Item 1. BUSINESS ------- --------
The following discussion contains various "forward-looking statements". All statements, other than statements of historical fact, that address activities, events or developments that the Company expects or anticipates will or may occur in the future are forward-looking statements. Examples are statements that concern future revenues, future costs, future capital expenditures, business strategy, competitive strengths, competitive weaknesses, goals, plans, references to future success or difficulties and other similar information. The words "estimate", "project", "forecast", "anticipate", "expect", "intend", "believe" and similar expressions, and discussions of strategy or intentions, are intended to identify forward-looking statements.
The forward-looking statements in this document are based on the Company's expectations and are necessarily dependent upon assumptions, estimates and data that the Company believes are reasonable and accurate but may be incorrect, incomplete or imprecise. Forward-looking statements are also subject to a number of business risks and uncertainties, any of which could cause actual results to differ materially from those set forth in or implied by the forward-looking statements. Accordingly, any forward-looking statements do not purport to be predictions of future events or circumstances and may not be realized.
The Company does not undertake publicly to update or revise the forward-looking statements even if it becomes clear that any projected results will not be realized.
General
Delta Woodside Industries, Inc. ("Delta Woodside" or the "Company") is a South Carolina corporation with its principal executive offices located at 100 Augusta Street, PO Box 6126, Greenville, South Carolina 29606 (telephone number: 864-255-4122). All references herein to Delta Woodside or the Company refer to Delta Woodside Industries, Inc. and its subsidiaries.
Until June 30, 2000, the Company had two apparel businesses and a textile fabrics business. One of the apparel businesses was conducted by the Company's Delta Apparel Company division, a vertically integrated supplier of knit apparel, particularly T-shirts, sportswear and fleece goods. The other apparel business was conducted by the Company's Duck Head Apparel Company division, which designed, sourced, produced, marketed and distributed boys' and men's value-oriented casual sportswear. The textile fabrics business was conducted by the Company's Delta Mills Marketing Company division, which engages in the manufacture and sale of a broad range of finished apparel fabrics primarily to branded apparel manufacturers and resellers and private label apparel manufacturers.
During fiscal 2000, the Company's board of directors determined that it was in the best interest of the Company and its shareholders to separate the three businesses into three independent companies. In May of 2000, the Company internally reorganized its business operations such that (i) all of the assets and operations of the Delta Apparel Company division were transferred to a newly-formed direct subsidiary of the Company named Delta Apparel, Inc. ("Delta Apparel") or to a subsidiary of Delta Apparel, (ii) all of the assets and operations of the Duck Head Apparel Company division were transferred to another newly-formed direct subsidiary of the Company named Duck Head Apparel Company, Inc. ("Duck Head") or to a subsidiary of Duck Head, and (iii) the Company's subsidiary Delta Mills, Inc., which includes all of the assets and operations of the Delta Mills Marketing Company division, became a direct subsidiary of the Company.
On June 30, 2000, the Company simultaneously spun-off Delta Apparel and Duck Head. All of the outstanding common stock of Delta Apparel and all of the outstanding common stock of Duck Head were distributed to the shareholders of the Company pro rata based on their record ownership on June 19, 2000 of the Company's common stock.
During fiscal 1998 the Company made the decision to exit the knit textile market by closing its Stevcoknit Fabrics Company operating division. Also during fiscal 1998 the Company made the decision to exit the fitness equipment (Nautilus International) business. Delta Apparel, Duck Head Apparel, Stevcoknit Fabrics Company and Nautilus International have been classified and reported as discontinued operations. Most of the liquidation of Stevcoknit Fabrics Company was completed in fiscal 1998. The Nautilus International business was sold in January 1999.
General - Continued
Delta Woodside Industries, Inc. is the successor by merger to Delta Woodside Industries, Inc., a Delaware corporation that was incorporated in 1986. The corporation that is now Delta Woodside Industries, Inc. was incorporated in 1972.
Products, Marketing and Manufacturing
The Company produces woven textile fabrics through its Delta Mills (formally named the Delta Mills Marketing Co.) operating division. As a result of the spin-offs of Delta Apparel and Duckhead and the subsequent classification of the Duck Head Apparel Company division and the Delta Apparel Company division as discontinued operations, Delta Mills is the only business segment of the Company.
Woven textile fabrics produced for sale by the Company are manufactured from cotton, wool or synthetic fibers or from synthetic filament yarns. Cotton and wool are purchased from numerous suppliers. Synthetic fibers and synthetic filament yarns are purchased from a smaller number of competitive suppliers. The Company spins the major portion of the spun yarns used in its weaving operations. In manufacturing these yarns, the cotton and synthetic fibers, either separately or in blends, are carded (fibers straightened and oriented) and then spun into yarn. The Company combs (removing short fibers) some cotton fiber to make high quality yarns. In other fabrics, filament yarns are used. The spun or filament yarn is then woven into fabric on looms. The unfinished fabric at this stage is referred to as greige goods. Finished fabric refers to fabric that has been treated by washing, bleaching, dyeing and applying certain chemical finishes.
The Company sells a broad range of finished apparel fabrics primarily to branded apparel manufacturers and resellers, including Levi Strauss, Haggar Corp., the Wrangler(R) and Lee(R) divisions of V.F. Corporation, The Gap, Kellwood Company and Liz Claiborne, Inc., and private label apparel manufacturers for J.C. Penney Company, Inc., Sears Roebuck & Co., Wal-Mart Stores, Inc., and other retailers. The Company also sells camouflage fabric and other fabrics used in apparel sold to the United States Department of Defense. These fabrics account for more than 10% of net sales for fiscal year 2001. The Company believes that it is a leading producer of cotton pants-weight woven fabric used in the manufacture of casual slacks such as Levi Strauss' Dockers(R) and Haggar Corp.'s Wrinkle-Free(R). Other apparel items manufactured with the Company's woven fabrics include women's chino pants, women's blazers, and career apparel (uniforms). Net sales of woven fabrics were $213 million, $249 million, and $314 million during fiscal 2001, 2000, and 1999 respectively. The Company had three customers, Levi Strauss, Haggar Corp. and V.F. Corporation, that each exceeded 10% of consolidated net sales in fiscal 2001. The Company's sales to these customers were $90 million, $109 million, and $150 million for fiscal 2001, 2000, and 1999 respectively. The loss of any of these accounts could have a material adverse effect on the results of the Company.
The Company has focused its marketing efforts on building close relationships with major apparel companies that have broad distribution channels and that the Company believes have positioned themselves for long term growth. The Company sells and distributes its fabrics through a marketing office based in New York City (which serves the United States, Canadian and Mexican markets), with sales agents also operating from Atlanta, Chicago, Dallas, Los Angeles, San Francisco and Mexico.
During fiscal years 2001, 2000 and 1999, approximately 82%, 83% and 78%, respectively, of the Company's finished woven fabric sales are of fabrics made from cotton or cotton/synthetic blends, while approximately 18%, 17% and 22%, respectively, of such sales are of fabrics made from spun synthetics and other natural fibers, including various blends of rayon, polyester and wool. Woven fabrics are generally produced and shipped pursuant to specific purchase orders, which minimizes the Company's uncommitted inventory levels. The Company's production of cotton and cotton/synthetic blend and spun synthetic finished woven fabrics is largely vertically integrated, with the Company performing most of its own spinning, weaving and finishing. In the production of military fabrics, the Company purchases a portion of its greige goods needs and finishes this fabric to specifications. The Company's woven finished fabrics plants are currently operating at less than full capacity.
Raw Materials
The Company's principal raw material is cotton, although it also spins polyester, wool, linen fiber, acrylic, lyocell, nylon and rayon fibers and weaves textured polyester filament. Polyester is obtained primarily from three major suppliers, all of whom provide competitive prices. For fiscal 2000 polyester prices reached the lowest prices the Company has paid since fiscal year 1993, but prices increased in fiscal 2001. The Company's average price per pound of cotton purchased and consumed (including freight, carrying cost and cost for the relatively high amount of premium cotton the Company uses) was $.659 in fiscal year 2001 as compared to $.661 in fiscal year 2000, and $.770 in fiscal year 1999. As of June 30, 2001, the Company had contracted to purchase 100% and had fixed the price for approximately 83% of its expected cotton requirements for fiscal year 2002. The percentage of the Company's cotton requirements that the Company fixes each year varies depending upon the Company's forecast of future cotton prices. The Company believes that recent cotton prices have enabled it to contract for cotton at prices that will permit it to be competitive with other companies in the United States textile industry when the cotton purchased for future use is put into production. To the extent that cotton prices decrease before the Company uses these future purchases, the Company could be materially and adversely affected, as there can be no assurance that it would be able to pass along its higher costs to its customers. In addition, to the extent that cotton prices increase and the Company has not provided for its requirements with fixed price contracts, the Company may be materially and adversely affected, as there can be no assurance that it would be able to pass along these increased costs to its customers.
Competition
The cyclical nature of the textile and apparel industries, characterized by rapid shifts in fashion, consumer demand and competitive pressures, results in both price and demand volatility. The demand for any particular product varies from time to time based largely upon changes in consumer preferences and general economic conditions affecting the textile and apparel industries, such as consumer expenditures for non-durable goods. The textile and apparel industries are also cyclical because the supply of particular products changes as competitors enter or leave the market.
The Company sells primarily to domestic apparel manufacturers, many of which operate offshore sewing operations. The Company competes with numerous domestic and foreign fabric manufacturers, including companies larger in size and having greater financial resources than the Company. The principal competitive factors in the woven fabrics markets are price, service, delivery time, quality and flexibility, with the relative importance of each factor depending upon the needs of particular customers and the specific product offering. Management believes that the Company maintains its ability to compete effectively by providing its customers with a broad array of high-quality fabrics at competitive prices on a timely basis.
The Company's competitive position varies by product line. There are several major domestic competitors in the finished cotton and cotton/polyester blend woven fabrics business, none of which dominates the market. The Company believes, however, that it has a strong competitive position in the all cotton pants-weight fabrics business. In addition, the Company believes it is one of only two finishers successful in printing camouflage for sale to apparel suppliers of the U.S. Government and the only supplier that is vertically integrated for camouflage production. Additional competitive strengths of the Company include: knowledge of its customers' business needs; its ability to produce special fabrics such as textured blends; state of the art spinning, weaving and fabric finishing equipment at most of its facilities; substantial vertical integration; and its ability to communicate electronically with its customers.
Competition - Continued
Foreign competition is a significant factor in the United States fabric market. The Company believes that its relatively small manual labor component, highly-automated manufacturing processes and domestic manufacturing base allow the Company to compete on a price basis and to respond more quickly than foreign producers to changing fashion trends and to its domestic customers' delivery schedules. In addition, the Company benefits from protections afforded to apparel manufacturers based in certain Latin American and Caribbean countries that ship finished garments into the United States. The North American Free Trade Agreement (often referred to as "NAFTA") entered into force on January 1, 1994. NAFTA has effectively eliminated all tariffs and quotas on goods imported from Mexico if such goods are made from fabric originating in Canada, Mexico, or the United States. The Caribbean Basin Trade Partnership Act (often referred to as "CBTPA") became effective on October 1, 2000. CBTPA has effectively eliminated tariffs and quotas on apparel products imported from participating Caribbean and Central American nations if such products are made from fabric woven in the United States of U.S. yarn. Because NAFTA and CBTPA create an incentive to use fabric manufactured in the United States, they are beneficial to the Company and other domestic producers of apparel fabrics. In contrast, apparel not meeting the criteria of NAFTA or CBTPA is subject to quotas and/or relatively higher tariffs. If NAFTA or CBTPA were repealed or altered in whole or in part, the Company believes that it could be at a serious competitive disadvantage relative to textile manufacturers in other parts of the world seeking to enter the United States market, which would have a material adverse effect on the Company. Moreover, there can be no assurance that the current favorable regulatory environment will continue or that other geographic areas will not be afforded similar regulatory advantages.
The World Trade Organization (which this document refers to as the "WTO"), a multilateral trade organization, was formed in January 1995 and is the successor to the General Agreement on Tariffs and Trade. This multilateral trade organization has set forth mechanisms by which world trade in clothing is being progressively liberalized by phasing-out quotas and reducing duties over a period of time that began in January of 1995. As it implements the WTO mechanisms, the U.S. government is negotiating bilateral trade agreements with developing countries (which are generally exporters of textile and apparel products) that are members of the WTO to get them to reduce their tariffs on imports of textiles and apparel in exchange for reductions by the United States in tariffs on imports of textiles and apparel. The elimination of quotas and the reduction of tariffs under the WTO may result in increased imports of certain textile and apparel products into North America. These factors could make the Company's products less competitive against low cost imports from developing countries.
Employees
The Company has approximately 1,900 employees. The Company's employees are not represented by unions. The Company believes that its relations with its employees are good.
Environmental and Regulatory Matters
Delta Woodside is subject to various federal, state and local environmental laws and regulations concerning, among other things, wastewater discharges, storm water flows, air emissions, ozone depletion and solid waste disposal. Delta Woodside's plants generate very small quantities of hazardous waste which are either recycled or disposed of off-site. Most of its plants are required to possess one or more discharge permits.
The information contained under the subheading "Environmental Matters" under the heading "Management's Discussion and Analysis of Results of Operations and Financial Condition" incorporated into Item 7 of this Form 10-K is incorporated herein by reference.
Generally, the environmental rules applicable to the Company are becoming increasingly stringent. The Company incurs capital and other expenditures in each year that aim at achieving compliance with current and future environmental standards.
Environmental and Regulatory Matters - Continued
The Company does not expect that the amount of such expenditures in the future will have a material adverse effect on its operations or financial condition. There can be no assurance, however, that future changes in federal, state, or local regulations, interpretations of existing regulations or the discovery of currently unknown problems or conditions will not require substantial additional expenditures. Similarly, the extent of Delta Woodside's liability, if any, for past failures to comply with laws, regulations and permits applicable to its operations cannot be determined.
Industry Segment Information
As a result of the spin-offs of Delta Apparel and Duckhead and the subsequent classification of the Duck Head Apparel Company division and the Delta Apparel Company division as discontinued operations, Delta Mills is the only business segment of the Company.
Other Not applicable.
Item 2.
Item 2. PROPERTIES ------- ----------
The following table provides a description of Delta Woodside's principal facilities.
Approximate Square Location Utilization Footage Owned/Leased -------- ----------- ------- ------------
Greenville. SC Administrative Offices 7,400 Leased (1) Beattie Plant, Fountain Inn, SC Spinning and Weaving 390,000 (2) Furman Plant, Fountain Inn, SC Weaving 155,000 (2) Estes Plant, Piedmont, SC Spinning and Weaving 332,000 (2) Delta 3 Plant, Wallace, SC Dyeing and Finishing 555,000 (2) Pamplico/Cypress Plant, Pamplico, SC Spinning and Weaving 419,000 (2) Delta 2 Plant, Wallace, SC Dyeing and Finishing 347,000 (2) Catawba Plant, Maiden, NC Spinning 115,000 Owned
(1) Lease expires in December 2003 with the right to renew for an additional five-year period.
(2) The title to these facilities and substantially all of the equipment located in these facilities is held by three South Carolina counties under a fee-in-lieu-of-taxes arrangement, which has the effect of substantially reducing the Company's property taxes in South Carolina. Although the Company can reacquire such property at a nominal price, this would currently cause a significant increase in the amount of property taxes paid by the Company.
Except as noted above, all of the above facilities are owned by the Company's Delta Mills, Inc. subsidiary, subject in certain cases to various outstanding security interests.
Delta Woodside leases corporate offices in Greenville, South Carolina. The lease on the corporate offices expires December 31, 2003. Sales offices are leased in or near New York and Dallas under leases expiring in December 2004 and September 2002 respectively.
At the date of execution of this Form 10-K, the Company believes that its plants are operating at less than full production capacity.
At the date of execution of this Form 10-K, the Company has announced plans to close and dispose of its Furman facility in Fountain Inn, SC.
The Company believes that its equipment and facilities are generally adequate to allow it to remain competitive with its principal competitors.
The Company's accounts receivable and inventory, and certain other intangible property (including the capital stock of Delta Mills, Inc. and its subsidiary) secure the credit facility of the Company's wholly owned subsidiary, Delta Mills, Inc.
Item 3.
Item 3. LEGAL PROCEEDINGS ------- -----------------
All litigation to which the Company is a party is ordinary routine product liability litigation or contract breach litigation incident to its business that does not depart from the normal kind of such actions. The Company believes that none of these actions, if adversely decided, would have a material adverse effect on its results of operations or financial condition taken as a whole.
Item 4.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS ------- ---------------------------------------------------
No matter was submitted to a vote of security holders during the fourth quarter of the Company's 2001 fiscal year.
PART II
Item 5.
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS ------- ---------------------------------------------------------------------
The material under the heading "Common Stock Market Prices and Dividends" on the inside front cover of the Company's annual shareholders' report for the year ended June 30, 2001 is incorporated herein by reference.
During fiscal 2001, the Company issued no shares of common stock that were not registered under the Securities Act of 1933, as amended, and were not previously reported by the Company in a Form 10-Q.
Item 6.
Item 6. SELECTED FINANCIAL DATA ------- -----------------------
The material under the heading "Selected Financial Data" on page 1 of the Company's annual shareholders' report for the year ended June 30, 2001 is incorporated herein by reference.
Item 7.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS ------- ----------------------------------------------------------------------- OF OPERATIONS -------------
The material under the heading "Management's Discussion and Analysis of Results of Operations and Financial Condition" on pages 3 through 9 of the Company's annual shareholders' report for the year ended June 30, 2001 is incorporated herein by reference.
Item 7A.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK -------- ----------------------------------------------------------
The material under the subheading , "Quantitative and Qualitative Disclosures About Market Risk" under the heading "Management's Discussion and Analysis of Results of Operations and Financial Condition" on page 8 of the Company's annual shareholders' report for the year ended June 30, 2001 is incorporated herein by reference.
Item 8.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ------- -------------------------------------------
The consolidated financial statements included on pages 11 through 27 of the Company's annual shareholders' report for the year ended June 30, 2001 are incorporated herein by reference.
Item 9.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND ------- --------------------------------------------------------------- FINANCIAL DISCLOSURE --------------------
Not applicable.
PART III
Item 10.
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT -------- --------------------------------------------------
The information required by this Item is incorporated herein by reference from the portions of the definitive Proxy Statement to be filed with the Securities and Exchange Commission on or prior to 120 days following the end of the Company's fiscal year under the headings "Election of Directors" ,"Executive Officers" and "Section 16 (a) Beneficial Ownership Reporting Compliance".
Item 11.
Item 11. EXECUTIVE COMPENSATION -------- ----------------------
The information required by this Item is incorporated herein by reference from the portions of the definitive Proxy Statement to be filed with the Securities and Exchange Commission on or prior to 120 days following the end of the Company's fiscal year under the headings "Management Compensation" and "Compensation Committee Interlocks and Insider Participation".
Item 12.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT -------- --------------------------------------------------------------
The information required by this Item is incorporated herein by reference from the portion of the definitive Proxy Statement to be filed with the Securities and Exchange Commission on or prior to 120 days following the end of the Company's fiscal year under the heading "Stock Ownership of Principal Shareholders and Management".
Item 13.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS -------- ----------------------------------------------
The information required by this Item is incorporated herein by reference from the portion of the definitive Proxy Statement to be filed with the Securities and Exchange Commission on or prior to 120 days following the end of the Company's fiscal year under the heading "Related Party Transactions".
PART IV
Item 14.
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K -------- ---------------------------------------------------------------
(a) (1) and (2) Financial Statements and Financial Statement Schedules ------------------------------------------------------
The following consolidated financial statements of Delta Woodside Industries, Inc. and subsidiaries included in the Annual Report of the Registrant to its shareholders for the Year ended June 30, 2001 are incorporated by reference in Item 8:
Consolidated balance sheets-- June 30, 2001 and July 1, 2000.
Consolidated statements of operations--Years ended June 30, 2001, July 1, 2000 and July 3, 1999.
Consolidated statements of shareholders' equity--Years ended June 30, 2001, July 1, 2000 and July 3, 1999.
Consolidated statements of cash flows--Years ended June 30, 2001, July 1, 2000 and July 3, 1999.
Notes to consolidated financial statements.
The following consolidated financial statement schedules of Delta Woodside Industries, Inc. are included in Item 14(d):
Schedule I -- Condensed Financial Information of Registrant
Schedule II -- Valuation and qualifying accounts
All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted. Columns omitted from schedules filed have been omitted because the information is not applicable.
(3) Listing of Exhibits:* -------------------
2.1 Distribution Agreement by and among Delta Woodside Industries, Inc,DH Apparel Company, Inc. (subsequently renamed Duck Head Apparel Company, Inc.) and Delta Apparel, Inc. (excluding schedules and exhibits): Incorporated by reference to Exhibit 2.1 to the Form 10/A of Delta Apparel, Inc. (File No. 1-15583).
3.1 Articles of Incorporation of the Company, as amended through February 5, 1989: Incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-4 of RSI Corporation and Porter Brothers, Inc., File No. 33-30247 (the "Form S-4").
3.1.1 Articles of Amendment to Articles of Incorporation of the Company: Incorporated by reference to Exhibit 3.1.2 to the Form S-4.
3.1.2 Articles of Merger of Harper Brothers, Inc. into RSI Corporation: Incorporated by reference to Exhibit 4.1.1 to the Registration Statement of the Company on Form S-8, File No. 33-33116 (the "1990 Form S-8").
3.1.3 Articles of Merger of Delta Woodside Industries, Inc., a Delaware corporation, into RSI Corporation: Incorporated by reference to Exhibit 4.1.2 to the 1990 Form S-8.
3.1.4 Articles of Merger of Duncan Office Supplies, Inc., into Delta Woodside Industries, Inc.: Incorporated by reference to Exhibit 3.1 to the Company's Form 10-Q for the quarterly period ended December 29, 1990 (the "December 1990 10-Q").
3.1.5 Articles of Amendment to the Articles of Incorporation of Delta Woodside Industries, Inc., filed with the South Carolina Secretary of State on November 15, 1991: Incorporated by reference to Exhibit 4.6 to the Form 10-Q of the Company for the quarterly period ended December 28, 1991.
3.2 Amended and Restated Bylaws of the Company adopted December 9, 1999: Incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K with date of December 9, 1999 and filed with the Securities and Exchange Commission on December 16, 1999.
4.1 See Exhibits 3.1, 3.1.1, 3.1.2, 3.1.3, 3.1.4, 3.1.5 and 3.2.
4.2 Specimen of Certificate for the Company's Common Stock: Incorporated by reference to Exhibit 4.7 to the Company's Registration Statement on Form S-3, File No. 33-42710 (the "Form S-3").
4.3.1 Revolving Credit and Security Agreement, dated as of March 31, 2000, between GMAC Commercial Credit LLC as agent and lender, and Delta Mills, Inc. as borrower: Incorporated by reference to Exhibit 99.1 to the Company's Current Report on Form 8-K dated March 31, 2000 and filed with the Securities and Exchange Commission on April 13, 2000
4.3.1.1 Letter, dated July 28, 2000, amending Revolving Credit and Security Agreement: Incorporated by reference to Exhibit 4.3.1.1 to the Company's Report on Form 10-K dated July 1, 2000 and filed with the Securities and Exchange Commission on September 29, 2000.
4.3.2 Guarantee, dated as of March 31, 2000, of Delta Mills Marketing, Inc. in favor of GMAC Commercial Credit LLC as agent: Incorporated by reference to Exhibit 99.2 to the Company's Current Report on Form 8-K dated March 31, 2000 and filed with the Securities and Exchange Commission on April 13, 2000.
4.3.3 General Security Agreement, dated as of March 31, 2000, between Delta Mills Marketing, Inc. and GMAC Commercial Credit LLC as agent: Incorporated by reference to Exhibit 99.3 to the Company's Current Report on Form 8-K dated March 31, 2000 and filed with the Securities and Exchange Commission on April 13, 2000.
4.3.4 Stock Pledge and Security Agreement, dated as of March 31, 2000, by Alchem Capital Corporation in favor of GMAC Commercial Credit LLC as agent: Incorporated by reference to Exhibit 99.4 to the Company's Current Report on Form 8-K dated March 31, 2000 and filed with the Securities and Exchange Commission on April 13, 2000.
4.3.5 Stock Pledge and Security Agreement, dated as of March 31, 2000, by Delta Mills, Inc. in favor of GMAC Commercial Credit LLC as agent: Incorporated by reference to Exhibit 99.5 to the Company's Current Report on Form 8-K dated March 31, 2000 and filed with the Securities and Exchange Commission on April 13, 2000
4.3.6 Stock Pledge and Security Agreement, dated as of May 11, 2000, by Delta Woodside Industries, Inc. in favor of GMAC Commercial Credit LLC as agent : Incorporated by reference to Exhibit 4.3.6 to the Company's Report on Form 10-K dated July 1, 2000 and filed with the Securities and Exchange Commission on September 29, 2000.
4.4 Indenture, dated as of August 25, 1997 with respect to Delta Mills, Inc.$150,000,000 Series A and Series B 9 5/8% Senior Notes due 2007, with The Bank of New York, as Trustee, together with forms of certain related instruments, agreements and documents: Incorporated by reference to Exhibit 4.2.6 to Form 8-K/A of the Company with date of September 25, 1997.
4.5 Rights Agreement, dated as of December 10, 1999, between the Company and First Union National Bank, which includes, as Exhibit A, the Form of Rights Certificate and, as Exhibit B, the Summary of Rights to Purchase Common Stock: Incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K with date of December 9, 1999 and filed with the Securities and Exchange Commission on December 16, 1999.
4.5.1 Amendment No. 1 to Shareholders Rights Agreement, dated as of March 15, 2000, between the Company and First Union National Bank: Incorporated by reference to the Company's Current Report on Form 8-K dated March 15, 2000 and filed with the Securities and Exchange Commission on April 3, 2000.
4.6 The Company hereby agrees to furnish to the Commission upon request of the Commission a copy of any instrument with respect to long-term debt not being registered in a principal amount less than 10% of the total assets of the Company and its subsidiaries on a consolidated basis.
10.1 Lease, dated September 1, 1998 and between Hammond Square, Ltd. and the Company: Incorporated by reference to exhibit 10.1 to the Company's Form 10-K for the fiscal year ended July 3, 1999.
10.1.1 Letter terminating lease between 233 N. Main, Inc. (formerly named Hammond Square, Ltd.) and the Company: Incorporated by reference to Exhibit 10.1.1 to the Company's Report on Form 10-K dated July 1, 2000 and filed with the Securities and Exchange Commission on September 29, 2000.
10.2** Delta Woodside Deferred Compensation Plan for Key Managers, Amended and Restated Effective June 30, 2000: Incorporated by reference to Exhibit 10.2 to the Company's Report on Form 10-K dated July 1, 2000 and filed with the Securities and Exchange Commission on September 29, 2000.
10.3** Incentive Stock Award Plan effective July 1, 1990: Incorporated by reference to Exhibit 10.1 to the Form 10-Q of the Company for the fiscal quarter ended March 31, 1990
10.3.1** 1995 Amendment to the Incentive Stock Award Plan effective as of November 9, 1995: Incorporated by reference to Exhibit 10.3.1 to the Form 10-Q of the Company for the quarterly period ended December 30, 1995 (the "December 1995 10-Q").
10.3.2** 1997 Amendment to Incentive Stock Award Plan effective as of November 6, 1997: Incorporated by reference to exhibit 99.1 to Registration Statement on Form S-8 of Delta Woodside Industries, Inc. (File No. 333-45771)
10.4.1** Stock Option Plan effective as of July 1, 1990: Incorporated by reference to Exhibit 10.11 to the Company's Form 10-K for the fiscal year ended June 30, 1990.
10.4.2** Amendment No. 1 to Stock Option Plan: Incorporated by reference to Exhibit 10.1 to the December 1990 10-Q.
10.4.3** Amendment to Stock Option Plan: Incorporated by reference to Exhibit 10.9.2 to the Company's Form 10-K for the fiscal year ended June 29, 1991 (the "1991 10-K").
10.4.4** 1995 Amendment to the Stock Option Plan effective as of November 9, 1995: Incorporated by reference to Exhibit 10.4.4 to the December 1995 10-Q.
10.4.5** 1997 Amendment to Stock Option Plan effective as of November 6, 1997: Incorporated by reference to Exhibit 99.1 to Registration Statement on Form S-8 of Delta Woodside Industries, Inc. (File No. 333-45767).
10.4.6** Amendment to Stock Option Plan adopted April 25, 2000: Incorporated by reference to Exhibit 10.4.6 to the Company's Form 10-Q for the fiscal quarter ended April 1, 2000.
10.4.7** Amendments to Stock Option Plan: Incorporated by reference to Exhibit 4.3.1.1 to the Company's Report on Form 10-K dated July 1, 2000 and filed with the Securities and Exchange Commission on September 29, 2000.
10.5 Stock Transfer Restrictions and Right of First Refusal Agreement between the Company and E. Erwin Maddrey, II: Incorporated by reference to Exhibit 10.2 to the December 1990 10-Q.
10.5.1 Termination of Stock Transfer Restrictions and Right of First Refusal Agreement with E. Erwin Maddrey, II, dated June 22, 2000: Incorporated by reference to Exhibit 10.5.1 to the Company's Report on Form 10-K dated July 1, 2000 and filed with the Securities and Exchange Commission on September 29, 2000.
10.6 Stock Transfer Restrictions and Right of First Refusal Agreement between the Company and Bettis C. Rainsford: Incorporated by reference to Exhibit 10.3 to the December 1990 10-Q.
10.6.1 Termination of Stock Transfer Restrictions and Right of First Refusal Agreement with Bettis C. Rainsford, dated June 14, 2000. Incorporated by reference to Exhibit 10.6.1 to the Company's Report on Form 10-K dated July 1, 2000 and filed with the Securities and Exchange Commission on September 29, 2000.
10.7** Form of Amendment of Certain Rights and Benefits Relating to Stock Options and Deferred Compensation by and between the Company and certain pre-spin-off Delta Woodside Industries, Inc, plan participants: Incorporated by reference to Exhibit 10.7 to the Company's Report on Form 10-K dated July 1, 2000 and filed with the Securities and Exchange Commission on September 29, 2000.
10.7.1 List of directors and officers of the Company who signed the document described in Exhibit 10.7: Incorporated by reference to Exhibit 10.7.1 to the Company's Report on Form 10-K dated July 1, 2000 and filed with the Securities and Exchange Commission on September 29, 2000.
10.7.2** Form of Amendment of Stock Options by and between Delta Woodside Industries, Inc. and certain pre-spin-off plan participants: Incorporated by reference to Exhibit 10.7.2 to the Company's Report on Form 10-K dated July 1, 2000 and filed with the Securities and Exchange Commission on September 29, 2000.
10.8.1** Directors Stock Acquisition Plan: Incorporated by reference to Exhibit 10.14 to the 1991 10-K.
10.8.2** Amendment of Director Stock Acquisition Plan, dated April 30, 1992: Incorporated by reference to Exhibit 10.12.2 to the 1992 10-K.
10.9** Delta Woodside Industries, Inc. Long Term Incentive Plan: Incorporated by reference to Exhibit 10.2 to Registration Statement on Form S-4 of Delta Mills, Inc. (File No. 333-37617).
10.9.1** Amendments of Delta Woodside Industries, Inc. Long Term Incentive Plan: Incorporated by reference to Exhibit 10.9.1 to the Company's Report on Form 10-K dated July 1, 2000 and filed with the Securities and Exchange Commission on September 29, 2000.
10.9.2** Form of Agreement Respecting Delta Woodside Industries, Inc. Long Term Incentive Plan, dated in June, 2000: Incorporated by reference to Exhibit 10.9.2 to the Company's Report on Form 10-K dated July 1, 2000 and filed with the Securities and Exchange Commission on September 29, 2000.
10.10** 2000 Stock Option Plan of Delta Woodside Industries, Inc: Incorporated by reference to Exhibit 10.10 to the Company's Report on Form 10-K dated July 1, 2000 and filed with the Securities and Exchange Commission on September 29, 2000.
10.10.1 Amendment of 2000 stock option plan of Delta Woodside Industries, Inc: Incorporated by reference to Item 6(a) of the Company's report on Form 10-Q for the quarter ended September 30, 2000 and filed with the Securities and Exchange Commission on November 14, 2000.
10.11** 2000 Incentive Stock Award Plan of Delta Woodside Industries, Inc: Incorporated by reference to Exhibit 10.11 to the Company's Report on Form 10-K dated July 1, 2000 and filed with the Securities and Exchange Commission on September 29, 2000.
10.14** Letter dated June 28,2000 to William F. Garrett: Incorporated by reference to Exhibit 10.14 to the Company's Report on Form 10-K dated July 1, 2000 and filed with the Securities and Exchange Commission on September 29, 2000.
10.15** Election and Release Form for the Severance Plan for Salaried Employees of Delta Woodside Industries, Inc., and its Adopting Subsidiaries with Bettis C. Rainsford: Incorporated by reference to Exhibit 10.15 to the Company's Report on Form 10-K dated July 1, 2000 and filed with the Securities and Exchange Commission on September 29, 2000.
10.16 Letter terminating lease with Bettis C. Rainsford: Incorporated by reference to Exhibit 10.16 to the Company's Report on Form 10-K dated July 1, 2000 and filed with the Securities and Exchange Commission on September 29, 2000.
10.17.1 Tax Sharing Agreement, dated as of June 30, 2000 by and among Delta Woodside Industries, Inc. Duck Head Apparel Company, Inc. and Delta Apparel, Inc.: Incorporated by reference to Exhibit 2.2 to the Report on Form 8-K of the Company with the date of June 30, 2000.
10.17.2 Amendment to tax sharing agreement dated as of August 6, 2001.
10.18 See Exhibits 4.3.1, 4.3.1.1, 4.3.2, 4.3.3, 4.3.4, 4.3.5, 4.3.6 and 4.4.
13 Annual Report to Shareholders of the Company for the fiscal year ended June 30, 2001.
21 Subsidiaries of the Company.
23.1 Report on Schedules and Independent Auditors' Consent for the years ended June 30, 2001, July 3, 1999 and June 27,1998.
* All reports previously filed by the Company with the Commission pursuant to the Exchange Act, and the rules and regulations promulgated thereunder, exhibits of which are incorporated to this Report by reference thereto, were filed under Commission File Number 1-10095.
** This is a management contract or compensatory plan or arrangement.
The registrant agrees to furnish supplementally to the Securities and Exchange Commission a copy of any omitted schedule or exhibit to any of the above filed exhibits upon request of the Commission.
(b) Reports on Form 8-K --------------------
None
(c) Exhibits --------
The response to this portion of Item 14 is incorporated by reference from Item 14(a)(3) above.
(d) Financial Statement Schedules -----------------------------
The response to this portion of Item 14 is submitted as a separate section of this report.
SIGNATURES ----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
DELTA WOODSIDE INDUSTRIES, INC. (Registrant)
September 25, 2001 By: /s/ William F. Garrett ---------------------------- ------------------------------------------- Date William F. Garrett President, Chief Executive Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
/s/ C.C. Guy 9/25/2001 /s/ William F. Garrett 9/25/2001 --------------------------------- -------------------------------------------- C.C. Guy Date William F. Garrett Date Director President, Chief Executive Officer and Director
/s/ James F. Kane 9/25/2001 /s/ William H. Hardman, Jr. 9/25/2001 --------------------------------- -------------------------------------------- James F. Kane Date William H. Hardman, Jr. Date Director Vice President, Treasurer, and Chief Financial Officer
/s/ Max Lennon 9/25/2001 /s/ Donald C. Walker 9/25/2001 --------------------------------- -------------------------------------------- Max Lennon Date Donald C. Walker Date Director Vice President, Assistant Secretary, and Controller
/s/ E. Erwin Maddrey 9/25/2001 --------------------------------- E. Erwin Maddrey, II Date Director
/s/ Buck A. Mickel 9/25/2001 --------------------------------- Buck A. Mickel Date Director
EXHIBIT INDEX
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
CONDENSED BALANCE SHEETS Delta Woodside Industries, Inc. (In thousands)
See notes to condensed financial statements.
CONDENSED STATEMENTS OF OPERATIONS Delta Woodside Industries, Inc. (in thousands)
See notes to condensed financial statements.
CONDENSED STATEMENTS OF CASH FLOWS Delta Woodside Industries, Inc. (In thousands)
See notes to consolidated financial statements.
NOTES TO CONDENSED FINANCIAL STATEMENTS Delta Woodside Industries, Inc.
The accompanying financial statements of Delta Woodside Industries, Inc. should be read in conjunction with the consolidated financial statements of Delta Woodside Industries and its consolidated subsidiaries.
BASIS OF PRESENTATION: Delta Woodside Industries Inc. is the parent of subsidiaries which are engaged in the manufacture, sale and distribution of textile products. Through June 30, 2000, Delta Woodside was also the parent of subsidiaries which were engaged in the manufacture, sale and distribution of apparel products. On June 30, 2000, Delta Woodside spun-off to its current shareholders, as separate public companies, its Delta Apparel and Duck Head subsidiaries. These spin-off transactions followed a subsidiary restructuring which involved, among other things, contributions of advances to subsidiaries to the capital of the subsidiaries, the transfer of certain tax attributes, and the merger of the Alchem Capital Corporation subsidiary into Delta Woodside. Since these were non-cash transactions, amounts presented in the Condensed Statements of Cash Flows are net of the changes resulting from these transactions. Delta Woodside's investments in its subsidiaries are reported in these condensed financial statements using the equity method of accounting.
LONG TERM DEBT: A subsidiary of Delta Woodside has unsecured senior notes and a bank credit facility outstanding. See Note D to Consolidated Financial Statements and "Management's Discussion and Analysis of Results of Operations and Financial Condition - Liquidity and Sources of Capital" in the Company's Annual Report to Shareholders. The DMI credit facility contains restrictive covenants that require that Delta Mills' Maximum Leverage Ratio not exceed specified ratios. The agreement also restricts additional indebtedness, dividends, and capital expenditures of Delta Mills. The payment of dividends with respect to Delta Mills stock is permitted if there is no event of default and there is at least $1 of undrawn availability under the facility. Loan covenants in the Senior Notes and the DMI credit facility limit the Company's ability to use cash generated by DMI to fund operations in the rest of the Company. In addition to the limitations contained in the DMI credit agreement described above, the Senior Notes also contain restrictive covenants limiting payments to the rest of the Company. At June 30, 2001, the net assets of the Company include net assets of the wholly owned subsidiary DMI of approximately $49 million, which are subject to the restrictions described above.
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS DELTA WOODSIDE INDUSTRIES, INC.
NOTES: 1) The change in the reserve for returns and allowances is charged to income as a reduction of sales.
2) Deductions represent customer returns and allowances during the period.