<PAGE>
SCHEDULE 14A INFORMATION
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
[ ] 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
Texfi Industries, Inc. (Name of Registrant as Specified In Its
Charter)
Dane L. Vincent, Vice President of Finance, 5400 Glenwood Avenue
Suite 215, Raleigh, North Carolina 27612, (919) 783-4736
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] 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:
<PAGE>
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 0-11:
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>
(Texfi Logo appears here) (Crafted with Pride in U.S.A. logo)
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the Annual Meeting of Stockholders of Texfi
Industries, Inc. (the "Company") will be held at The Sheraton Crabtree Hotel,
4501 Creedmoor Drive, Raleigh, North Carolina on March 12, 1996, at 10:30 a.m.,
for the following purposes:
(1) To elect two directors;
(2) To consider ratification of the selection of Ernst & Young LLP
as independent auditors for the fiscal year ending November 1,
1996; and
(3) To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on January 12,
1996, as the record date for the determination of stockholders entitled to
notice of and to vote at the meeting.
Your attention is directed to the accompanying Proxy Statement.
By Order of the Board of Directors
(Signature of Braxton Schell)
Braxton Schell
Secretary
Raleigh, North Carolina
February 15, 1996
<PAGE>
TEXFI INDUSTRIES, INC.
5400 GLENWOOD AVENUE, SUITE 215
RALEIGH, NORTH CAROLINA 27612
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Texfi Industries, Inc. (the "Company") for
the Annual Meeting of Stockholders to be held at The Sheraton Crabtree Hotel,
4501 Creedmoor Drive, Raleigh, North Carolina on March 12, 1996, at 10:30 a.m.
The approximate date on which this Proxy Statement and the enclosed form of
proxy were first sent or given to stockholders was February 15, 1996.
Any stockholder who executes and returns the accompanying proxy may
revoke it at any time before it is voted by filing with the Secretary of the
Company a written revocation or a duly executed proxy bearing a later date, or
by attending and voting in person. All shares represented by valid proxies
received pursuant to the solicitation and prior to 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 specifications.
Only stockholders of record at the close of business as of January 12,
1996 will be entitled to notice of and to vote at the Annual Meeting of
Stockholders. On such date, the Company had 8,650,690 outstanding shares of
Common Stock, par value $1.00 per share; there are no other voting securities.
Each share is entitled to one vote.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth each person or entity who may be deemed
to have beneficial ownership of more than five percent of the Company's
outstanding stock:
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percentage
of Beneficial Owner Beneficial Ownership of Class
<S> <C> <C>
Chadbourne Corporation (1) 1,705,800 (2) 18.4
1430 Broadway, 13th Floor
New York, N. Y. 10018
L. Terrell Sovey, Jr. 794,943 (3) 9.0
367 South Pine Street
Spartanburg, SC 29302
Merrill Lynch Asset 717,000 (4) 8.3
Management, L.P.
800 Scudders Mill Road
Plainsboro, NJ 08536
<PAGE>
Name of and Address Amount and Nature of Percentage
of Beneficial Owner Beneficial Ownership of Class
Dimensional Funds 528,300 (5) 6.1
Advisors Inc.
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
</TABLE>
(1) According to information supplied to the Company by Chadbourne
Corporation ("Chadbourne"), Halton House Ltd. c/o Coutts & Co. (Bahamas)
Ltd., P. O. Box N7788, West Bay Street, Nassau, Bahamas ("Halton Ltd.")
owns all of the outstanding capital stock of Chadbourne. The Halton
Declaration of Trust ("Halton Trust") owns beneficially ninety percent
(90%) of the outstanding capital stock of Halton Ltd. The trustee of
Halton Trust is Coutts & Co. (Bahamas) Ltd. All powers with respect to
investment or voting of securities beneficially owned by Halton Trust
are exercisable by Bahamas Protectors, Ltd., protector under the
constituent instruments of Halton Trust. Bahamas Protectors, Ltd
business address is Charlotte House, Charlotte Street, P.O. Box N-341,
Nassau, Bahamas. William L. Remley, Vice Chairman of the Board of
Directors and Chief Executive Officer of the Company, is the sole
director and executive officer of Chadbourne and the sole director and
executive officer of Halton Ltd. Mentmore Holdings Corporation provides
management services to companies in which Chadbourne is invested. Mr.
Remley and Richard L. Kramer, Chairman of the Board of the Company, are
principals in Mentmore Holdings Corporation.
(2) Ownership as of January 12, 1996, according to information supplied by
Chadbourne, includes 600,000 shares of Common Stock that Chadbourne has
the right to purchase under presently exercisable stock options granted
pursuant to a Stock and Option Purchase Agreement dated May 24, 1994
between Chadbourne and the Company. Chadbourne's beneficial ownership
has been calculated by treating these shares as outstanding shares of
the Company's Common Stock.
(3) Ownership as of December 31, 1995, according to information supplied by
Mr. Sovey, includes (i) 210,164 shares of Common Stock that may be
acquired upon conversion of $1,406,000 principal amount of the 111/4%
Senior Subordinated Debentures due 1997 (the "111/4% Debentures"), which
are convertible at a price of $6.69 per share; (ii) 18,900 shares held
in retirement plans over which Mr. Sovey has investment authority but in
which he otherwise has no beneficial interest (iii) 41,000 shares of
Common Stock over which Mr. Sovey has control as attorney-in-fact
pursuant to a revocable power of attorney and (iv) 24,000 shares held by
his mother's estate for which he is executor. Mr. Sovey has sole voting
and investment power over all of the shares beneficially owned with the
exception of the 41,000 shares described above over which he has shared
voting and investment power. Mr. Sovey's percentage of beneficial
ownership has been calculated by treating as
2
<PAGE>
outstanding the amount of the Company's Common Stock that Mr. Sovey
indicated that he has the right to acquire through conversion of the
111/4% Debentures.
(4) Ownership as of November 30, 1995 according to information supplied to
the Company by Merrill Lynch Fund Asset Management, L.P. ("FAM"). FAM
has indicated that (i) the shares are held by Merrill Lynch Phoenix
Fund, Inc., a registered investment company for which FAM acts as a
registered investment adviser (ii) FAM is an indirectly wholly-owned
subsidiary of Merrill Lynch & Co., Inc. and (iii) the security positions
of FAM reported on Form 13F and Schedule 13G are also reported on behalf
of Merrill Lynch & Co., Inc., which may be deemed to share with FAM
investment discretion and voting authority with respect to such
positions.
(5) Ownership as of September 30, 1995 according to information supplied to
the Company by Dimensional Fund Advisors Inc. ("Dimensional").
Dimensional has indicated that (i) the shares are held in portfolios of
DFA Investment Dimensions Group Inc., a registered open- end investment
company, or in series of The DFA Investment Trust Company, a Delaware
business trust, or the DFA Group Trust and the DFA Participating Group
Trust, investment vehicles for qualified employee benefit plans (ii)
Dimensional serves as investment manager to all of the above entities
(iii) Dimensional may be deemed to exercise sole voting power as to
353,000 shares and sole dispositive power as to 528,300 shares and (iv)
Dimensional disclaims beneficial ownership of all such shares.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of January 12, 1996.
<TABLE>
<CAPTION>
Name of Director, Amount and Nature Percentage
Nominee or Officer Beneficial Owners of Class
-------------- ----------
<S> <C> <C>
Richard L. Kramer -0- (2)(3) *
William L. Remley 31,471 (2)(3)(4) *
John D. Mazzuto -0- (2) *
William D. Goldston, Jr 6,000 (2) *
John S. Rainey 145,644 (2)(5) 1.7
Braxton Schell 19,216 (2)(6) *
Andrew J. Parise, Jr 79,191 (4)(7) *
Michael A. Miller 160,431 (8) 1.8
Gerald A. Rubinfeld 1,400 (4) *
Thomas A. Gilreath 8,667 (4) *
All Directors, Nominees and
Officers as a Group (13 Persons) 487,018 (2)(4)(9) 5.6
*Represents less than 1%
</TABLE>
3
<PAGE>
(1) Unless otherwise indicated, all shares are owned of record by
the persons named and the beneficial ownership consists of sole
voting power and sole investment power.
(2) Does not include shares allocated pursuant to the Directors'
Deferred Stock Compensation Plan as to which participants have
no rights as stockholders. See "Director Compensation".
(3) Mr. Remley and Mr. Kramer are principals in Mentmore Holdings
Corporation, which provides management services to companies in
which Chadbourne Corporation is invested. Chadbourne Corporation
beneficially owns 1,705,800 shares (18.4%). Mr. Remley also is
sole director and executive officer of Chadbourne. See "Security
Ownership of Certain Beneficial Owners".
(4) Includes shares purchased pursuant to the Company's Executive
Stock Purchase Plan subsequent to January 12, 1996. See
"Executive Compensation -- Compensation and Stock Option
Committee Report of Executive Compensation.
(5) Includes 60,403 shares owned by a partnership of which Mr.
Rainey is a general partner (as to which he shares voting and
investment authority with the other general partner), 31,391
shares owned by trusts of which he is sole trustee and 51,335
shares held in a retirement plan of which he is a co-trustee and
principal beneficiary.
(6) Includes 8,148 shares of Common Stock that Mr. Schell has the
right to purchase under presently exercisable stock options
granted to him by the Company, which shares may be deemed to be
beneficially owned by him.
(7) Includes 14,850 shares of Common Stock that Mr. Parise has the
right to purchase under presently exercisable stock options
granted to him by the Company, which shares may be deemed to be
beneficially owned by him.
(8) Includes 37,342 shares of Common Stock that Mr. Miller has the
right to purchase under presently exercisable stock options
granted to him by the Company, and 53,064 shares of Common Stock
that may be acquired upon conversion of 111/4% Debentures, which
shares may be deemed to be beneficially owned by him, and 150
shares held by his wife.
(9) Includes (i) 60,340 shares that officers and directors have the
right to purchase under presently exercisable stock options
granted to them by the Company, which shares may be deemed to be
beneficially owned by said persons and (ii) 53,064 shares of
Common Stock that may be acquired upon conversion of 111/4%
Debentures held by officers and directors as a group. The
percentage of beneficial ownership treats as outstanding the
amount of the Company's Common Stock that directors and officers
have a right to acquire through the presently exercisable stock
options and the 111/4% Debentures. The $355,000 amount of 111/4%
Debentures beneficially owned by directors and officers as a
group constitute 10.0% of these securities as of January 12,
1995.
4
<PAGE>
Under federal securities laws, the Company's directors, its executive
officers, and any persons holding more than 10 percent of the Company's stock
are required to report their ownership of the Company's stock and any changes in
that ownership to the Securities and Exchange Commission. Specific due dates for
these reports have been established and the Company is required to report in
this proxy statement any failure to file by these dates during fiscal year 1995.
All of these filing requirements were satisfied by its directors, officers and
10 percent holders except that W. D. Goldston, Jr., a director of the Company,
inadvertently failed to file on a timely basis two reports related to two
transactions involving the stock of the Company owned by him. In making these
statements, the Company has relied on the written representations of its
directors, officers and 10 percent holders and copies of the reports that they
have filed with the Commission.
ELECTION OF DIRECTORS
The Certificate of Incorporation of the Company currently provides that
the number of directors shall be not less than six nor more than fifteen, as
established from time to time by the Board of Directors of the Company. The
Board of Directors has determined that the number of directors will be seven.
The Certificate of Incorporation also provides for a classified Board of
Directors of three classes, as nearly equal in number as possible, with one
class of Directors to be elected at each annual meeting for a term of three
years.
In accordance with the classification of the Board, the members of Class
III of the Board of Directors (the "Class III Directors") are to be elected at
this Annual Meeting to serve three-year terms until the annual meeting of
stockholders in 1999. Richard L. Kramer and John D. Mazzuto have been nominated
for election by the stockholders as the members of Class III of the Board of
Directors.
The affirmative vote of the holders of a majority of the Common Stock of
the Company present or represented at the meeting is required to elect the
nominated individuals as members of Class III of the Board of Directors.
Abstentions and broker non-votes have the effect of a vote against the nominees.
The persons named in the accompanying proxy intend to vote the shares
represented by the proxy for the election of the two nominees named below,
except as otherwise specified by the proxy. In the event that any nominee should
not be available to serve for any reason, the proxy holders may vote for
substitute nominees designated by the Board of Directors. The Board of Directors
has no reason to believe either of the nominees named below will be unavailable
to serve as a member of the Board of Directors.
The Board of Directors will consider qualified candidates recommended by
stockholders for nomination to the Board. In order for a candidate recommended
by a stockholder to be considered as a nominee at the next annual meeting, the
name of such candidate, together with a written
5
<PAGE>
description of the candidate's qualifications, must be received at the Company's
principal executive offices on or before October 18, 1996.
The following information is furnished with respect to the nominees and
the directors continuing in office:
CLASS III DIRECTORS
- NOMINEES FOR ELECTION AS DIRECTORS FOR THREE-YEAR TERMS EXPIRING
WITH THE ANNUAL MEETING IN 1999
<TABLE>
<CAPTION>
Principal Occupation Director
Name, Age For Past Five Years Since
<S> <C> <C>
Richard L. Kramer Chairman of the Board (1994-Present); Chairman, 1994
46 Mentmore Holdings Corporation (Corporate acquisitions
and management) (1989-Present);Chairman, Sunderland
Industrial Holdings Corp.(plastics manufacturing)(1989-
Present); Chairman, Republic Properties Corporation (real
estate development)(1989 - Present); Chairman, CPT Holdings, Inc.
(steel manufacturing)(1992 - Present); Chairman, Weldotron Corp.
(machinery manufacturing)(1994 - Present).
John D. Mazzuto Private Investor and Consultant (1991-Present);Director, 1994
47 Weldotron Corporation (machinery manufacturing)(1994-Present);
Director, CPT Holdings (steel manufacturing)(1993-Present);
Chairman, Communications Group, Inc. (telecommunications
service bureau and software)(1990-Present).
CLASS I DIRECTORS
- CONTINUING IN OFFICE UNTIL THE ANNUAL MEETING IN 1997
Principal Occupation Director
Name, Age For Past Five Years Since
William L. Remley Chief Executive Officer and Vice Chairman of the Board 1994
45 (1994-Present); President, Mentmore Holdings Corporation
(corporate acquisitions and management)(1989 -
Present); President, CPT Holdings, Inc.(steel
manufacturing)(1992- Present); President,
Sunderland Industrial Holdings Corp. (plastics
manufacturing)(1989 - Present); Director, Republic
Properties Corporation (real estate
development)(1992 - Present); President, Weldotron
Corporation (machinery manufacturing) (1994 -
Present).
6
<PAGE>
Braxton Schell Partner, Schell Bray Aycock Abel & Livingston 1970
71 L.L.P., Attorneys at Law, Greensboro, N. C.(1987-
Present); Secretary of the Company (1963-Present);
Director of Kenan Transport Company (1986-Present);
Director of Flagler System, Inc.(1984-Present)
CLASS II DIRECTORS
- CONTINUING IN OFFICE UNTIL THE ANNUAL MEETING IN 1998
Principal Occupation Director
Name, Age For Past Five Years Since
W. D. Goldston, Jr. Personal Investments (1983-present); Senator, 1990
70 State of North Carolina (1985-1992); Chairman,
North Carolina State Ports Authority (1994 - Present).
Andrew J. Parise, Jr. President and Chief Operating Officer (1994 1995
48 -present); President, Finished Fabrics Division (1992-
present); Executive Vice President, Texfi Blends Division
(1990-1992).
John S. Rainey Chairman of the Board of Easlan Capital, Inc., 1985
54 Greenville, S.C., a real estate development company
(1982-present); Partner, Demo & Rainey, L.L.P.,
Attorneys at Law, Lexington and Spartanburg, S.C.
(1971-present); Chairman of the Board of the South
Carolina Public Service Authority (Santee Cooper),
a publicly-owned electric utility (1990- present);
Director of the Citizens and Southern National Bank
of South Carolina (1977-1992); Director of
NationsBank of South Carolina, N.A. (1993 - 1994);
Director of NationsBank, N.A. (Carolinas),
1994-1995); Director of NationsBank, National
Association (1995 - present).
</TABLE>
Directors Meetings and Committees
During the fiscal year ended November 3, 1995, the Board of Directors
held a total of eight regular and special meetings, including telephone
conference meetings. Each director attended 75% or more of the total number of
meetings of the Board and of the committees of the Board on which he served. The
Board of Directors of the Company has a standing Executive Committee, Audit
Committee, Compensation and Stock Option Committee, and Nominating Committee.
The Audit Committee confers with the Company's independent auditors and
reviews the scope of auditing of the Company's books and accounts and the
reports submitted by the auditors.
7
<PAGE>
The Committee also reviews, with the independent auditors and appropriate
Company personnel, procedures and methods employed in connection with the
Company's management policies relating to internal controls. Reports are made by
the Committee to the Board from time to time. The Audit Committee met six times
during fiscal year 1995. Its members are Messrs. John S.
Rainey (Chairman), Richard L. Kramer and W. D. Goldston, Jr.
The Executive Committee may exercise the authority of the Board of
Directors in the management and business affairs of the corporation in the
interim periods between regular and special meetings of the full Board; except
that the Executive Committee may not amend the corporation's Certificate of
Incorporation; adopt an agreement of merger or consolidation; recommend to
stockholders the sale, lease or exchange of all or substantially all of the
corporation's property or assets; recommend to stockholders a dissolution of the
corporation or a revocation of a dissolution; amend the bylaws of the
corporation; declare a dividend; authorize the issuance of stock; fill vacancies
on the Board of Directors or any of its committees; authorize or approve the
reacquisition of shares of capital stock of the corporation, except according to
a formula or method prescribed by the Board of Directors; approve or propose to
stockholders action that the General Corporation Law of Delaware requires be
approved by stockholders; change the principal corporate office of the
corporation; appoint or remove officers of the corporation; or fix the
compensation of directors. The Executive Committee met six times during fiscal
1995. Its members are Messrs. William L. Remley, Chairman, John D. Mazzuto, and
W. D. Goldston, Jr.
The Nominating Committee makes recommendations to the Board with respect
to candidates for membership on the Board. Its members are Messrs. Remley and
Goldston.
For information about the Compensation and Stock Option Committee see
"Compensation and Stock Option Committee Report on Executive Compensation".
EXECUTIVE COMPENSATION
The following information relates to all compensation awarded to, earned
by or paid pursuant to a plan or otherwise, to (i) the Chief Executive Officer
of the Company (the "CEO"), and (ii) the four most highly compensated executive
officers, other than the CEO, who were serving as executive officers of the
Company at November 3, 1995. The above-referenced persons are referred to herein
as the Named Executive Officers.
The following information does not reflect any compensation earned or
paid to the Named Executive Officers subsequent to November 3, 1995, unless
otherwise indicated. Any such compensation earned and paid to the Named
Executive Officers during fiscal 1996 will be recorded in the proxy statement
for the Company's 1997 Annual Meeting of Shareholders, unless such compensation
is required to be reported previously.
8
<PAGE>
Summary Compensation Table
The following table sets forth for the Named Executive Officers for each
of the last three fiscal years annual compensation amounts as indicated by the
applicable table headings. Annual Compensation, columns (c), (d) and (e),
includes base salary and bonus earned during the year covered and, if
applicable, other annual compensation not properly categorized as salary or
bonus.
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Securities
Other Restricted Underlying All
Annual Stock Options/ LTIP Other
Name and Fiscal Salary Bonus Compensation Award(s) SARs Payouts Compensation
Principal Position Year ($) ($)(1) ($)(2) ($)(3) (#) ($) ($)(4)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William L. Remley 1995 $256,250 $262,500 -- -- 150,000 -- --
Chief Executive Officer 1994 -- -- -- -- -- -- --
1993 -- -- -- -- -- -- --
Andrew J. Parise, Jr 1995 300,000 225,000 -- -- 75,000 -- $ 150
President, Chief 1994 195,000 28,412 -- -- -- -- 150
Operating Officer 1993 195,000 5,588 $ 10,406 $ 8,875 3,800 -- --
Michael A. Miller 1995 165,000 -- -- -- -- -- 150
Division President 1994 165,000 -- -- -- -- -- 150
1993 165,000 -- 5,203 -- -- -- 1,031
Gerald D. Rubinfeld 1995 170,000 72,250 -- -- -- -- --
Division President 1994 140,000 29,750 -- -- -- -- --
1993 140,000 26,500 -- -- -- -- --
Thomas A. Gilreath 1995 95,000 57,000 -- -- -- -- 150
Controller 1994 75,000 11,875 -- -- -- -- 150
1993 75,000 11,875 -- -- -- -- 750
</TABLE>
(1) Annual incentive compensation paid pursuant to the Company's Performance
Incentive Plan or Management Incentive Plan. See "Compensation and Stock
Option Committee Report of Executive Compensation."
(2) Represents the dollar value of the difference between the price paid for
Common Stock of the Company pursuant to the Company's Executive Stock
Purchase Plan and the fair market value of the Common Stock on the date
of purchase.
(3) Represents the dollar value of restricted stock awarded pursuant to the
Company's Restricted Stock Incentive Plan based on the closing stock
price on the date of grant. The Plan was terminated in fiscal 1995
except for outstanding shares. A holder of restricted stock may receive
dividends if dividends are paid on the Common Stock. At November 3, 1995
Mr. Parise was the only executive officer of the Company to hold
unvested restricted stock under the Plan. As of such date, Mr. Parise
had 1,000 shares which are scheduled to vest on March 24, 1996 and were
valued at $2,500 based on the closing stock price of November 3, 1995.
(4) Represents the Company's matching contributions to the Company's 401(k)
plan.
9
<PAGE>
Stock Options
The following table provides details regarding stock options granted to
the Named Executive Officers during fiscal year 1995.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK APPRECIATION FOR
OPTION TERM (3)
(A) (B) (C) (D) (E) (F) (G)
NUMBER OF % OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
---- ------- ----------- --------- ---- ----- ------
<S> <C> <C> <C> <C>
William L. Remley 50,000 } 2.81 } 39,000 86,000
50,000 } 66.7% 3.63 } 5-18-2000 -0- 45,000
50,000 } 4.43 } -0- 5,000
Andrew J. Parise 25,000 } 2.81 } 19,500 43,000
25,000 } 33.3% 3.63 } 5-18-2000 -0- 22,500
25,000 } 4.43 } -0- 2,500
</TABLE>
(1) Non-qualified stock options granted under the Company's 1987 Stock
Option Plan. One- half of the options become exercisable on May 18,
1996 and remainder become exercisable on May 18, 1997.
(2) As required by Securities and Exchange Commission, the amounts shown
assume a 5% and 10% annual rate of appreciation on the price of the
Company's Common Stock from the date of grant throughout a 5 year
option term. There can be no assurance that the rate of appreciation
assumed for purposes of this table will be achieved. The actual value
of the stock options to the Named Executive Officers and all optionees
as a group will depend on the future price of the Company's Common
Stock.
The following table shows the number of shares covered by exercisable
and unexercisable options held by the Named Executive Officers as of fiscal year
end. At the end of fiscal 1995, none of these options were "in-the-money"
options, which are options with a positive spread between the fiscal year-end
market price of the underlying Common Stock and the exercise price of such stock
options. On November 5, 1995, the end of the fiscal year, the closing sales
price of the Common Stock was $2.50 per share. No options were exercised by the
Named Executive Officers during fiscal 1995.
10
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUE TABLE
(a) (b) (c) (d) (e)
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at FY-End (#) at Fiscal Year-End ($)
Shares
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($) Unexercisable Unexercisable
<S> <C> <C> <C> <C>
William Remley 0 0 0/150,000 0/0
Andrew J. Parise 0 0 10,900/79,900 0/0
Michael A. Miller 0 0 34,342/7,909 0/0
0 $0 169,834/79,686 0/0
</TABLE>
Director Compensation
Each director who is not also a full-time employee of the Company
receives an annual director's fee of $15,000. In addition, each such director
receives a meeting fee of $500 for each meeting of the Board of Directors and
for each meeting of any committee thereof that he attends. Directors who are
full time employees receive no additional compensation for serving as directors
or as committee members.
Effective July 14, 1989, the Company adopted the Directors' Deferred
Stock Compensation Plan, which permits directors of the Company who are not
full-time employees to defer receipt of directors' fees and to receive such fees
in the form of Common Stock after termination of their service as directors. On
the first business day of each quarter, directors' fees for the previous quarter
are credited to each participant's account as shares of Common Stock based upon
the market value of the Common Stock on that day. Upon ceasing to be a director,
a distribution of the Common Stock will be made to the participant or his
beneficiary based upon the number of shares credited to his account. Until such
distribution, a participant has no rights as a stockholder with respect to
shares credited to his account. Messrs. W.D. Goldston, Jr., Richard L. Kramer,
John D. Mazzuto, John S. Rainey and Braxton Schell, who are currently the
directors eligible to participate under the plan, each has elected to
participate. Allocations of a total of 119,001 shares have been made under the
plan. Current Board members have received aggregate allocations as follows: Mr.
Goldston, 21,965 shares; Mr. Kramer, 6,818 shares; Mr. Mazzuto 7,305 shares; Mr.
Rainey, 23,131 shares, and Mr. Schell, 20,584 shares.
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Compensation and Stock Option Committee Report of Executive Compensation
The Compensation and Stock Option Committee of the Board of Directors
(the "Committee") is comprised of non-employee directors. The Committee's
purpose is to review and make recommendations to the Board concerning the base
salary of the Chief Executive Officer and to review and approve the
recommendations of the Chief Executive Officer concerning the salaries of other
corporate and divisional executives. The Committee also reviews and recommends
Board action on all forms of non-salary executive compensation and administers
the Company's stock-based incentive plans pursuant to the terms of the
respective plans. It is the responsibility of the Committee continuously to
review the general compensation philosophy of the Company, the elements of the
compensation program, the specifics of each element, the goals and measurements
used in the program and the results of the program compared to the philosophy.
The members of the Committee are John D. Mazzuto, Chairman, and
W.D. Goldston, Jr. The Committee met five times during fiscal year 1995.
Overall Compensation Philosophy.
In May of 1994, three new members of the Board of Directors were
elected and in June the Board appointed a new compensation committee consisting
of Messrs. Mazzuto and Goldston. Effective November 1, 1994, the beginning of
the fiscal year, new officers were elected. The Committee recognized that
management would be responsible for developing and pursuing new strategies that
would improve the operating performance and financial condition of the Company
in fiscal 1995 and future years. As part of the overall deliberations on the
necessary steps to be taken to return the Company to profitability, the
Committee paid particular attention to the difficulties anticipated in growing
the core business of the Company while at the same time disposing of those
assets no longer considered to be desirable. The program adopted and pursued by
the Company required highly talented and motivated individuals to succeed in the
execution of the strategic plan. The Committee began reanalyzing the
compensation policies of the Company with the overall goals of attracting and
retaining the best possible executive talent and motivating each executive to
achieve the goals inherent in the Company's business strategy and results that
are positive to the Company's stockholders.
Base Salaries.
Pending completion of the Committee's analysis, the Company entered
into a temporary employment arrangement with Mr. Remley, its new Chief Executive
Officer ("CEO"). In view of the Company's cash requirements, Mr. Remley agreed
to act as CEO for the first five months of fiscal 1995 for a salary payable at
the rate of $125,000 per year. The Committee subsequently approved a new
employment contract with Mr. Remley, effective as of April 1, 1995, to serve as
CEO for a term of two years at a base salary of $350,000. With the assistance of
a consultant, the base salary was set at approximately the 50th percentile of a
marketplace of over 400 public
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companies using an evaluation system that took into account revenue differences
of these companies.
Following an evaluation of Mr. Parise and in view of his new
responsibilities as President and Chief Operating Officer ("COO") in developing
and implementing new strategies for the Company, the Committee approved a three
year employment agreement with Mr. Parise that provided for a base salary of
$300,000 per year. The base salaries of other executive officers named in the
Summary Compensation Table were established as recommended by the CEO.
Annual Incentive Compensation. The Committee emphasizes
performance-based elements of executive compensation. As in past years, the
Company had in place at the beginning of fiscal 1995 a Management Incentive Plan
that provided executives with the opportunity to receive bonuses based on
return-on-assets goals for the Company and its divisions and business units.
Under this plan, the bonuses of corporate level participants are based 100 % on
the performance of the overall Company and the bonuses of all top-level division
executives are based 25% on overall Company results and 75% on division results.
The bonuses of all other participants are based totally on the performance of
their division.
Following completion of its review of the Company's compensation
policies, the Committee determined that the Management Incentive Plan should be
terminated in favor of an incentive plan that could be more closely linked to
the Company's strategic goals than the return- on-assets formula of the
Management Incentive Plan. In analyzing the ingredients for the Company's future
success, the Committee utilized both external and internal reviews to guide it
in the deliberations over the focus of the incentive plans going forward. It was
clear that cash flow was the key for the Company during this transition period
from the losses of the past several years to an ongoing sustainable profit. The
Committee adopted a Performance Incentive Plan that would be effective for five
corporate level executives for fiscal 1995 and for other key management
employees beginning in fiscal 1996. Under the Performance Incentive Plan,
corporate level executives were eligible to receive cash bonuses for fiscal 1995
of up to 75% of their base salaries based on targeted improvements in the
Company's operating cash flow. The size of the potential bonus was set so as to
provide the executive with the opportunity to earn total annual cash
compensation of approximately 75th percentile of the marketplace used to
establish the CEO base salary if the Company achieved its highest targeted
increase in cash flow.
The existing Management Incentive Plan was left in place for fiscal
1995 for divisional level management employees. The bonuses shown in the Summary
Compensation Table to the executive officers other than the CEO, COO and
Controller were paid in cash under this plan.
Long-Term Incentive Compensation. The dominant long-term goal of the
Company is to increase the market value of its common stock. To this end, the
Committee strives to establish effective ways to provide long-term incentive
compensation for executives and link the interests of key employees with those
of stockholders through stock-based incentives.
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As reported in the Summary Compensation Table above, stock options
were granted to the CEO and COO during fiscal year 1995 for an aggregate of
150,000 and 75,000 shares of Common Stock, respectively. The amount of the
grants was determined in relation to the executive's base salary and annual
incentive compensation and to provide the executives with the opportunity to
increase their equity stake in the Company. Two-thirds of these options were
granted at prices significantly higher than the then current fair market value
of the Common Stock while the remainder were granted at fair market value. The
structure of these options was established to emphasize the importance of
increasing the market value of the stock over the graduated exercise prices. The
options will have value only to the extent the market value of the Common Stock
increases over the exercise prices established.
The Company also maintains an Executive Stock Purchase Plan under which
employees who receive cash bonuses under the Company's annual incentive plans
have the option to invest up to 50% of their annual incentive in the Common
Stock of the Company for a price equal to 85% of the fair market value of the
stock. This plan is designed to encourage employees to use their annual
incentive compensation payments to increase their long-term incentives through
additional equity ownership in the Company. Pursuant to this Plan, from 1995
incentives, Mr. Remley purchased 31,471 shares, Mr. Parise purchased 26,859
shares and the remaining Named Executive Officers purchased 5,977 shares, all
for a purchase price of $2.38 per share.
Compensation and Stock Option Committee
John D. Mazzuto, Chairman
W. D. Goldston, Jr.
Performance Graph.
The following graph compares the percentage change in the cumulative
total shareholder return on the Company's Common Stock with the cumulative
return of the Standard & Poor's 500 Stock Index and with a peer group index
developed by Ernst & Young LLP, assuming reinvestment of dividends.
The Peer Group index has been constructed by calculating the cumulative
total return of the common stock of the following companies: Concord Fabrics
Inc., Delta Woodside Industries Inc., Johnston Industries Inc., Springs
Industries Inc., Texfi Industries, Inc., Thomaston Mills Inc. and United
Merchants and Manufacturers.
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COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN* FOR TEXFI INDUSTRIES, INC.,
S&P 500 AND CUSTOMIZED PEER INDICES
(The Performance Graph appears here. The plot points are listed below.)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Value of Initial $100 Investment Oct-90 Oct-91 Oct-92 Oct-93 Oct-94 Oct-95
Texfi Industries, Inc. $100.00 $114.71 $147.06 $ 97.06 $ 67.65 $ 58.82
S&P 500 Index $100.00 $133.51 $146.83 $168.78 $175.31 $221.67
Customized Peer Group $100.00 $232.31 $224.17 $251.07 $255.70 $246.61
</TABLE>
*Assumes that the value of the investment in Texfi Industries, Inc. common
stock and each index was $100 on October 31, 1990 and that all dividends
were reinvested.
Employment and Other Related Agreements
The Company has entered into employment agreements with two of its
executive officers. Effective April 1, 1995, the Company and Mr. Remley entered
into an employment agreement with a two-year term under which Mr. Remley serves
as Vice Chairman of the Board and Chief Executive Officer and receives a base
salary payable at the annual rate of $350,000. Effective November 1, 1994, the
Company and Mr. Parise entered into an employment agreement with a term of three
years under which Mr. Parise serves as President and Chief Operating Officer and
receives a base salary of $300,000 per year. Each of the employment agreements
provides that the officer is entitled to participate in the Company's annual
incentive bonus plan and other comparable benefit programs provided to senior
executive officers. Each agreement may be terminated by the Company with or
without cause or upon the employee's death or disability or voluntarily by the
employee upon 60 days' notice. If the employee is terminated without cause, then
he is entitled to (i) his base salary for the greater of a six month period from
termination or the remaining term of his employment agreement and (ii) any
amounts due under the Company's annual incentive plans. Mr. Parise also is
entitled to such payments in the event he voluntarily terminates his employment
due to a substantial change in duties. In addition, following any
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termination of employment which entitles Mr. Remley or Mr. Parise to the
foregoing payments, all outstanding and unexpired stock options that are held by
the terminated officer that are not then exercisable become exercisable for a
period of sixty days.
CERTAIN TRANSACTIONS
The employment agreement of L. Terrell Sovey, Jr., the Company's former
President and Chief Executive Officer, expired on October 31, 1994. Under this
agreement, Mr. Sovey (or his beneficiary) was entitled to receive from the
Company for a period of 10 years $100,000 per year upon the earlier of death or
retirement at age 65. The Company purchased a life insurance policy insuring the
life of Mr. Sovey which provided partial funding for these retirement benefits.
Following the expiration of Mr. Sovey's employment, the Company and Mr. Sovey
agreed to an alternative arrangement in which the Company assigned the life
insurance policy to Mr. Sovey, which had a cash value of $389,546, and agreed to
pay to Mr. Sovey the sum of $8,333 per month from April 1, 1995 until March 1,
1999 and a final payment of $7,955 on April 1, 1999. As part of this
arrangement, the Board of Directors approved Mr. Sovey's early retirement in
order to remove the restrictions on 11,762 shares of restricted stock previously
granted to Mr. Sovey under the 1990 Restricted Incentive Stock Plan. Mr. Sovey
resigned as a director of the Company effective February 10, 1995.
On March 31, 1995, the Company sold the assets of its Marion Fabrics
greige goods facility located in Marion, North Carolina to Decotech, L.C., a
privately held South Carolina limited liability company ("Decotech") of which L.
Terrell Sovey, Jr. directly and indirectly owns approximately 23%. The aggregate
purchase price for the facility was approximately $10.7 million and consisted of
approximately $8.7 million in cash and a subordinated promissory note in the
principal amount of $2,000,000 (the "Note"). Decotech did not make payment on
the Note, which was due and payable in three equal monthly installments
beginning on July 29, 1995, and the Company did not pay certain post-closing
adjustments. The Company agreed to reduce the Note by $330,000 by setoff of an
agreed amount owed to Decotech resulting from these post-closing adjustments
and, as of September 8, 1995, sold the Note for $400,000 to a general
partnership of which Mr. Sovey indirectly owns approximately 30%. The terms of
each of these transactions were arrived at through private negotiation.
Mr. Schell is a partner of Schell Bray Aycock Abel & Livingston L.L.P.,
a law firm that serves as General Counsel to the Company. The Company paid
approximately $250,000 to Schell Bray Aycock Abel & Livingston L.L.P. for legal
services rendered during fiscal 1995. Mr. Rainey provides legal and investor
relation services to the Company. The Company paid approximately $38,000 for
such professional services rendered during fiscal 1995.
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INDEPENDENT AUDITORS
The accounting firm of Ernst & Young LLP has been selected by the Board
of Directors as independent auditors for the Company for the fiscal year ending
November 1, 1996. This selection is being presented to the stockholders for
their ratification at the Annual Meeting. The Board of Directors recommends a
vote FOR ratification of the selection of Ernst & Young LLP as independent
auditors.
A representative of Ernst & Young LLP is expected to be present at the
Annual Meeting of Stockholders, will be given the opportunity to make a
statement if he desires to do so and will be available to respond to appropriate
questions.
PROPOSALS OF SECURITY HOLDERS
A proposal of a security holder of the Company intended to be presented
at the next Annual Meeting of Stockholders must be received at the Company's
principal executive offices on or before October 18, 1996 in order to be
considered for inclusion in the Company's Proxy Statement and form of proxy
relating to that meeting.
OTHER MATTERS
Management is not aware of any matters to be brought before the Annual
Meeting other than those matters described in this Proxy Statement. However, if
other matters do come before the meeting, it is the intention of the persons
named in the accompanying proxy to vote said proxy in accordance with their
judgment on such matters.
The cost of this solicitation will be borne by the Company. In addition
to the use of the mails, proxies may be solicited personally, or by telephone or
telegram, by directors, officers and employees of the Company or by D. F. King &
Co., Inc. of New York, New York, which will assist in the solicitation of
proxies. D. F. King & Co., Inc. is being paid a fee of $6,000 for these
services.
By Order of the Board of Directors
February 15, 1996.
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***************************************************************************
APPENDIX
PROXY
TEXFI INDUSTRIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints William L. Remley and W. D. Goldston, Jr.,
or either of them, with power of substitution, attorneys and proxies to
represent the undersigned at the Annual Meeting of Stockholders of TEXFI
INDUSTRIES, INC. to be held on March 12, 1996, and at any adjournment or
adjournments thereof, with all power which the undersigned would possess if
personally present, and to vote all shares of stock which the undersigned may be
entitled to vote at said meeting, as follows:
<TABLE>
<S> <C> <C>
(1) ELECTION OF FOR all nominees listed below (except as marked to the WITHHOLD AUTHORITY to vote
DIRECTORS contrary below) [ ] for all nominees listed below [ ]
(CLASS III)
Richard L. Kramer, John D. Mazzuto
</TABLE>
(INSTRUCTION: To withhold authority to vote for any individual nominee write
that nominee's name on the space provided below.)
PLEASE SIGN ON REVERSE SIDE AND RETURN IN THE ENCLOSED POSTAGE-PAID ENVELOPE
<PAGE>
(2) PROPOSAL TO RATIFY SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(3) With discretionary authority upon such other matters as may come before the
meeting.
Your Proxy May be Rescinded at Any Time Before it is Exercised and Will be
Returned to You on Request.
IF NO SPECIFICATION IS MADE ABOVE, SHARES WILL BE VOTED FOR PROPOSALS 1 AND
2 ABOVE.
PLEASE SIGN HERE AND RETURN PROMPTLY
Dated , 1996
Please sign exactly as your name
appears at left. If the stock is
registered in the names of two or more
persons, each should sign. Executors,
administrators, trustees, guardians,
attorneys and corporate officers should
show their full titles.
