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 ss.240.14a-11(c) or ss.240.14a-12
ITHACA INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(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
O-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule O-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>
ITHACA INDUSTRIES, INC.
HIGHWAY 268 WEST, P.O. BOX 620
WILKESBORO, NORTH CAROLINA 28697
(336) 667-5231
May 10, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
(the "Annual Meeting") of Ithaca Industries, Inc. (the "Company") at the offices
of Paul, Weiss, Rifkind, Wharton & Garrison, located at 1285 Avenue of the
Americas, New York, New York on Monday, June 14, 1999, at 10:00 a.m., local
time.
The Annual Meeting will be held for the following purposes:
(1) To elect 7 directors to hold office until the next Annual Meeting
of Stockholders or until their successors are elected and qualified;
(2) To ratify the appointment of PricewaterhouseCoopers LLP as the
Company's independent public accountants for the fiscal year 2000; and
(3) To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 23,
1999 as the record date for determination of stockholders entitled to notice of
and to vote at the meeting, or any adjournment thereof.
A copy of the Annual Report to Stockholders for the fiscal year ended
January 30, 1999 is enclosed.
Whether or not you plan to attend the Annual Meeting, please complete
the enclosed proxy and return it promptly so that your shares will be
represented. The vote of every stockholder is important. The proxy is revocable
and will not affect your right to vote in person if you attend the meeting.
Very truly yours,
/s/ Jim D. Waller
-----------------
Jim D. Waller
Chairman of the Board,
Chief Executive Officer,
President and Director
<PAGE>
ITHACA INDUSTRIES, INC.
HIGHWAY 268 WEST, P.O. BOX 620
WILKESBORO, NORTH CAROLINA 28697
(336) 667-5231
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MONDAY, JUNE 14, 1999 AT 10:00 A.M.
-------------------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Annual Meeting") of Ithaca Industries, Inc., a Delaware corporation (the
"Company"), will be held at the offices of Paul, Weiss, Rifkind, Wharton and
Garrison located at 1285 Avenue of the Americas, New York, New York on Monday,
June 14, 1999 at 10:00 a.m., local time, for the following purposes:
(1) To elect 7 directors to hold office until the next Annual Meeting
of Stockholders or until their successors are elected and
qualified;
(2) To ratify the appointment of PricewaterhouseCoopers LLP as the
Company's independent public accountants for the fiscal year 2000;
and
(3) To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 23,
1999, as the record date for determination of stockholders entitled to notice of
and to vote at the meeting, or any adjournment thereof. Representation of at
least a majority of all outstanding shares of the Company's common stock, par
value $0.01, is required to constitute a quorum. Accordingly, it is important
that your stock be represented at the meeting. Whether or not you plan to attend
the Annual Meeting, please complete, date and sign the enclosed proxy card and
mail it promptly in the self-addressed envelope enclosed for your convenience.
You may revoke your proxy at any time before it is voted.
By Order of the Board of Directors,
/s/ Richard P. Thrush
---------------------
Richard P. Thrush
Secretary
May 10, 1999
YOUR VOTE IS IMPORTANT, ACCORDINGLY, WE URGE YOU
TO DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD
REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE MEETING.
<PAGE>
ITHACA INDUSTRIES, INC.
HIGHWAY 268 WEST, P.O. BOX 620
WILKESBORO, NORTH CAROLINA 28697
(336) 667-5231
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MONDAY, JUNE 14, 1999.
INTRODUCTION
This Proxy Statement and the enclosed proxy, which is first being
mailed to the stockholders of Ithaca Industries, Inc. ("Ithaca" or the
"Company") on approximately May 12, 1999, is furnished to you in connection with
the solicitation of proxies on behalf of the Board of Directors of Ithaca to be
used at the Annual Meeting of Stockholders (the "Annual Meeting") to be held at
the offices of Paul, Weiss, Rifkind, Wharton and Garrison located at 1285 Avenue
of the Americas, New York, New York on Monday, June 14, 1999 at 10:00 a.m., and
at any subsequent time which may be necessary by any adjournment or adjournments
thereof.
Proxies in proper form received by the time of the meeting will be
voted as specified. A stockholder of the Company (a "Stockholder") giving a
proxy may revoke it at any time before it is exercised by filing with the
Secretary of the Company a revoking instrument or a duly executed proxy bearing
a later date, or by attending the meeting and voting in person. Shares of the
Company's common stock, par value $0.01 (the "Common Stock"), cannot be voted at
the meeting unless the holder is present or represented by proxy.
The cost of soliciting proxies, including the preparation, assembling
and mailing of the Notice of Meeting, Proxy Statement, form of proxy and other
soliciting material, as well as the cost of forwarding such material to the
beneficial owners of the Common Stock, will be borne by the Company. Directors,
officers and employees of the Company may also solicit proxies, but without
compensation, by further mailings, personal conversations or by telephone. The
Company may reimburse brokers and others holding stock in their names or in the
names of nominees for their reasonable out-of-pocket expenses incurred in
sending the proxy materials to principals and beneficial owners.
Each Stockholder is entitled to one vote per share of Common Stock held
as of the Record Date, as defined below. In determining whether a quorum exists
at the Annual Meeting for purposes of all matters to be voted on, all votes
"for" or "against," as well as all abstentions (including votes to withhold
authority to vote in certain cases), with respect to the proposal receiving the
most such votes, will be counted.
The Board of Directors of the Company (the "Board"), in accordance with
the By-Laws of the Company, has fixed the close of business on April 23, 1999,
as the record date (the "Record Date") for determining the Stockholders entitled
to notice of and to vote at the Annual Meeting or any adjournments thereof. At
the close of business on such date, the outstanding number of voting securities
of the Company was 10,400,000 shares of Common Stock, $0.01 par value, each of
which is entitled to one vote.
<PAGE>
ELECTION OF DIRECTORS
BOARD OF DIRECTORS
The current number of directors is set at seven. The Board is
responsible for the overall affairs of the Company. To assist it in carrying out
its duties, the Board has delegated certain authority to an Audit Committee and
a Compensation and Stock Option Committee. The Board has no nominating committee
or other committee which performs a similar function.
MEETINGS OF THE BOARD OF DIRECTORS
There were nine meetings of the Board during the fiscal year ended
January 30, 1999. In addition to the meetings of the Board and its committees at
which all formal actions are taken, additional time on the part of the Company's
directors is required to be expended in the frequent review of Company matters
and documents in numerous communications with the chairman and other executives
during periods between meetings.
The Audit Committee is responsible for meeting with representatives of
the Company's independent certified public accountants and financial management
to review accounting, internal control, auditing and financial reporting matters
and is responsible, among other things, for maintaining liaison with and
exercising supervision over the actions of said accountants in whatever manner
and to whatever extent deemed, at its discretion, necessary, proper and in the
best interest of the Company and its Stockholders. The audit committee consists
of Messrs. Crow, Goldwyn and Handel, three directors who are not and never have
been employees of the Company. The Audit Committee met three times during the
fiscal year ended January 30, 1999.
The Compensation and Stock Option Committee is responsible for
reviewing and approving officer and executive salaries and for reviewing and
recommending for approval by the Board executive and key employee compensation
plans, including incentive compensation and other benefits. The Compensation and
Stock Option Committee consists of Messrs. Branson, Weinstein and Williams, all
of whom are not and never have been employees of the Company. The Compensation
and Stock Option Committee met four times during the fiscal year ended January
30, 1999.
NOMINEES FOR THE BOARD OF DIRECTORS
Seven directors are to be elected at the Annual Meeting to hold office
until the next Annual Meeting of Stockholders or until their successors are
elected and qualified. The nominees for election as directors who are named
below are willing to be elected and to serve. However, in the event that a
nominee at the time of election is unable to serve, or is otherwise unavailable
for election, the Board may elect a
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substitute nominee. Information concerning the business experience of the
nominee appears in the section entitled "Business Experience of Directors and
Executive Officers." The nominees for directors are:
o Walter J. Branson
o Marvin B. Crow
o Francis Goldwyn
o Morton Handel
o Jim D. Waller
o David N. Weinstein
o James A. Williams
VOTE REQUIRED
The vote required for the election of directors is a plurality of the
votes of the shares present in person or represented by proxy at the meeting and
entitled to vote on the election of directors, provided a quorum is present.
Thus, with respect to election of directors, an abstention or broker non-vote
will have no effect.
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<PAGE>
BUSINESS EXPERIENCE OF DIRECTORS
AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are as follows:
Name Age Present Position With the Company
---- --- ---------------------------------
Walter J. Branson 38 Director
Marvin B. Crow 66 Director
Francis Goldwyn 45 Director
Morton Handel 64 Director
Jim D. Waller 58 Chairman of the Board, Chief Executive
Officer, President, Director
David N. Weinstein 39 Director
James A. Williams 56 Director
Richard P. Thrush 51 Senior Vice President-Finance and
Administration, Chief Financial Officer,
Secretary
David H. Jones 55 Executive Vice President-Apparel Sales
George A. Clark 53 Executive Vice President-Apparel Manufacturing
Brian T. Fearn 57 Treasurer
Walter J. Branson has been a director since 1996. Since 1996, Mr.
Branson has been the Senior Vice President of Development of The Big Party
Corporation, a party supplies retailer. From 1993 to 1996, Mr. Branson was
Senior Vice President and Chief Financial Officer of CWT Specialty Stores, Inc.,
a women's apparel retailer.
Marvin B. Crow has been a director since 1996. Mr. Crow has been the
President since 1989 of KBO Enterprises, Inc., which operates TCBY Yogurt stores
and is involved in management consulting. Mr. Crow also serves on the Board of
Directors of Dyersburg Fabrics, Inc.
Francis Goldwyn has been a director since 1996. Mr. Goldwyn for the
past five years has been the President of Chapman Management Inc., a provider of
strategic operating and financial consulting services.
Morton Handel has been a director since 1996. Mr. Handel, for the past
five years, has been the President of S&H Consulting, Ltd., a financial
consulting company. He is also Chairman of the Board of Directors of Marvel
Enterprises, Inc.; a director of CompUSA, Inc.; a director of Concurrent
Computer Corp.; and President and CEO of Ranger Industries, Inc., an inactive
public company.
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<PAGE>
Jim D. Waller has been a director since 1985. Mr. Waller became Chief
Executive Officer of the Company in 1991 and President of the Company in 1987.
David N. Weinstein has been a director since 1996. Mr. Weinstein has
been a Managing Director of the High Yield Capital Markets Group at BancBoston
Robertson Stephens since 1996. From 1993 to 1996, Mr. Weinstein was Managing
Director and Co-Head of the High Yield Capital Markets Group at Chase
Securities, Inc. Mr. Weinstein also serves on the Board of Directors of Homeland
Holding Corporation.
James A. Williams has been a director since 1996. Since December 1997,
Mr. Williams has been a board member of Maidenform Worldwide, Inc., a
manufacturer of women's intimate apparel, and since January 1998, Mr. Williams
has been Maidenform Worldwide Inc.'s Chairman of the Board. In addition, since
1993 he has been President and Chief Executive Officer of Great American
Knitting Mills, Inc., which filed for bankruptcy in July 1995. Mr. Williams also
serves on the Board of Directors of Esprit de Corp. and Cluett American Group,
Inc.
Richard P. Thrush joined the Company in March 1998 as Senior Vice
President-Finance and Administration, Chief Financial Officer and Secretary.
Prior to joining Ithaca, Mr. Thrush was the President of Coralstone Associates,
which provided business advisory services to consumer product companies, since
1997. From 1992 to 1997, Mr. Thrush was the Chairman and Chief Executive Officer
of Block Industries, Inc., a men's sportswear company, which filed for
bankruptcy in July 1996.
David H. Jones joined the Company in January 1997 as Executive Vice
President-Sales. In March 1998, when the Company split its hosiery and apparel
lines of business, Mr. Jones became Executive Vice President-Apparel Sales.
Prior to joining Ithaca, Mr. Jones was with Gerber Childrenswear, Inc., which
manufactures and distributes bed and bath products and apparel for children,
where he served as President and Chief Executive Officer from 1994 to 1996 and
as Vice President-Sales prior thereto.
George A. Clark joined the Company in January 1999 as Executive Vice
President-Apparel Manufacturing. From 1991 to 1998, he was Vice President-
Manufacturing for the Bassett-Walker Division of VF Corporation, which
manufactured sweatshirts and T-shirts. Prior to joining Bassett-Walker, he held
senior level positions in manufacturing operations with several large apparel
companies.
Brian T. Fearn joined the Company in May 1995. Prior to being elected
Treasurer in April 1998, he was the Director-Treasury Operations. Mr. Fearn was
previously employed by Quantum Chemical Corporation, a manufacturer and marketer
of petrochemical and energy products. He held numerous positions with that
company and from 1993 to 1994 served as Treasurer and a director of several
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<PAGE>
subsidiary and joint venture companies. During the same period, he also served
on the board of the Hopewell International insurance syndicate.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth the names and addresses of the only
persons known to the Company as of April 19, 1999 to be the beneficial owners
(individually, each "Owner") of more than five percent of the Company's
outstanding Common Stock and the number of shares of Common Stock so owned, to
the Company's knowledge, as of such date. Such information is based upon a
Schedule 13D or Schedule 13G filed by each Owner with the Securities and
Exchange Commission (the "Commission").
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
OF MORE THAN FIVE PERCENT OF OUTSTANDING SHARES
Name and Address Amount and Nature of Percent of
of Beneficial Owner Beneficial Ownership Class (1)
- ------------------- -------------------- ----------
The Northwestern Mutual Life 2,536,000 shares (2) 24.38%
Insurance Company
720 East Wisconsin Ave.
Milwaukee, WI 53202
DDJ Capital Management LLC 1,820,920 shares (3) 17.51%
141 Linden Street, Suite 4
Wellesley, MA 02181
Merrill Lynch & Co., Inc. 1,252,080 shares (4) 12.04%
Merrill Lynch, Pierce,
Fenner & Smith Incorporated
World Financial Center
250 Vesey St.
New York, NY 10281
Pacholder Associates, Inc. 1,046,200 shares (5) 10.06%
8044 Montgomery Road
Suite 382
Cincinnati, Ohio 45236
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<PAGE>
(1) Percentages are based upon the 10,400,000 shares of Common Stock
outstanding at April 19, 1999. Percentages disclosed in the Schedule 13Ds
and 13Gs submitted by each Owner before March 24, 1998 are based on
10,000,000 shares.
(2) Based on information contained in a Schedule 13G/A filed with the
Commission as of February 9, 1998, Northwestern Mutual Life Insurance
Company claimed sole voting power and sole dispositive power with respect
to 2,280,000 shares and shared voting power and shared dispositive power
with respect to 256,000 shares. Of the 2,536,000 shares of Common Stock
listed in such schedule, 136,000 shares of Common Stock are owned by the
High Yield Bond Portfolio of Northwestern Mutual Series Fund, Inc., a
wholly owned subsidiary of the Northwestern Mutual Life Insurance Company,
and 120,000 shares of Common Stock are held in The Northwestern Mutual
Life Insurance Company Group Annuity Separate Account. Such schedule also
reports that Northwestern Mutual Investment Services, Inc., an indirect
wholly owned subsidiary of The Northwestern Mutual Life Insurance Company,
serves as an investment advisor to the High Yield Bond Portfolio.
(3) Based on information contained in a Schedule 13D/A filed with the
Commission as of May 12, 1998, DDJ Capital Management, LLC claimed sole
voting power and sole dispositive power with respect to all 1,820,920
shares of Common Stock. The Galileo Fund, L.P. and DDJ Galileo, LLC
claimed sole voting and sole dispositive power over 396,000 shares of
Common Stock, Kepler Overseas Corp. claimed sole voting and sole
dispositive power over 4,000 shares of Common Stock and B III Capital
Partners, L.P. and DDJ Capital III, LLC claimed sole voting and sole
dispositive power over 1,420,920 shares of Common Stock. According to such
schedule, of such 1,820,920 shares of Common Stock, The Galileo Fund, L.P.
owns, and DDJ Galileo, LLC and DDJ Capital Management, LLC beneficially
own, as general partner and investment manager, respectively, of The
Galileo Fund, L.P., 396,000 shares of Common Stock, Kepler Overseas Corp.
owns, and DDJ Capital Management, LLC, as investment manager for Kepler
Overseas Corp., beneficially owns, 4,000 shares of Common Stock and B III
Capital Partners, L.P. owns, and DDJ Capital III, LLC and DDJ Capital
Management, LLC beneficially own, as general partner and investment
manager, respectively, of B III Capital Partners, L.P., 1,420,920 shares
of Common Stock. Other than Kepler Overseas Corp., whose principal office
is c/o Goldman Sachs (Cayman), Harbour Centre, George Town, Post Office
Box 896, Grand Cayman Islands, all such entities' principal office is
located at 141 Linden Street, Suite 4, Wellesley, MA 02181.
(4) Based on information contained in a Schedule 13G filed with the Commission
as of May 9, 1997, Merrill Lynch & Co., Inc. and Merrill Lynch, Pierce,
Fenner & Smith Incorporated claimed shared voting power and shared
dispositive power with respect to all 1,252,080 shares.
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<PAGE>
(5) Based on information contained in a Schedule 13D filed with the Commission
as of November 10, 1998 and a Form 4 filed with the Commision as of April
13, 1999, Pacholder Associates, Inc. claimed sole voting power and sole
dispositive power with respect to all 1,046,200 shares.
The following table sets forth, as of April 19, 1999, the beneficial
ownership of the Company's Common Stock by: (a) the Company's executive officers
named in the Summary Compensation Table below, (b) directors and (c) all
executive officers and directors as a group. The following information was
furnished by the respective directors or officers or obtained from the records
of Ithaca.
SECURITY OWNERSHIP OF MANAGEMENT
Shares Which
Number May Be Total Shares
of Shares Acquired Within Beneficially Percent of
Name (1) Owned 60 Days (2) Owned Class (3)
- -------- ------- ------------- ------- -----------
Jim D. Waller 8,000 182,149 190,149 1.80%
Richard P. Thrush 2,000 14,166 16,166 *
R. Dean Riggs 0 37,500 37,500 *
David H. Jones 6,000 46,666 52,666 *
Brian F. Slagle 0 0 0 *
Brian T. Fearn 500 1,666 2,166 *
Walter J. Branson 0 3,000 3,000 *
Marvin C. Crow 0 3,000 3,000 *
Francis Goldwyn 0 3,000 3,000 *
Morton E. Handel 1,000 3,000 4,000 *
David N. Weinstein 2,000 3,000 5,000 *
James A. Williams 0 3,000 3,000 *
------- ------- ------- -------
All directors and 19,500 300,147 319,647 3.0%(4)
officers as a group
(12 persons)
- ---------------
* Less than 1%
(1) The persons named in this table have sole voting power and sole investment
power.
(2) Includes options to purchase shares within 60 days of April 19, 1999.
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(3) Percentages are based upon the number of shares of Ithaca Common Stock
outstanding at April 19, 1999, which was 10,400,000 shares, plus the total
number of shares that may be acquired within 60 days of April 19, 1999 by
such person.
(4) Percentage based upon the number of shares of Ithaca Common Stock
outstanding at April 19, 1999, which was 10,400,000 shares, plus the total
number of shares which may be acquired within 60 days by the group, which
was 300,147.
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<PAGE>
REMUNERATION OF DIRECTORS AND EXECUTIVE OFFICERS
Non-employee directors are paid $20,000 per year and an additional
$1,500 each day the director attends a board or committee meeting. Pursuant to
the Company's 1997 Stock Option Plan for Non-Employee Directors (the "1997
Plan"), which was approved by the Company's Stockholders at the Company's 1998
annual meeting of stockholders, each person who served as a non-employee
director on July 24, 1997 ("Non-Employee Director") was granted an option to
purchase 1,500 shares of Company Common Stock. Thereafter, during the term of
the 1997 Plan, each year, each person who is a Non-Employee Director on the date
immediately after the Company's yearly annual meeting of stockholders will
receive an option to purchase 1,500 shares of Common Stock. Each option granted
under the 1997 Plan will vest and become exercisable on the date immediately
preceding the Company's yearly annual meeting of stockholders. Marvin B. Crow, a
director of the Company, received $6,000 in consulting fees during the fiscal
year ended January 30, 1999.
The following table sets forth all compensation awarded, earned or paid
for services rendered in all capacities to the Company and its subsidiaries
during each of the fiscal years 1999, 1998 and 1997 to the Chief Executive
Officer and the four most highly compensated executive officers of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
---------------------------------------- ------------------
No. of
Securities
Fiscal Other Annual Underlying All Other
Name and Principal Position Year Salary Bonus Compensation Options Compensation
- ------------------------------- ------ ------- ------- ------------ ------------------ ------------
($) ($) ($) (1) (2)
<S> <C> <C> <C> <C> <C> <C>
Jim D. Waller 1999 497,571 0 0 0 3,014
Chairman, President and Chief 1998 498,346 0 0 0 1,296
Executive Officer 1997 490,988 422,005 0 273,224 1,219
Richard P. Thrush(3) 1999 245,246 0 75,096 (4) 85,000 1,302
Sr. Vice President
Finance & Administration,
Chief Financial Officer, and
Secretary
R. Dean Riggs(5) 1999 170,673 0 0 0 898
Executive Vice President- 1998 202,326 0 0 0 1,293
Manufacturing 1997 80,641 46,369 0 75,000 0
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
---------------------------------------- ------------------
No. of
Securities
Fiscal Other Annual Underlying All Other
Name and Principal Position Year Salary Bonus Compensation Options Compensation
- ------------------------------- ------ ------- ------- ------------ ------------------ ------------
($) ($) ($) (1) (2)
<S> <C> <C> <C> <C> <C> <C>
David H. Jones(6) 1999 228,605 0 0 0 1,798
Executive Vice President-Apparel 1998 216,614 0 58,499(7) 0 50
Sales 1997 8,267 4,755 0 70,000 0
Brian F. Slagle(8) 1999 201,313 0 0 0 920
Executive Vice President-
Hosiery
Brian T. Fearn(9) 1999 102,944 0 0 10,000 710
</TABLE>
(1) Excluded perquisites and other personal benefits, securities or property
which, in the aggregate did not exceed the lesser of $50,000 or 10% of the
annual salary and bonus for each named executive officer.
(2) Amounts represent employer contributions to qualified defined contribution
and non-qualified deferred compensation plans.
(3) Mr. Thrush joined the Company in March 1998.
(4) Amount represents moving expenses.
(5) Mr. Riggs left the Company in November 1998.
(6) Mr. Jones joined the Company in January 1997.
(7) Amount represents moving expenses.
(8) Mr. Slagle joined the Company in March 1998 and left the Company in April
1999.
(9) Mr. Fearn became Treasurer of the Company in April 1998.
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EMPLOYMENT AGREEMENTS
The Company is, and during the fiscal year ended January 31, 1999 was,
a party to employment agreements with Jim D. Waller and Richard P. Thrush. Below
are summaries of each of those agreements.
Employment Agreement of Jim D. Waller
On January 1, 1997, the Company entered into an employment agreement
with Jim D. Waller, naming Mr. Waller as Chief Executive Officer (the "Waller
Employment Agreement"). The Waller Employment Agreement expires on December 31,
1999, unless an extension is agreed to in writing by Ithaca and Mr. Waller.
Under the Waller Employment Agreement, Mr. Waller's base salary is $490,000 per
year, subject to increases in the sole discretion of the Board. In addition to
Mr. Waller's base salary, Mr. Waller is eligible to participate in any incentive
compensation arrangement maintained generally by Ithaca for senior executive
officers.
If Mr. Waller's employment is terminated during the term of the Waller
Employment Agreement, he will be entitled to receive his base salary until
termination. If such termination is without cause (defined as gross misconduct
that is materially injurious to the Company; wilful, material, continued and bad
faith failure to perform and discharge his duties and responsibilities; or
conviction of a felony involving personal dishonesty) or if Mr. Waller resigns
for good reason (defined as either a failure to re-elect him as Chief Executive
Officer, an assignment of duties significantly different from Chief Executive
Officer, a material limitation of the powers of Chief Executive Officer, a
reduction in base salary, relocation from Wilkesboro, North Carolina or a
failure to obtain the assumption of the Waller Employment Agreement by a
successor), until the expiration of the Waller Employment Agreement, Mr. Waller
will be entitled to receive 65% of his base salary if his employment terminates
during the fiscal year ending in the third year prior to the expiration date,
80% of his base salary if his employment terminates during the fiscal year
ending in the second year prior to the expiration date and 100% of his base
salary if his employment is terminated thereafter.
In the case of Mr. Waller's death during the term of the Waller
Employment Agreement, his designee, estate, personal or legal representative, as
the case may be, shall be entitled to receive his then current base salary until
the earlier of the first anniversary of his death or the date of expiration of
the Waller Employment Agreement. If Mr. Waller is mentally or physically
incapacitated during the term of the Waller Employment Agreement and is unable
to perform his duties, he will be entitled to receive his base salary until one
year after he is replaced, and thereafter, but in no event after the expiration
of the Waller Employment Agreement, fifty percent of his base salary.
In addition, unless Mr. Waller's employment is terminated for cause by
the Company, or Mr. Waller terminates his employment other than for good reason,
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<PAGE>
Mr. Waller is entitled to continue to participate in all group health, medical
and employee benefits plans and programs to which he was previously entitled for
the remaining term of the Waller Employment Agreement.
The Waller Employment Agreement contains restrictions on disclosure by
Mr. Waller of confidential information and restricts Mr. Waller's right to
compete with the Company anywhere the Company does business during the term of
his employment and for twenty-four months thereafter. As described above, the
Waller Employment Agreement is terminable upon the death of Mr. Waller, by the
Company for cause, upon disability or by Mr. Waller under certain circumstances.
Employment Agreement of Richard P. Thrush
On January 31, 1998, the Company entered into an employment agreement
with Richard P. Thrush, naming Mr. Thrush as Senior Vice President of Finance
and Administration, Secretary and Chief Financial Officer (the "Thrush
Employment Agreement"). The Thrush Employment Agreement expires on February 8,
2000; however, the Thrush Employment Agreement will be automatically extended
for successive one year periods unless the Company provides Mr. Thrush with
written notice of its wish not to extend the Thrush Employment Agreement. Under
the Thrush Employment Agreement, Mr. Thrush's base salary is $250,000 per year,
subject to increases in the sole discretion of the Board. In addition, Mr.
Thrush is eligible to earn an annual bonus award of up to fifty percent of his
base salary. The amount of this bonus, if any, shall be based upon the
achievement of annual performance targets established by Mr. Thrush and the
Company's Chief Executive Officer.
If Mr. Thrush is terminated without cause (defined as misconduct which
is materially injurious to the Company; continued failure to substantially
perform duties; repeated dishonesty in the performance of Mr. Thrush's duties;
or commission of an act or acts constituting any (i) fraud against, or
misappropriation or embezzlement from, the Company or (ii) crime involving moral
turpitude or (iii) breach of the non-competition or confidentiality sections of
the Thrush Employment Agreement), Mr. Thrush will continue to receive his base
salary for one year following his termination (the "Severance Period") and will
be entitled to continue to participate in the Company's medical plans during the
Severance Period. If Mr. Thrush is terminated for cause, Mr. Thrush will be
entitled to receive his base salary through the date of his termination.
In the case of Mr. Thrush's death or disability (defined as mentally or
physically incapacitated and is therefore unable to perform his duties for a
period of six months in any twelve consecutive month period), Mr. Thrush or his
estate will be entitled to receive his base salary through February 8, 2000 and
a pro rata portion of any bonus Mr. Thrush would have been entitled to in the
year of his termination.
The Thrush Employment Agreement contains restrictions on disclosure by
Mr. Thrush of confidential information. The Thrush Employment Agreement also
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restricts Mr. Thrush's right to compete with the Company during the term of the
Thrush Employment Agreement and until the later of (i) one year following the
date Mr. Thrush ceases to be employed by the Company and (ii) the expiration of
the Severance Period. Mr. Thrush is prohibited from directly or indirectly (i)
engaging in any business which is principally engaged in the hosiery or
underwear business or any other business which competes with the Company, (ii)
entering the employ of any person who is principally engaged in the hosiery or
underwear business or any other business which competes with the Company (the
"Competitive Business"), (iii) acquiring a financial interest in, or otherwise
becoming actively involved with, any person who is principally engaged in any
Competitive Business, or (iv) interfering with business relationships between
the Company and any customers or suppliers.
COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
The following report submitted by the Compensation and Stock Option
Committee of the Board of Directors addresses the Company's executive
compensation policies for the fiscal year ended January 30, 1999.
The Compensation and Stock Option Committee is composed of three
members, all outside directors. The Compensation and Stock Option Committee
provides guidance for the Company's executive compensation programs to insure a
direct relationship between executive compensation and corporate performance. In
addition, the Compensation and Stock Option Committee makes final decisions
regarding stock option awards under the Company's plans.
The executive compensation program is focused on attainment of sales
goals and profitability targets. The Company's program consists of three
principal types of compensation including annual base salary, incentive bonuses
and stock option awards. Executive officers are rewarded when the Company
achieves financial goals related to total revenues and net income and when the
executive officer achieves individual performance goals related to the executive
officer's specific area of responsibility.
ANNUAL BASE SALARY
Each year the Compensation and Stock Option Committee reviews the base
salary of each executive officer as recommended by the Chief Executive Officer.
Base salaries for executive officers were established at levels considered
appropriate in light of the duties and scope of responsibilities of each
officer's position and the salaries paid to comparable officers by other peer
group companies.
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INCENTIVE BONUS
Incentive bonuses, paid to executive officers in April following the
fiscal year end, are based on the achievement of the Company's financial goals
and the individual's performance goals. A bonus accrual is made based on
achievement of the Company's goals. If the Company's goals are not made, the
accrual may be reduced or eliminated. However, the Compensation and Stock Option
Committee may choose to award a performance bonus to an executive officer based
on individual performance goals. No executive officer received an incentive
bonus for the fiscal year ended January 30, 1999.
STOCK OPTIONS
Stock options are awarded by the Compensation and Stock Option
Committee to executive officers to provide incentive for the executive officer
to focus on the future financial performance of the Company and as a means to
encourage the officer to remain employed with the Company. Stock option grants
are made when executive officers join the Company and thereafter at the
discretion of the Compensation and Stock Option Committee. Because performance
goals were not met, performance based stock options did not vest for the fiscal
year ended January 30, 1999.
CHIEF EXECUTIVE OFFICER
The Compensation and Stock Option Committee determines the compensation
package for the Chief Executive Officer by comparing his compensation package to
the Chief Executive Officer compensation package of other peer group companies.
The Compensation and Stock Option Committee also takes into consideration years
of service, experience, leadership, dedication and vision.
This report has been provided by the Compensation and Stock Option
Committee:
Walter J. Branson
David N. Weinstein
James A. Williams
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PERFORMANCE GRAPH
The following graph compares the cumulative total return on the
Company's Common Stock from the first trade of record after the initial exchange
of the Company's Senior Subordinated Bonds for the Common Stock on May 19, 1997
to January 30, 1999, with the Russell 2000 Index and a peer group index prepared
by Interstate Johnson Lane (the "Peer Group Index"), consisting of 25 public
textile and apparel companies. All cumulative returns assume the investment of
$100 in each of the Company's Common Stock, the Russell 2000 Index and the Peer
Group Index on May 19, 1997 (the first available stock quote on the Company's
Common Stock).
[GRAPHIC OMITTED]
5/19/97 1/30/98 1/30/99
------- ------- -------
Ithaca Industries, Inc. 100 46.2 20.1
Russell 2000 Index 100 112.9 104.6
Peer Group Index 100 115.2 68.1
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
During the Company's last fiscal year there were no Compensation and
Stock Option interlocks. The Compensation and Stock Option Committee consists of
Messrs. Branson, Weinstein and Williams, all of whom are not and never have been
employees of the Company.
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RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
The directors of the Company have selected the firm of
PricewaterhouseCoopers LLP ("PwC") as the auditors of the Company subject to the
approval of the stockholders. PwC has acted as the Company's auditors since
August 1998. Before the Board selected PwC, it carefully considered the
qualifications of that firm and their reputation for integrity and for
competence in the fields of accounting and auditing.
On August 19, 1998, the Board of Directors of the Company, on the
recommendation of the Company's Audit Committee, approved the engagement of PwC
as its principal independent accountant to audit its financial statements and
approved the dismissal of KPMG Peat Marwick LLP ("KPMG") as its independent
accountant.
KPMG's reports on the Company's financial statements for the past two
years have neither contained an adverse opinion, a disclaimer of opinion nor a
qualification or modification as to uncertainty, audit scope or accounting
principles. During the Company's two most recent fiscal years and subsequent
interim periods preceding KPMG's dismissal, there have been no disagreements
between the Company and KPMG on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure, which
disagreement, if not resolved to KPMG's satisfaction, would have caused KPMG to
make reference to the subject matter of such disagreement in connection with its
report.
At no time during the past two fiscal years and subsequent interim
period preceding such dismissal did KPMG advise the Company: (i) that the
internal controls necessary for the Company to develop reliable financial
statements did not exist; (ii) that information has come to KPMG's attention
that has led it to no longer be able to rely on the representations of the
Company's management or that has made KPMG unwilling to be associated with the
financial statements prepared by the Company's management; (iii)(1) the need to
expand significantly the scope of KPMG's audit, or that information has come to
its attention, that if further investigated, may (a) materially impact the
fairness or reliability of either: a previously issued audit report or the
underlying financial statements; or the financial statements issued or to be
issued covering the fiscal period(s) subsequent to the date of the most recent
financial statements covered by an audit report (including information that may
prevent it from rendering an unqualified audit report on those financial
statements), or (b) cause it to be unwilling to rely on the representations of
the Company's management or be associated with the Company's financial
statements and (2) that due to its dismissal, or for any other reason, it did
not expand the scope of its audit or conduct further investigation; or (iv)(1)
that information has come to KPMG's attention that it has concluded materially
impacts the fairness or reliability of either (a) a previously issued audit
report or the underlying financial statements or (b) the financial statements
issued or to be issued covering the fiscal period(s) subsequent to the date of
the most recent financial statements covered by an audit
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<PAGE>
report (including information that, unless resolved to KPMG's satisfaction,
would prevent it from rendering an unqualified audit report on those financial
statements) and (2) due to its dismissal, or for any other reason, the issue had
not been resolved to KPMG's satisfaction prior to its dismissal.
At no time during the past two fiscal years or any subsequent interim
period prior to the selection of PwC as the Company's independent accountant,
did the Company consult with PwC regarding either the application of accounting
principles to a specified transaction or the type of audit opinion which might
be rendered on the Company's financial statements or any matter of the sort
described above with reference to KPMG.
A representative of PwC is expected to be present at the
Annual Meeting, will have the opportunity to make a statement, if he or she
desires to do so, and will be available to respond to appropriate questions.
VOTE REQUIRED
The vote required for the ratification of PwC as the Company's
independent public accountants is the affirmative vote of a majority of the
votes of the shares present in person or represented by proxy at the meeting and
entitled to vote on the ratification of PwC, provided a quorum is present.
Abstentions will have the same effect as votes against this item; however,
broker non-votes will have no effect.
THE BOARD OF DIRECTORS RECOMMENDS THAT
STOCKHOLDERS VOTE FOR RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP.
SECTION 16(A) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE
There was a failure by each of Richard P. Thrush, George A. Clark,
Brian F. Slagle and Brian T. Fearn to file a Form 3, an Initial Statement of
Beneficial Ownership of Securities, on a timely basis with the Commission as
required under Section 16(a) of the Exchange Act.
There was a failure by each of Jim D. Waller, David H. Jones, B III
Capital Partners, L.P., with certain of its affiliates, DDJ Capital III, LLC,
David J. Breazzano and Judy K. Mencher, to file a Form 4, Changes in Beneficial
Ownership of Securities, each of which reported one transaction, on a timely
basis with the Commission as required under Section 16(a) of the Exchange Act.
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MISCELLANEOUS
STOCKHOLDER PROPOSALS
Pursuant to the By-Laws of the Company, proposals of Stockholders
intended to be presented at the 2000 Annual Meeting must be received by
management of the Company at its executive offices not less than 60 and no more
than 90 days in advance of June 14, 2000.
OTHER BUSINESS
As of the date of this Proxy Statement, the Board is not aware of any
matters that will be presented for action at the Annual Meeting other than those
described above. Should other business be properly brought before the Annual
Meeting, it is intended that the accompanying proxy will be voted thereon in the
discretion of the person named as proxies.
Date: May 10, 1999 By Order of the Board of
Directors,
/s/ Jim D. Waller
-----------------
Jim D. Waller
Chairman of the Board,
Chief Executive Officer,
President and Director
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ITHACA INDUSTRIES, INC.
Highway 268 West, P.O. Box 620
Wilkesboro, North Carolina 28697
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints Richard P. Thrush and Brian T. Fearn,
and each of them, proxy and attorney-in-fact for the undersigned, with full
power of substitution, to vote on behalf of the undersigned at the 1999 Annual
Meeting of Stockholders (the "Annual Meeting") of Ithaca Industries, Inc., a
Delaware corporation (the "Company"), to be held at the offices of Paul, Weiss,
Rifkind, Wharton & Garrison located at 1285 Avenue of the Americas, New York,
New York on Monday, June 14, 1999, at 10:00 a.m., local time, and at any
adjournment or postponement of the Annual Meeting, all of the shares of Common
Stock ($.01 par value) of the Company standing in the name of the undersigned or
which the undersigned may be entitled to vote on the matters described on the
reverse side of this card.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ITHACA
INDUSTRIES, INC. PLEASE COMPLETE, SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
<PAGE>
A [X] PLEASE MARK YOUR VOTE AS IN THIS EXAMPLE.
<TABLE>
<CAPTION>
For the nominees
listed on the right WITHHOLD AUTHORITY
(except as marked to to vote for all nominees
the contrary below) listed to the right
[ ] [ ]
<S> <C>
1. Proposal to elect Nominees: Walter J. Branson
as directors of the Marvin B. Crow
Company the Francis Goldwyn
following persons, Morton Handel
to hold office for a term of one year expiring at the Jim D. Waller
meeting to be held in 2000. David N. Weinstein
James A. Williams
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR
ANY INDIVIDUAL NOMINEES, CROSS OUT THAT NOMINEE'S NAME.)
2. Ratify the appointment of PricewaterhouseCoopers LLP FOR [ ] AGAINST [ ] ABSTAIN [ ]
as the Company's independent public accountants for the
fiscal year 2000.
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
All of the proposals have been proposed by the Company.
The undersigned hereby revokes all proxies heretofore given by the undersigned
to vote at the Annual Meeting and any adjournment or postponements therefor.
Please mark here if you plan to attend the Annual Meeting. [ ]
SIGNATURE(S)_____________________________ DATE _______________ SIGNATURE(S)_____________________________ DATE _______________
NOTE: Please sign exactly as your name appears on this card. Joint owners should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a corporation, please sign full corporate name and
sign authorized officer's name and title. If a partnership, please sign in partnership name and sign authorized person's
name and title.
</TABLE>
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