Proxy
Statement. All members of the Audit Committee are independent as defined in
Section 121(A) of the American Stock Exchange's listing standards.
The Audit Committee has reviewed and discussed with the Company's
management and the Company's independent auditors the audited financial
statements of the Company contained in the Company's fiscal 2000 Annual Report.
Without limiting the foregoing, the Audit Committee has also discussed with the
Company's independent auditors the matters required to be discussed pursuant to
SAS 61 (Codification of Statements on Auditing Standards, AU ss. 380).
Based on the review and discussions described in the immediately preceding
paragraph, the Audit Committee recommended to the Board of Directors that the
audited financial statements included in the Company's fiscal 2000 Annual Report
be included in that report, which is incorporated by reference into the
31
<PAGE>
Company's Annual Report on Form 10-K for the fiscal year ended July 1, 2000,
filed with the U.S. Securities and Exchange Commission.
AUDIT COMMITTEE
C.C. Guy, Chair Dr. Max Lennon Dr. James F. Kane
SOLICITATION OF PROXIES
The Company will pay the cost of soliciting proxies in the accompanying
form. In addition to solicitation by mail, proxies may be solicited by
directors, officers and other regular employees of the Company by telephone,
telecopy or personal interview for no additional compensation. Arrangements will
be made with brokerage houses and other custodians, nominees and fiduciaries to
forward solicitation material to beneficial owners of the stock held of record
by such persons, and the Company will reimburse such persons for reasonable
out-of-pocket expenses incurred by them in so doing. The Company has engaged
Corporate Investor Communications to assist in these contacts with brokerage
houses, custodians, nominees and fiduciaries for an estimated fee of $2,000 plus
reasonable out-of-pocket expenses.
PROPOSALS OF SECURITY HOLDERS
Any shareholder of the Company who desires to present a proposal at the
2001 Annual Meeting of Shareholders for inclusion in the Company's proxy
statement and form of proxy relating to that meeting must submit such proposal
to the Company at its principal executive offices on or before June 16, 2001.
Pursuant to the requirements of the Company's bylaws, if a shareholder of the
Company desires to present a proposal at the 2001 Annual Meeting of Shareholders
that will not be included in the Company's proxy statement and form of proxy
relating to that meeting, such proposal must be submitted to the Company at its
principal executive offices no later than July 10, 2001 for the proposal to be
considered timely.
--------------------------------
The above Notice and Proxy Statement are sent by order of the Board of
Directors.
Herbert M. Mueller
Vice President
Duluth, Georgia
October 16, 2000
32
<PAGE>
APPENDIX A
NOTWITHSTANDING ANY STATEMENT IN ANY OF THE COMPANY'S PREVIOUS FILINGS
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED, INCORPORATING FUTURE FILINGS, INCLUDING THIS PROXY STATEMENT,
IN WHOLE OR IN PART, THE AUDIT COMMITTEE CHARTER BELOW SHALL NOT BE INCORPORATED
BY REFERENCE INTO ANY SUCH FILING.
DELTA APPAREL, INC.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
1. PURPOSE
The primary function of the Audit Committee is to assist the Board of Directors
in fulfilling its oversight responsibilities by reviewing: the financial reports
and other financial information provided by the Company to any governmental body
and the public; the Company's system of internal controls regarding finance,
accounting and legal compliance and ethics; and the Company's auditing,
accounting and financial reporting procedures generally. Consistent with this
function, the Audit Committee should encourage continuous improvement of, and
should foster compliance with, the Company's policies, procedures and practices
at all levels.
The Audit Committee's primary duties and responsibilities are to:
Serve as an independent and objective party to monitor the Company's
financial reporting process and internal control system.
Review and appraise the audit efforts of the Company's independent
accountants and internal auditing department. The Company's independent
accountants are ultimately accountable to the Audit Committee and the Board
of Directors, as representatives of the Company's shareholders. The Audit
Committee and the Board of Directors have the ultimate authority and
responsibility to select, evaluate and, where appropriate, replace the
outside auditors (subject to ratification of the selection of outside
auditors by the Company's stockholders).
Provide an open avenue of communication among the independent accountants,
financial and senior management, the internal auditing department and the
Board of Directors.
The Audit Committee will primarily fulfill these responsibilities by carrying
out the activities set forth in Section IV of this Charter.
II. COMPOSITION
The Audit Committee shall be comprised of three or more directors as determined
by the Board, each of whom shall be an independent director and free from any
relationship that may interfere with the exercise of independent judgment. Each
member of the Committee shall be able to read and understand fundamental
financial statements, including a company's balance sheet, income statement and
cash flow statement or will become able to do so within a reasonable period of
time after his or her appointment to the audit committee. At least one member of
the Committee must have past employment experience in finance or accounting,
requisite professional certification in accounting or any other comparable
experience or background which results in the individual's financial
sophistication, including being or having been a chief executive officer, chief
financial officer or other senior officer with financial oversight
responsibilities. In addition, each member of the Committee must satisfy the
restrictions of the American Stock Exchange concerning such membership.
Committee members may enhance their familiarity with finance and accounting by
participating in educational programs conducted by the Company or an outside
consultant.
33
<PAGE>
The members of the Audit Committee shall be elected by the Board at the meeting
of the Board that occurs on the date of the Company's annual stockholders'
meeting, and shall serve until their successors shall be duly elected and
qualified. Unless a Chair is elected by the Board, the members of the Committee
may designate a Chair by a majority vote of the full Committee membership.
III. MEETINGS
The Committee shall meet at least four times a year or more frequently as
circumstances dictate. As part of its job to foster open communications, the
Committee should meet at least annually with management, the director of the
internal audit department and the independent accountants in separate executive
sessions to discuss any matters that the Committee or any of these groups or
individuals believes should be discussed privately. In addition, the Committee
or at least its Chair should meet with the independent accountants and
management quarterly to review the Company's financials consistent with IV.4.
(below)
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
DOCUMENTS/REPORTS REVIEW
1. Review and reassess the adequacy of this Charter periodically, at least
annually, as conditions dictate.
2. Review the Company's annual financial statements and any reports or other
financial information submitted to any governmental body, or the public,
including any certification, report, opinion or review rendered by the
independent accountants.
3. Review the regular internal reports to management prepared by the internal
auditing department and any letters of the independent accountants to
management, and management's response thereto.
4. Review with financial management and the independent accountants each 10-Q
prior to its filing. The Chair may represent the entire committee for purposes
of this review.
INDEPENDENT ACCOUNTANTS
5. Recommend to the Board of Directors the selection of the outside auditors,
consider the independence and effectiveness of the outside auditors and approve
the fees and other compensation to be paid to the outside auditors. The
Committee shall ensure that it receives from the outside auditors a formal
written statement delineating all relationships between the outside auditors and
the Company, consistent with Independence Standards Board Standard 1. The
Committee shall actively engage in a dialogue with the outside auditors with
respect to any disclosed relationships or services that may impact the
objectivity and independence of the outside auditors. The Committee has the
responsibility to take, or recommend that the Board take, appropriate action to
oversee the independence of the outside auditors.
6. Review and evaluate the performance of the independent accountants and, when
circumstances warrant, recommend to the Board the replacement of the independent
accountants.
7. Periodically consult with the independent accountants out of the presence of
management about internal controls and the fullness and accuracy of the
Company's financial statements.
FINANCIAL REPORTING PROCESS
8. In consultation with the independent accountants and the internal auditors,
review the integrity of the Company's financial reporting processes, both
internal and external.
9. Consider the independent accountants' judgment about the quality and
appropriateness of the Company's accounting principles as applied in its
financial reporting.
34
<PAGE>
10. Consider and approve, if appropriate, material changes to the Company's
auditing and accounting principles and practices as suggested by the independent
accountants, management or the internal auditing department.
PROCESS IMPROVEMENT
11. Establish regular and separate systems of reporting to the Audit Committee
by each of management, the independent accountants and the internal auditors
regarding any significant judgments made in management's preparation of the
financial statements and the view of each as to the appropriateness of such
judgments.
12. Following completion of the annual audit, review separately with each of
management, the independent accountants and the internal auditing department any
significant difficulties encountered during the course of the audit, including
any restrictions on the scope of the work or access to the required information.
13. Review any significant disagreement among management and the independent
accountants or internal auditing department in connection with the preparation
of the financial statements.
14. Review with the independent accountants, the internal auditing department
and management the extent to which changes or improvements in financial
accounting practices, as previously approved by the Audit Committee, have been
implemented. The appropriate time of this review shall be decided by the
Committee.
ETHICAL AND LEGAL COMPLIANCE
15. Establish, review and update periodically a Code of Ethical Conduct and
ensure that management has established a system to enforce the Code.
16. Review management's monitoring of the Company's compliance with the
Company's Ethical Code, and ensure that management has the proper review system
in place to ensure that the Company's financial statements, reports and other
financial information disseminated to governmental organizations and the public
satisfy legal requirements.
17. Review the activities, organizational structure and qualifications of the
internal audit department.
18. Review with the Company's counsel legal compliance matters including
corporate securities trading policies.
19. Review with the Company's counsel any legal matter that could have a
material impact on the Company financial statements.
20. Perform any other activities consistent with this Charter, the Company's
By-laws and governing law, as the Committee or the Board deems necessary or
appropriate.
Adopted by Board of Directors on February 17, 2000.
35
<PAGE>
APPENDIX 1
DELTA APPAREL, INC.
[GRAPHIC]
PLEASE SIGN, DETACH
AND RETURN PROXY CARD
IN SUPPLIED ENVELOPE
FOLD AND DETACH HERE
--------------------------------------------------------------------------------
DELTA APPAREL, INC.
ANNUAL MEETING, NOVEMBER 7, 2000
PROXY
PLEASE SIGN ON REVERSE SIDE AND RETURN IN THE ENCLOSED POSTAGE-PAID ENVELOPE
The undersigned shareholder of Delta Apparel, Inc., a Georgia corporation,
hereby constitutes and appoints Robert W. Humphreys, Herbert M. Mueller and E.
Erwin Maddrey II, and each of them, attorneys and proxies on behalf of the
undersigned to act and vote at the Annual Meeting of shareholders to be held at
the Gunter Theatre, 320 South Main Street, Greenville, South Carolina, on
November 7, 2000 at 10:30 A.M., and any adjournment or adjournments thereof, and
the undersigned instructs said attorneys to vote:
1. ELECTION OF DIRECTORS:
_______ FOR all nominees listed below (except as marked to the contrary
below)
_______ WITHHOLD AUTHORITY to vote all nominees listed below
Messrs. W. F. Garrett, C. C. Guy, R. W. Humphreys, J. F. Kane, M. Lennon, E. E.
Maddrey II, B. A. Mickel
(INSTRUCTION: To withhold authority to vote for an individual nominee write that
nominee's name in the space provided below.)
________________________________________________________________________________
2. Proposal to ratify selection of KPMG LLP as the independent auditors of
Delta Apparel, Inc. for fiscal 2001
______ FOR ______ AGAINST ______ ABSTAIN
3. At their discretion upon such other matters as may properly come before
the meeting.
A majority of said attorneys and proxies who shall be present and acting as such
at the meeting or any adjournment or adjournments thereof (or, if only one such
attorney and proxy may be present and acting, then that one) shall have and may
exercise all the powers hereby conferred.
(over)
<PAGE>
FOLD AND DETACH HERE
--------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF DELTA
APPAREL, INC. IF NOT OTHERWISE SPECIFIED. THIS PROXY WILL BE DEEMED TO GRANT
AUTHORITY TO VOTE, AND WILL BE VOTED, FOR ELECTION OF THE DIRECTORS LISTED ON
THE REVERSE SIDE OF THIS PROXY AND FOR APPROVAL OF PROPOSAL 2.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Shareholders dated October 16, 2000 and the Proxy Statement furnished
therewith.
Dated this ________________ day of __________________, 2000.
_________________________________ (Seal)
_________________________________ (Seal)
NOTE: Signature should agree with name on stock certificate
as printed thereon. Executors, administrators, trustees and
other fiduciaries should so indicate when signing.
PLEASE DATE, SIGN AND RETURN THIS PROXY. THANK YOU.
<PAGE>
APPENDIX 2
DELTA APPAREL, INC.
[GRAPHIC]
PLASE SIGN, DETACH
AND RETURN PROXY CARD
IN SUPPLIED ENVELOPE
FOLD AND DETACH HERE
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Voting Instructions
PLEASE SIGN ON REVERSE SIDE AND RETURN
DELTA APPAREL, INC.
ANNUAL MEETING, NOVEMBER 7, 2000
The undersigned participant in the Savings and Investment Plan of Delta
Apparel, Inc., a Georgia corporation, hereby directs Branch Banking & Trust
Company, trustee of such Plan, to vote the undersigned's proportionate share of
the shares of common stock of Delta Apparel, Inc. held by such Plan at the
Annual Meeting of shareholders to be held at the Gunter Theatre, 320 South Main
Street, Greenville, South Carolina, on November 7, 2000 at 10:30 A.M., and any
adjustment or adjournments thereof, as follows:
1. Election of Directors:
_______ FOR all nominees listed below (except as marked to the contrary
below)
_______ WITHHOLD AUTHORITY to vote all nominees listed below
Messrs. W. F. Garrett, C. C. Guy, R. W. Humphreys, J. F. Kane, M. Lennon, E. E.
Maddrey II, B. A. Mickel
(INSTRUCTION: To withhold authority to vote for an individual nominee write that
nominee's name in the space provided below.)
________________________________________________________________________________
2. Proposal to ratify selection of KPMG LLP as the independent auditors of
Delta Apparel, Inc. for fiscal 2001
______ FOR ______ AGAINST ______ ABSTAIN
5. At their discretion upon such other matters as may properly come before
the meeting.
(over)
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THESE VOTING INSTRUCTIONS ARE SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
DELTA APPAREL, INC. IF NOT OTHERWISE SPECIFIED, THESE VOTING INSTRUCTIONS WILL
BE DEEMED DIRECTION TO VOTE FOR ELECTION OF THE DIRECTORS LISTED ON THE REVERSE
SIDE OF THESE VOTING INSTRUCTIONS AND FOR APPROVAL OF PROPOSAL 2.
The undersigned hereby acknowledged receipt of the Notice of Annual Meeting
of Shareholders dated October 16, 2000 and the Proxy Statement furnished
therewith.
Dated this ________ day of _________ 2000
___________________ (Seal)
___________________ (Seal)
NOTE: Please sign exactly as name appears at left.
PLEASE DATE, SIGN AND RETURN THESE VOTING INSTRUCTIONS. THANK YOU.
