SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant |X|
Filed by a party other than the registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
PREMIUMWEAR, INC.
(Name of Registrant as Specified in Its Charter)
N/A
(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)(1)
and 0-11.
(1) Title of each class of securities to which
transaction applies:
(2) Aggregate number of securities to which transactions
applies:
(3) Per unit price or other underlying value of
transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was
determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
PREMIUMWEAR, INC.
7566 MARKET PLACE DRIVE
MINNEAPOLIS, MINNESOTA 55344
------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 13, 1998
------------------
To All Holders of Common Stock:
The Annual Meeting of Shareholders of PremiumWear, Inc. will be held at The
Thunderbird Hotel and Convention Center, 2201 East 78th Street, Bloomington, MN
55425, on Wednesday, May 13, 1998 at 11:00 a.m., Central Daylight Time, for the
following purposes:
1. To elect one director to serve a three-year term.
2. To transact such other business as may properly come before the meeting,
or any adjournment or adjournments thereof.
Shareholders of record at the close of business on March 27, 1998 are
entitled to notice of and to vote at the Annual Meeting. Since it is important
that your shares be represented at the meeting, whether or not you personally
plan to attend, you are requested to sign, date and return your proxy card
promptly in the enclosed envelope. Returning your signed proxy will not prevent
you from voting in person at the meeting, should you desire to do so.
By Order of the Board of Directors
/s/ John R. Houston
John R. Houston, SECRETARY
Minneapolis, Minnesota
April 3, 1998
YOUR PROXY IS IMPORTANT; PLEASE SIGN, DATE AND MAIL IT TODAY.
<PAGE>
PREMIUMWEAR, INC.
7566 MARKET PLACE DRIVE
MINNEAPOLIS, MINNESOTA 55344
------------------
PROXY STATEMENT
------------------
This Proxy Statement is furnished in connection with the solicitation on
behalf of the Board of Directors of PremiumWear, Inc. (the "Company") of proxies
for the Annual Meeting of Shareholders of the Company to be held at The
Thunderbird Hotel and Convention Center, 2201 East 78th Street, Bloomington, MN
55425, Minnesota, on Wednesday, May 13, 1998 at 11:00 a.m., Central Daylight
Time, or any adjournment or adjournments thereof. This Proxy Statement and the
enclosed proxy card are being mailed to shareholders on or about April 3, 1998.
There were outstanding at the close of business on March 27, 1998, the
record date for shareholders entitled to notice of and to vote at the meeting,
2,319,430 shares of Common Stock, and each of such shares is entitled to one
vote at the meeting. Only shareholders of record at the close of business on
March 27, 1998 will be entitled to vote at the Annual Meeting. The presence, in
person or by proxy, of the holders of a majority of the shares of Common Stock
entitled to vote at the Annual Meeting of Shareholders constitutes a quorum for
the transaction of business.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the election inspectors appointed for the meeting. Shares represented by proxies
properly signed, dated and returned will be voted at the Annual Meeting of
Shareholders in accordance with the instructions set forth therein. If a proxy
is properly signed but contains no such instructions, the shares represented
thereby will be voted FOR the director nominee and at the discretion of the
proxyholders as to any other matters which may properly come before the Annual
Meeting of Shareholders.
The election inspectors will treat abstentions as shares that are present
and entitled to vote for purposes of determining the presence of a quorum but as
unvoted for purposes of determining the approval of the matter submitted to the
shareholders for a vote. Consequently, an abstention will have the same effect
as a negative vote. If a broker indicates on the proxy that it does not have
discretionary authority as to certain shares to vote on a particular matter,
those shares will not be considered as present and entitled to vote with respect
to that matter.
Each proxy may be revoked at any time before it is voted by executing and
returning a proxy bearing a later date, by giving written notice of revocation
to the Secretary of the Company, or by attending the Annual Meeting of
Shareholders and voting in person.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes of directors, each
director serving a three-year term. Approximately one-third of the directors
belong to each class. The Board of Directors is seeking shareholder election of
one director whose term expires this year, Mr. Gerald E. Magnuson. If elected,
his term will expire in 2001. The Company believes that Mr. Magnuson will be
able to serve; but should he be unable to serve as a director, the persons named
in the proxies have advised that they will vote for the election of such
substitute nominee as the Board may propose.
Information regarding Mr. Magnuson and other incumbent directors and their
principal occupations are set forth below, based upon information furnished to
the Company by such persons. Unless otherwise indicated, each of the directors
has held their respective identified positions for more than the
<PAGE>
past five years. Messrs. William J. Morgan and Michael A. Raskin, directors
since 1996 and 1991, respectively, retired from the Board on June 30, 1997.
<TABLE>
<CAPTION>
DIRECTOR
NAME AND AGE PRINCIPAL OCCUPATION AND OTHER DIRECTORSHIPS SINCE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NOMINATED FOR A TERM ENDING IN 2001:
Gerald E. Magnuson (67) Of Counsel to Lindquist & Vennum PLLP (law firm); 1982
Partner of Lindquist & Vennum PLLP to December 1994;
Director of Research, Incorporated, Sheldahl, Inc. and
Washington Scientific Industries, Inc.
OTHER DIRECTORS WHOSE TERMS OF OFFICE WILL CONTINUE AFTER THE ANNUAL MEETING AND
WHOSE TERM EXPIRES IN 1999:
Keith A. Benson (54) Vice Chairman, Chief Financial Officer and Director of 1993
Musicland Stores Corporation (retail stores).
Thomas D. Gleason (62) Chairman and Chief Executive Officer of the Company; 1995
Vice Chairman of Wolverine World Wide, Inc. (footwear
manufacturing and marketing), 1993 through April 1996;
Chief Executive Officer of Wolverine World Wide, Inc.
from 1972 to 1993.
OTHER DIRECTORS WHOSE TERMS OF OFFICE WILL CONTINUE AFTER THE ANNUAL MEETING AND
WHOSE TERM EXPIRES IN 2000:
C.D. Anderson (56) Senior Managing Partner and director of Plantagenet 1991
Capital Management LLC (investment partnership);
Director, Anderson Capital Management, Inc. (investment
management firm); Director/Trustee of AIM/G.T. Global
Mutual Funds; Director of various private companies.
Mark B. Vittert (50) Private Investor; Director of Lee Enterprises, Inc. and 1991
Dave & Busters, Inc.
</TABLE>
BOARD OF DIRECTORS AND COMMITTEE MEETINGS AND MEMBERSHIP
During the last fiscal year the Board of Directors met eleven times. Each
director attended more than 75% of the meetings of the Board of Directors and
any committee on which he served.
The Board of Directors has established three standing committees, the Audit
Committee, the Compensation Committee and the Governance Committee. The Audit
Committee, which met two times during the last fiscal year, is currently
comprised of Messrs. Benson (Chairman) and Magnuson. Among other duties, the
Audit Committee reviews the internal and external financial reporting of the
Company, reviews the scope of the independent audit and considers comments by
the independent public accountants regarding internal controls and accounting
procedures and management's response to those comments. The Compensation
Committee, which met three times during the last fiscal year, is currently
comprised of Messrs. Anderson (Chairman), Benson and Vittert. The Compensation
Committee approves the compensation arrangements for senior management. The
Board of Directors established a Stock Grant Subcommittee of the Compensation
Committee, currently comprised of Messrs. Benson and Vittert, for the purpose of
granting awards under the 1991 Stock Plan. The Company does not have a
nominating committee. However, in December 1996, the Board of Directors
established a Governance Committee, currently comprised of Messrs. Magnuson
(Chairman), Vittert and Gleason, for the purpose of reviewing Board governance
and membership matters. The Governance Committee met three times during the last
fiscal year.
DIRECTOR FEES AND STOCK OPTIONS
Non-employee members of the Board of Directors receive an annual fee of
$6,000 plus $750 for each Board meeting attended in person, $150 for each
meeting attended by telephonic conference, $500 for each committee meeting held
more than 24 hours before or after a Board meeting and $150 for each
<PAGE>
committee meeting held within 24 hours of a Board meeting. Prior to September 9,
1996, Mr. Gleason received a fee of $41,667 per annum and was reimbursed for
ordinary business expenses for serving as Chairman; such fee totaled $25,958 for
fiscal 1996 and was terminated in connection with Mr. Gleason's assumption of
the position of Chief Executive Officer. Mr. Gleason also received stock options
to purchase 15,000 shares in fiscal 1996 prior to his assuming the position of
Chief Executive Officer.
The 1991 Stock Plan provides for the annual, automatic granting of a
defined number of options to directors who are not employees of the Company.
Such options are granted to each director who is not an employee of the Company
and who (i) is elected or re-elected as a director by the shareholders at any
annual or special meeting of the shareholders or (ii) is serving an unexpired
term as a director on the date of an annual meeting at which any other director
is elected. Each such person shall, as of the date of such annual meeting,
automatically receive a non-qualified option to purchase 1,000 shares of Common
Stock with the option price equal to the fair market value of the Company's
Common Stock on such date. These options will have five-year terms. The 1991
Stock Plan also permits granting of additional or alternative options to
directors at the discretion of the Board.
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for fiscal years 1997, 1996 and 1995, the cash
compensation paid by the Company, as well as certain other compensation paid or
accrued for those years, to Thomas D. Gleason, the Chief Executive Officer, and
to each of the other executive officers of the Company who received more than
$100,000 during the last fiscal year (together, the "Named Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------------ -------------
AWARDS
SECURITIES ALL OTHER
OTHER ANNUAL UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION OPTIONS (#) ($)(1)
- -------------------------- ------ ------------ ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas D. Gleason(2) 1997 180,000 -- -- 40,000 30,389
Chairman and Chief 1996 66,462 -- -- -- 1,361
Executive Officer
David E. Berg 1997 158,077 41,250 -- 20,000 7,158
President and 1996 150,000 -- -- 15,000 4,028
Chief Operating Officer 1995 149,442 -- -- 5,000 3,572
James S. Bury 1997 128,077 34,375 -- 12,000 8,101
Vice President of 1996 125,000 -- -- 5,000 5,322
Finance and Assistant 1995 116,000 -- -- 3,000 4,882
Secretary
Cynthia L. Boeddeker(3) 1997 90,000 24,750 -- 8,000 6,211
Vice President and
General Merchandise Manager
</TABLE>
- ------------------
(1) Includes Company contributions to the Company's retirement plan, premiums
paid for term life insurance and other payments as described below. For
fiscal 1997, the Company's contributions to the retirement plan for Messrs.
Gleason, Berg, Bury and Ms. Boeddeker totaled $1,212, $3,162, $3,202 and
$1,800, respectively. The amounts indicated for Mr. Gleason and Ms.
Boeddeker include $22,500 and $2,250, respectively, as compensation to Mr.
Gleason and Ms. Boeddeker due to stock option exercises in 1997. In 1997,
the Company also paid profit sharing contributions earned in fiscal 1996 to
Messrs. Gleason, Berg, Bury and Ms. Boeddeker totaling $1,329, $3,000,
$2,500 and $1,748, respectively. For fiscal 1996, the Company's
contributions to the retirement plan for Messrs. Berg and Bury totaled
$3,000 and $3,125, respectively. For fiscal 1996, the Company paid director
fees and granted stock options to Mr. Gleason prior to his assumption of the
position of Chief Executive Officer, which fees and stock options are
described under the heading "Director Compensation." For fiscal 1995, the
Company's contributions to the retirement plan for Messrs. Berg and Bury
totaled $2,939 and $2,499, respectively. The balance, if any, for each year
for all Named Executives reflects term life insurance premiums.
(2) Mr. Gleason was elected Chief Executive Officer on September 9, 1996.
(3) Ms. Boeddeker's compensation for prior years did not exceed $100,000.
EMPLOYMENT AGREEMENTS
The Company entered into an employment agreement with Mr. Bury effective
April 24, 1990. This agreement is for an indefinite term and may be terminated
by either party upon 30 days' prior written notice. The agreement provides,
among other things, for a lump sum cash severance payment to Mr. Bury in the
event of a voluntary or involuntary termination of employment in connection with
a change in control of the Company, as defined in the agreements, in an amount
equal to the number of months remaining in the two-year period commencing on the
first Event (as defined therein) in connection with the change in control,
multiplied by one calendar month's base salary, at the highest monthly base
salary rate paid at any time during the term of the agreement. The agreement
also specifies minimum base
<PAGE>
salaries to be paid during the term of the agreement. If an Event had occurred
at the end of fiscal 1997, Mr. Bury would have received $258,000 pursuant to his
employment agreement.
In 1996, the Company entered into a severance agreement with Mr. Lowell
Fisher in connection with Mr. Fisher's resignation as the Company's Chief
Executive Officer and Director effective September 9, 1996. During fiscal 1997,
severance payments to Mr. Fisher totaled $180,000. Mr. Fisher is entitled to
continuation of health benefits and is subject to a non-compete provision during
the period of payment of his severance.
STOCK OPTIONS
The following table contains information concerning individual grants of
stock options under the 1991 Stock Plan to each of the Named Executives during
the last fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED ANNUAL
RATES OF
INDIVIDUAL GRANTS STOCK PRICE
----------------------------------------------------------------- APPRECIATION
PERCENT OF TOTAL MARKET
OPTIONS OPTIONS GRANTED TO PRICE FOR OPTION TERM($)
GRANTED EMPLOYEES IN EXERCISE ON GRANT EXPIRATION -------------------
NAME (#)(1) FISCAL YEAR PRICE ($) DATE ($) DATE 5% 10%
- ------------------------------ --------- -------------------- ----------- ---------- ----------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas D. Gleason ............ 40,000 31.8% 3.25 3.25 3/19/02 35,917 79,366
David E. Berg ................ 20,000 15.9% 3.25 3.25 3/19/02 17,958 39,683
James S. Bury ................ 12,000 9.5% 3.25 3.25 3/19/02 10,775 23,810
Cynthia L. Boeddeker ......... 8,000 6.4% 3.25 3.25 3/19/02 7,183 15,873
</TABLE>
- ------------------
(1) Becomes exercisable with respect to 25% of the shares of Common Stock
subject to the option on March 19 of 1997, 1998, 1999 and 2000.
The following table sets forth information with respect to the Named
Executives concerning the exercise of options during fiscal 1997 and unexercised
options held as of January 3, 1998:
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND JANUARY 3, 1998 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT 1/3/98 (#) AT 1/3/98 ($)(1)
ACQUIRED VALUE ----------------------------- -----------------------------
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------- ---------------- ------------- ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Thomas D. Gleason ........ 15,000 $22,500 15,000 30,000 $20,000 $60,000
David E. Berg ............ 20,000 $30,625 5,000 15,000 $10,000 $30,000
James S. Bury ............ 8,000 $11,875 3,000 9,000 $ 6,000 $18,000
Cynthia L. Boeddeker ..... 7,000 $12,000 2,000 6,000 $ 4,000 $12,000
</TABLE>
- ------------------
(1) Based on a market price of $5.25 per share of Common Stock on January 3,
1998.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Decisions on compensation of the Company's executives are generally made by
the Compensation Committee of the Board, currently consisting of Messrs.
Anderson (Chairman), Benson and Vittert. All decisions by the Compensation
Committee relating to the compensation of the Company's executive officers were
during fiscal 1997 and will in fiscal 1998, be reviewed by the full Board.
Pursuant to SEC rules designed to enhance disclosure of companies' policies with
regard to executive compensation, set forth below is a report submitted by the
Compensation Committee addressing the Company's compensation policies for fiscal
1997 as they affected Mr. Gleason, the Company's Chief Executive Officer, and
Messrs. Berg and Bury and Ms. Boeddeker, the executive officers other than the
Chief Executive Officer who, for fiscal 1997, were the Company's most highly
paid executive officers whose compensation exceeded $100,000 (collectively with
Mr. Gleason, the "Named Executives"). The following report shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933 (the "1933
Act") or the Securities Exchange
<PAGE>
Act of 1934 (the "1934 Act"), except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under the 1933 Act or the 1934 Act.
COMPENSATION PHILOSOPHY. The Compensation Committee's executive
compensation policies are designed to provide competitive levels of compensation
that integrate pay with the Company's annual and long-term performance goals,
reward above-average corporate performance, recognize individual initiative and
achievement, and assist the Company in attracting and retaining qualified
executives. Furthermore, the Company's use of stock options and restricted stock
grants reflects the Compensation Committee's position that stock ownership by
management and stock-based performance compensation arrangements are beneficial
in aligning management's and shareholders' interests and the enhancement of
shareholder value. Compensation payments, to the extent possible, are designed
to qualify for deductibility under the Internal Revenue Code of 1986, as
amended.
The Company has designed its executive compensation plans around these
policies and objectives. The Compensation Committee believes the Company's
compensation arrangements consistently meet these goals. The following is a
description of the Company's current plans and how each relates to the
objectives indicated above.
BASE SALARY. While the Chief Executive Officer determines the annual salary
of each officer of the Company (including the Named Executives) other than
himself, the Compensation Committee generally approves the salary
determinations. In determining or approving appropriate salary levels, the
Compensation Committee considers levels of responsibility, experience,
individual performance and internal equity, as well as external pay practices.
ANNUAL INCENTIVES. During fiscal 1997, the Company maintained a 1997 Bonus
Plan for payment of incentive compensation to key managers, including the Named
Executives. The Bonus Plan rewards participants for their contributions to the
attainment of certain Company goals established for profitability, sales volume
and inventory turns during the fiscal year, as well as, to a much lesser degree,
achievement of personal objectives for each participant. Incentive payments are
based on the level of achievement against those goals. For 1997, Messrs.
Gleason, Berg and Bury and Ms. Boeddeker earned $7,501, $6,644, $5,338 and
$3,767, respectively, pursuant to the Bonus Plan, which sums will be paid during
fiscal 1998. In addition, in connection with the Company's 1996 sale of its
retail and golf businesses, the Company entered into hold-in-place agreements
with certain employees, including the Named Executives (except Mr. Gleason),
which provided for payment in the event of termination of employment of varying
amounts depending on the employee's job responsibility. The Named Executives
were to receive six months base salary if the agreements were triggered.
Following the sale of the businesses, the Compensation Committee recommended,
and the Board approved, the payment of retention bonuses in substitution for the
hold-in-place agreements in amounts equal to 80% of the hold-in-place
obligations, payable in three installments during fiscal 1997 and 1998. In
fiscal 1997, Messrs. Berg and Bury and Ms. Boeddeker received $41,250, $34,375
and $24,750, respectively, pursuant to the hold-in-place obligations. In fiscal
1998, Messrs. Berg and Bury and Ms. Boeddeker will be paid $18,750, $15,625, and
$11,250, respectively, as the final installment on these agreements.
LONG-TERM INCENTIVES. The Company's overall long-term compensation
philosophy is that long-term incentives should be related to improvement in
long-term shareholder value. In furtherance of this objective, the Company
awards to its executive officers and other key personnel stock options and, on a
very selected basis, restricted stock. Stock options encourage and reward
effective management that results in long-term corporate financial success, as
measured by stock price appreciation. Stock options have value from the date the
stock options are granted. Shareholders also benefit from such stock price
appreciation. The 1991 Stock Plan allows the grant of incentive stock options
and non-qualified stock options. Stock options are awarded consistent with the
Company's objective to include in total compensation a long-term equity interest
for executive officers, with greater opportunity for reward if long-term
performance is sustained. To encourage a longer-term perspective, the options
are only exercisable over a multiple year period and grants are made at an
option price equal to the fair market value of the Common Stock on the date of
grant.
OTHER COMPENSATION PROGRAMS. The Company maintains certain broad-based
employee benefit plans in which its executive officers, including the Named
Executives, have been permitted to participate,
<PAGE>
including retirement, life and health insurance plans. The Company's retirement
plan consists of a profit sharing plan, pursuant to which the Board of Directors
may make annual discretionary contributions, and a 401(k) employee savings plan
which allows employees to make pre-tax contributions and in which the Company
matches employee contributions in an amount equal to one-half of the employee's
contribution up to 5% of the employee's base salary. In February 1998, the Board
of Directors approved a discretionary contribution to the profit sharing plan
with regard to fiscal 1997. Other non-cash compensation benefits are provided to
the Named Executives. None of these plans are directly or indirectly tied to
Company performance.
CEO FISCAL 1997 COMPENSATION. Regulations of the SEC require the Company to
disclose the Compensation Committee's basis for compensation reported for its
Chief Executive Officer in fiscal 1997 and to discuss the relationship between
the Company's performance during the last fiscal year and such Chief Executive
Officer's compensation. Mr. Gleason's base salary of $180,000 for fiscal 1997
was determined on the same basis as all other executive officers and, as
indicated above, Mr. Gleason earned $7,501 of incentive compensation with
respect to services rendered in fiscal 1997, determined on the same basis as for
the other Named Executives, which sum will be paid in 1998.
SUBMITTED BY THE COMPENSATION COMMITTEE
OF THE COMPANY'S BOARD OF DIRECTORS
C.D. Anderson Keith A. Benson Mark B. Vittert
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Magnuson, a member of the Compensation Committee for a portion of
fiscal 1997, is currently Of Counsel to the law firm of Lindquist & Vennum PLLP
which was paid for legal services rendered to the Company during the last fiscal
year. Mr. Magnuson receives no financial benefit on account of amounts paid by
the Company to Lindquist & Vennum PLLP for such services. It is anticipated that
Lindquist & Vennum PLLP will continue to perform legal services for the Company
during the current fiscal year.
<PAGE>
PERFORMANCE GRAPH
In accordance with the rules of the Securities and Exchange Commission, the
following performance graph compares performance of the Company's Common Stock
on the New York Stock Exchange to the Russell 3000 Textile Apparel Industry
Index and to the Russell 2000 Index. The graph compares the cumulative total
shareholder return as of the end of each of the Company's last five fiscal years
on $100 invested at the end of fiscal 1992 and assumes reinvestment of all
dividends. The performance graph is not necessarily indicative of future
investment performance.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
[GRAPH]
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
PremiumWear $ 100.00 $ 65.67 $ 86.57 $ 77.61 $ 107.46 $ 148.91
Russell 2000 100.00 118.91 116.74 149.94 174.67 213.73
Russell 3000 Textile Apparel 100.00 79.82 75.77 86.98 108.45 118.31
</TABLE>
The performance graph above shall not be deemed incorporated by reference
by any general statement incorporating by reference this Proxy Statement into
any filing under the 1933 Act or under the 1934 Act, except to the extent that
the Company specifically incorporates this information by reference, and shall
not otherwise be deemed filed under the 1933 Act or the 1934 Act.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth, as of March 20, 1998 (unless otherwise
specified), the beneficial ownership of Common Stock of the Company by each
shareholder who is known by the Company to own beneficially 5% or more of the
outstanding Common Stock of the Company, each director, each Named Executive and
by all directors and executive officers as a group. See "Reorganization" for a
description of certain restrictions on transfers of Common Stock by holders of
5% or more of the total fair market value of all outstanding Common Stock.
Except as otherwise indicated, the shareholders listed in the table have full
voting and investment powers with respect to the shares indicated.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
BENEFICIALLY OWNED OUTSTANDING SHARES
---------------------- -------------------
<S> <C> <C>
Heartland Advisors, Inc ............ 200,000(1) 8.6%
790 North Milwaukee Street
Milwaukee, WI 53202
The Clark Estates, Inc. ............ 196,281(2) 8.5%
30 Wall Street
New York, NY 10005
Francisco A. Lorenzo ............... 184,100(5) 7.9%
333 Clay Street, Suite 4040
Houston, TX 77002
C. Derek Anderson .................. 158,532(4)(6) 6.8%
220 Sansome Street, Suite 400
San Francisco, CA 94104
Arnold M. Amster ................... 117,500(3) 5.1%
767 Fifth Avenue
New York, NY 10153
Keith A. Benson .................... 9,808(6) *
Thomas D. Gleason .................. 96,000(6) 4.1%
Gerald E. Magnuson ................. 18,800(6) *
Mark B. Vittert .................... 86,808(6) 3.7%
David E. Berg ...................... 72,220(6) 3.1%
James S. Bury ...................... 36,720(6) 1.6%
Cynthia L. Boeddeker ............... 11,000(6) *
All Directors and Executive Officers
as a Group (8 persons) ............ 489,888(6) 20.5%
</TABLE>
- ------------------
*Less than 1%
(1) Based on a Schedule 13G filed with the Securities and Exchange Commission.
(2) The Clark Estates, Inc. provides administrative assistance to a number of
Clark family accounts which beneficially own an aggregate 196,281 shares of
the Company's Common Stock, including The Clark Foundation, which owns
95,390 shares. The Clark Estates, Inc. has, or in certain instances shares,
voting power and/or dispositive power with respect to such shares. The Clark
Estates, Inc. has no remainder or other economic interest in such trust or
fiduciary accounts.
(3) Based on a Schedule 13D filed with the Securities Exchange Commission, which
indicates that Mr. Amster has or shares voting and dispositive power with
respect to these shares. Accordingly, Mr. Amster may be deemed to be the
beneficial owner of such shares.
(4) Mr. Anderson shares voting and dispositive power with respect to 82,032
shares acquired by Anderson Capital Management, Inc. as agent for its
investment advisory clients and, accordingly, Mr. Anderson may be deemed to
be the beneficial owner of such shares. Mr. Anderson disclaims beneficial
ownership of those shares and 6,500 of the shares represented as
beneficially owned by him which are owned by his wife.
(5) Based on a Schedule 13D filed with the Securities and Exchange Commission.
Francisco A. Lorenzo shares voting and dispositive power with respect to the
shares of Common Stock owned by a private investment
<PAGE>
company and four trusts for the benefit of family members of Mr. Lorenzo.
Accordingly, Mr. Lorenzo may be deemed to be the beneficial owner of all of
the shares reported on the Schedule 13D.
(6) Includes 25,000 shares for Mr. Gleason, 8,000 shares for each of Messrs.
Anderson and Magnuson, 6,000 shares for each of Messrs. Benson and Vittert,
4,000 shares for Ms. Boeddeker, 10,000 shares for Mr. Berg, 6,000 shares for
Mr. Bury and 73,000 shares for all directors and executive officers as a
group which may be acquired within sixty days of the date hereof upon the
exercise of outstanding stock options.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based upon its review of Forms 3, 4 and 5 and any amendments thereto
furnished to the Company pursuant to Section 16 of the 1934 Act, the Company
believes all of such forms were filed on a timely basis by the reporting persons
during the fiscal year ended January 3, 1998.
REORGANIZATION
On July 3, 1991, the Company filed a Petition for Reorganization under
Chapter 11 of the United States Bankruptcy Code, together with a Plan of
Reorganization and a Disclosure Statement, with the United States Bankruptcy
Court for the District of Minnesota. The Plan of Reorganization was confirmed by
the Bankruptcy Court on October 1, 1991 and became effective as of October 29,
1991 (the "Reorganization"). Pursuant to the Reorganization, holders of the
Company's Common Stock received one new share of Common Stock for every 25
shares of their then existing Common Stock surrendered and the Company issued or
committed to issue in excess of 1,773,000 new shares of Common Stock to
creditors in satisfaction of indebtedness in excess of $53,000,000.
In connection with the Reorganization, in order to reduce the risk that any
change in the stock ownership of the Company may jeopardize certain Federal
income tax attributes of the Company, the Company's Certificate of Incorporation
was amended to limit the ability of persons beneficially owning, or who, upon
acquisition of any shares, would beneficially own, five percent (5%) or more of
the total fair market value of outstanding shares of Common Stock of the Company
(a "5% Holder"). Until October 29, 1993, no 5% Holder was permitted to sell,
transfer or dispose or contract to sell, transfer or dispose any shares of
Common Stock or options, warrants or other rights to acquire Common Stock,
except in accordance with the procedures described in Article V of the
Certificate of Incorporation. Until October 29, 2001, no 5% Holder may purchase
or acquire or contract to purchase shares of Common Stock, except in accordance
with the procedures described in Article V, and any such purchase, acquisition
or contract not in compliance with Article V shall be null and void.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP served as the independent public accountants for the
Company for fiscal 1997 and have been selected to act in such capacity for
fiscal 1998. A representative of Arthur Andersen LLP is expected to be present
at the Annual Meeting of Shareholders. Such representative will have an
opportunity to make a statement if such representative desires to do so and will
be available to respond to appropriate questions.
OTHER MATTERS
The Board of Directors knows of no business other than that described
herein that will be presented for consideration at the Annual Meeting. If,
however, other business shall properly come before the meeting, the persons in
the enclosed form of proxy intend to vote the shares represented by said proxies
on such matters in accordance with their judgment in the best interest of the
Company.
<PAGE>
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
The rules of the Securities and Exchange Commission permit shareholders of
a company, after timely notice to the Company, to present proposals for
shareholder action in the Company's proxy statement where such proposals are
consistent with applicable law, pertain to matters appropriate for shareholder
action and are not properly omitted by Company action in accordance with the
proxy rules. The Company's 1999 Annual Meeting of Shareholders is expected to be
held on or about May 13, 1999 and proxy materials in connection with that
meeting are expected to be mailed on or about April 2, 1999. Shareholder
proposals prepared in accordance with the proxy rules must be received by the
Company on or before December 3, 1998.
METHOD OF PROXY SOLICITATION
The entire cost of preparing, assembling, printing and mailing the Notice
of Annual Meeting of Shareholders, this Proxy Statement, the proxy itself, and
the cost of soliciting proxies relating to the meeting will be borne by the
Company. In addition to use of the mails, proxies may be solicited by officers,
directors and other regular employees of the Company by telephone, telegraph or
personal solicitation, and no additional compensation will be paid to such
individuals. The Company will, if requested, reimburse banks, brokerage houses
and other custodians, nominees and certain fiduciaries for their reasonable
expenses incurred in mailing proxy material to their principals.
GENERAL
The Company's Annual Report to Shareholders for the fiscal year ended
January 3, 1998 is being mailed to shareholders with this Proxy Statement.
Shareholders may receive without charge a copy of the Company's Annual Report on
Form 10-K, including financial statements and schedules thereto, as filed with
the Securities and Exchange Commission by writing to: PremiumWear, Inc., 7566
Market Place Drive, Minneapolis, MN 55344.
By Order of the Board of Directors,
/s/ John R. Houston
John R. Houston, SECRETARY
<PAGE>
PREMIUMWEAR, INC.
7566 MARKET PLACE DRIVE, MINNEAPOLIS, MINNESOTA 55344
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, having duly received the Notice of Annual Meeting and Proxy
Statement dated April 3, 1998, of PremiumWear, Inc., (the "Company"), hereby
appoints Thomas D. Gleason and Keith A. Benson as proxies (each with the power
to act alone and with the power of substitution and revocation), to represent
the undersigned and to vote as designated below, all shares of Common Stock of
the Company held of record by the undersigned on March 27, 1998, at the Annual
Meeting of Shareholders to be held on May 13, 1998, or any adjournments or
adjournments thereof.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL OF THE FOLLOWING
PROPOSALS:
1. ELECTION OF DIRECTORS: [ ] FOR the nominee listed below
[ ] WITHHOLD AUTHORITY
to vote for the nominee
listed below
Gerald E. Magnuson
2. THE PROXIES ARE AUTHORIZED TO VOTE IN THEIR DISCRETION UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
(CONTINUED, AND TO BE COMPLETED AND SIGNED, ON THE REVERSE SIDE)
<PAGE>
(CONTINUED FROM THE OTHER SIDE)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSAL (1) AND, IN THE DISCRETION OF THE PROXIES, ON ANY OTHER MATTERS
WHICH MAY PROPERLY COME BEFORE THE MEETING.
PLEASE SIGN exactly as name appears on this card. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by an authorized person.
Dated: ________________________, 1998
______________________________
Signature(s) of Shareholder(s)
______________________________
Signature if held jointly
