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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended July 1, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ____________
Commission File Number 1-10095
DELTA WOODSIDE INDUSTRIES, Inc.
(Exact name of registrant as specified in its charter)
South Carolina 57-0535180
(State of Incorporation) (I.R.S. Employer Identification No.)
233 N. Main Street, Hammond Square, Suite 200
Greenville, South Carolina 29601
(Address of principal executive offices) (Zip code)
803/232-8301
Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, Par Value $.01 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
None
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No _____
Exhibit Index at Page No._____
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (229.405 of this chapter)
is not contained herein, and will not be contained, to be best of
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-
K or any amendment to this Form 10-K [ ].
The aggregate market value of the voting stock held by non-
affiliates of the registrant as of September 5, 1995 was :
Common Stock, $.01 par value - $198,327,805
The number of shares outstanding of each of the registrant's
classes of Common Stock, as of
September 5, 1995 was:
Common Stock, par value $.01 24,409,576 shares
DOCUMENTS INCORPORATED BY REFERENCE: Portions of the Company's
Annual Report to shareholders for the fiscal year ended July 1,
1995 are incorporated by reference into Parts I and II.
Portions of the Company's definitive Proxy Statement to be filed
pursuant to Regulation 14A for the annual shareholders' meeting
to be held on November 9, 1995 are incorporated by reference into
Part III.
Part I
Item 1. BUSINESS
General
Delta Woodside Industries, Inc. ("Delta Woodside" or the
"Company") is a South Carolina corporation with its principal
executive offices located at 233 North Main Street, Hammond
Square, Suite 200, Greenville, South Carolina 29601 (telephone
number: 803-232-8301). All references herein to Delta
Woodside or the Company refer to Delta Woodside Industries,
Inc. and its subsidiaries.
The Company manufactures and markets woven and knitted
fabrics and apparel. The Company's textile segment produces a
range of cotton, synthetic and blended fabrics, woven and
knit, which are sold for the ultimate production of apparel,
home furnishings and other products. The Company's apparel
segment produces woven and knit apparel, including the "Duck
Head" (Reg. trademark) line of casualwear marketed primarily
in the Southeastern United States to department stores and
specialty apparel retailers. The Company also operates 33
retail apparel outlet stores that sell primarily closeout and
irregular "Duck Head" products and other woven and knit
casualwear produced by the "Duck Head" division and other
manufacturers. The Company also manufactures and distributes
physical fitness equipment under the "Nautilus" (Reg.
trademark) name. In June 1994, the Company sold its office
products business. The Company has operations in 11 states,
Costa Rica and Honduras, and employs approximately 7,500
employees.
Delta Woodside Industries, Inc. is the successor by merger
to Delta Woodside Industries, Inc., a Delaware corporation that
was incorporated in 1986 and whose subsidiaries' businesses
were acquired beginning in 1984. The corporation that is now
Delta Woodside Industries, Inc. was incorporated in 1972.
Products, Marketing and Manufacturing
The Company conducts its textile fabrics operations
through the Delta Mills Marketing (woven fabrics) and
Stevcoknit (knitted fabrics) divisions. It conducts its woven
and its knit apparel operations through the "Duck Head" and
"Delta Apparel" (Reg. trademark) divisions. Certain retail
sales of "Duck Head" and other manufacturers' products are
made through the "Duck Head" Retail Outlet Stores division.
The Company also manufactures and sells fitness equipment
through the "Nautilus" (Reg. trademark) division, and licenses
the use of both the "Duck Head" and "Nautilus" trademarks
through International Apparel Marketing Corporation. Each
division has its own management and employees and operates
independently of the other divisions. Inter-segment sales in
fiscal 1995, fiscal 1994 and 1993 accounted for no more than
approximately 4%, 3% and 3%, respectively, of the total sales
of any segment.
Fabrics produced by Delta Woodside are either woven or
knitted and are manufactured from cotton, wool or synthetic
fibers or from synthetic filament yarns. Cotton and wool are
purchased from numerous suppliers. Synthetic fiber and
synthetic filament yarns are purchased from a smaller number of
competitive suppliers.
The Company sells its woven fabrics primarily to numerous
apparel manufacturers and apparel resellers, including Levi,
Haggar and Farah and private label apparel manufacturers for
J. C. Penney, Sears and other retailers. The Company's
knitted fabrics are sold for production of apparel for
ultimate sales to catalogue companies, as well as to other
branded and private label manufacturers. Apparel products are
sold primarily to department and specialty retailers under the
Company's "Duck Head" label, to private label apparel
resellers and to screen printers.
Textile Segment
The textile segment manufactures and markets woven and
knitted fabrics to manufacturers of apparel and home
furnishings and other products. The Company's net sales of
woven fabrics were $290.8 million, $288.6 million and $325.1
million and the Company's net sales of knit fabrics were
$102.9 million, $102.8 million and $119.9 million, during
fiscal 1995, 1994 and 1993, respectively.
Item 1 (Continued)
Delta Mills Marketing Company (Woven Fabrics). Delta
Mills Marketing Company produces finished and unfinished woven
fabrics used in the production of apparel, home furnishings
and other products. "Finished" fabric refers to fabric which
has been treated by washing, bleaching, dyeing and applying
certain chemical finishes. Finished apparel fabric is ready
to be cut and sewn into garments and is typically sold to
manufacturers of apparel.
Unfinished fabric, commonly referred to as "greige"
(pronounced "gray") goods, is typically sold to converters who
subsequently finish the fabric and sell it to manufacturers of
apparel, home furnishings and other products.
The Company's finished woven fabrics operation, through 7
of its plants, manufactures medium-weight woven fabrics sold in
a finished state for use in the manufacture of men's and
women's apparel and professional uniforms.
Finished woven fabrics produced by the division are
primarily sold directly to major apparel manufacturers. The
division's marketing efforts focus on four primary apparel
manufacturing groups: women's apparel, including fashion
apparel; men's apparel; career apparel and uniforms; and
military and other government uniforms and apparel. The
division also engages in commission finishing, whereby it
finishes fabric for converters. The finished woven fabrics
operation sells and distributes its fabrics through Delta Mills
Sales Company, a marketing office based in New York City, with
sales personnel also operating from Atlanta, Dallas, Los
Angeles and San Francisco.
Approximately 69% of the division's finished woven
fabrics are made from cotton or cotton/synthetic blends, while
approximately 31% are made from spun synthetics, including
varying blends of rayon, polyester and wool. Finished woven
fabrics are principally woven according to projected sales
based on strong indications from major customers, but finished
according to specific purchase orders. The division's
production of cotton and cotton/synthetic blend finished woven
fabrics is largely integrated, with the division performing
most of its own spinning and substantially all of its own
weaving and finishing. The production of spun synthetic
finished woven fabrics is fully integrated, with various
plants in the division involved in spinning, weaving and
finishing. With its printing capability, the Company believes
that the division is the only substantially vertically
integrated producer of battle dress camouflage military
fabrics in the United States. The Company expects that its
finished woven all cotton facilities will run at near full
capacity during fiscal 1996. However, woven synthetic and
greige goods facilities are not expected to run full schedules
during fiscal 1996.
The division also operates two plants included in its
Woodside operation which produce a variety of unfinished light-
weight woven fabrics sold for ultimate use in manufacturing
apparel such as blouses, dresses and pajamas, and in
manufacturing home furnishings, including draperies, curtains
and comforters, and in medical and industrial products.
Fabrics sold by the Woodside operation include 100% cotton,
polyester/cotton blends, 100% polyester, 100% rayon,
polyester/rayon blends, textured polyester and other "semi-
fancy" fabrics of more complicated construction. The Woodside
operation currently is operating at less than full production
capacity.
Stevcoknit (Knitted Fabrics). Stevcoknit, through 4
plants, spins yarn, knits and finishes a wide range of
circular knit fabrics for use in the manufacture of knit
apparel, and also provides yarn to the Company's apparel
segment.
Stevcoknit products are marketed to numerous apparel
manufacturers through marketing staffs employed by Stevcoknit
Marketing Company in New York City and Los Angeles, with sales
personnel also located in North Carolina, Georgia and Dallas.
To further promote sales of Stevcoknit's fabrics to apparel
manufacturers, the marketing staff of Stevcoknit Marketing
Company also contacts major retailers of products manufactured
from the division's knitted fabrics. Discussions with these
retailers provide information relating to fabric quality and
trends in style and color. In addition to its sales to apparel
manufacturers, the division also sells prepared for print
fabrics to converters through a broker. Certain knitting
operations are scheduled according to projected sales, but most
knitting and finishing of the fabrics are performed to specific
customer orders.
Item 1 (Continued)
The operations within the knitted fabrics operation are
largely integrated. Various plants are equipped to perform
all stages of the manufacturing process, from carding the raw
fiber stock to dyeing and finishing the final fabric product.
The fabrics produced by this segment are manufactured
primarily by using 100% cotton and polyester/cotton blends.
The Stevcoknit operation currently is running at less than
full capacity.
Apparel Segment
The apparel segment produces and markets both woven
apparel and knit apparel. The segment's products include the
"Duck Head" line of men's and boys' casualwear, which includes
pants, shorts and shirts. The knit apparel business includes
T-shirts and sweatshirts which are sold under the labels of
"Duck Head", "Delta Apparel", and various private labels.
"Duck Head" Division. The division produces a line of
men's and boys' casual apparel, sold under the "Duck Head"
label, including pants, shorts, shirts and accessories. This
division also sells a relatively small amount of men's and
boys' woven workwear, sportswear and casualwear under the
private labels of its customers. In fiscal 1994 the division
began licensing various other categories of apparel and
accessories.
"Duck Head" labeled products are primarily marketed by
sales staff employed by Duck Head Marketing Company to
regional and national retailers with stores in the South and
South Atlantic regions. The "Duck Head" trademark has been
associated with apparel for many decades, but has
traditionally been marketed primarily to a Southeastern
customer base. The Company acquired the brand in February
1989. The division sells its "Duck Head" products primarily
to regional and national department store chains as well as
specialty apparel retailers and through Company-operated
outlet stores. The division currently displays "Duck Head"
products in "Duck Head" specialty departments within some
department stores. The "specialty department" display format
permits the presentation of an entire line of clothing in a
dedicated section of a store's clothing department, and has
been increasingly used in department stores by the major
national clothing brands. Gross sales of "Duck Head" labeled
products were approximately $80.5 million, $95.4 million and
$137.3 million during fiscal 1995, 1994 and 1993,
respectively.
"Duck Head" Apparel operates a total of 8 facilities
located in Georgia and Costa Rica. The division purchases the
fabrics used in its products from a number of producers. "Duck
Head" is now acquiring less than one-half of its finished
products from other companies throughout the world. This
outside production takes the form of sewing fabric parts cut at
"Duck Head" facilities, cutting and sewing with fabric and
patterns supplied by "Duck Head", or providing finished
garments made to "Duck Head" specifications. The division
maintains a staff of quality specialists who consistently
monitor work in process at outside companies. The Company
believes that there is ample capacity among outside contractors
worldwide to meet its future production requirements. The
majority of the products is warehoused in the division's leased
facilities.
"Duck Head" labeled apparel items are generally required
to be inventoried to permit quick shipment and to level
production schedules, and customer private label apparel items
are generally made only to order. The division's products are
manufactured primarily from 100% cotton. The division's
marketing office is based in Winder, Georgia with regional
sales managers and sales personnel located throughout the
country.
"Delta Apparel". "Delta Apparel", which is headquartered
in Duluth, Georgia, operates a total of 9 facilities and
produces knitted T-shirts and sweatshirts. The division
markets its products primarily to companies that screen print
shirts for resale, and to department stores and other clothing
stores for resale under the customer's private labels or under
the Company's "Delta Apparel" label. Net sales in this
division were $101.5 million, $84.1 million and $81.8 million
during fiscal 1995, 1994 and 1993, respectively.
The division's knit apparel marketing is performed by
sales personnel of Delta Apparel Marketing Company with sales
personnel located throughout the country. Sales personnel
call directly on the retail trade, contacting department
stores and the mass markets such as discount houses. This
operation utilizes independent sales representatives to sell
to screen printing companies. Some knit apparel items are
inventoried to permit quick shipment and to level production
Item 1 (Continued)
schedules. Special fashion knit apparel items and customer
private label knit apparel styles generally are made only to
order.
Of the yarn used by the Company's knit apparel operation,
approximately one-half is produced by Stevcoknit with the
remainder purchased from outside vendors; the knit apparel
operation is otherwise largely vertically integrated. The
business manufactures its own knitted fabrics, utilizing
knitting, dyeing and finishing processes, and cuts and sews
its finished knitted fabrics into apparel. The fabrics used
by the division are either polyester/cotton blends or 100%
cotton.
Retail Apparel. The Company has 33 outlet stores in 11
states that sell principally closeout and irregular "Duck
Head" products. These stores also sell a small amount of
apparel items manufactured by other companies.
Fitness Equipment
"Nautilus" Fitness Equipment. Nautilus produces weight
resistance and aerobic equipment for the institutional,
medical and home markets. The current product line in the
weight resistance category is called the "Next Generation",
which consists of 45 individual machines that exercise the
various muscle groups. Nautilus also produces an exclusive
line of 30 weight resistance machines for women called
"Nautilus for Women". Nautilus also manufactures Power Plus
and Free Weight equipment which consists of 45 machines.
As a supplement to the weight resistance line, Nautilus
produces seven versions of a multi-station machine that
serve those markets that have space and budget limitations.
Nautilus currently produces seven aerobic machines for the
institutional market: three recumbent bikes, two stairclimbers,
a treadmill and a skate machine.
Nautilus historically has been focused on the
institutional market. Beginning in fiscal 1994, Nautilus
launched a concerted effort to penetrate the home market.
Nautilus historically targets health clubs, the public sector,
YMCAs and similar institutions and the medical, amenity and
corporate markets. Based on successful results from a test of
the consumer market, national expansion will begin in fiscal
1996.
The manufacturing operations at Nautilus are vertically
integrated, including metal fabrication, upholstery, and a
vacuum formed and injection molded plastics process. Raw
material is inventoried, but finished machines are generally
manufactured against customer orders. All manufacturing is
done in Independence, Virginia. The Company believes that the
manufacturing operation is currently operating at
approximately 75% of present capacity, including certain new
building space.
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 nondurables. The textile and apparel
industries are also cyclical because the supply of particular
products changes as competitors enter or leave the market.
See "Management's Discussion and Analysis of Results of
Operations and Financial Condition."
The Company sells primarily to domestic customers and
competes with numerous competitors, both domestic and foreign.
The principal competitive factors are price, service, delivery
time, quality and flexibility, with the significance of each
factor depending upon the product involved. The Company's
competitive position varies among the different goods
produced.
There are several major domestic competitors in the
finished cotton and cotton/polyester blend woven fabrics area,
none of which dominates the market. The Company believes that
it has a strong competitive position with respect to the
manufacture of spun synthetic slack-weight and skirt-weight
woven fabrics, as well as wrinkle-resistant all cotton
sportswear fabrics.
The woven fabrics' Woodside operation is a major supplier
of both polyester/rayon print cloth used in home furnishings
and women's blouses and acetate fabric used in apparel linings
and surgical tapes. There are several major domestic
competitors in the Company's acetate linings business and
Item 1 (Continued)
its unfinished cotton and cotton/polyester blend print cloth
business, but no company dominates any of these businesses.
The knitted fabrics business in which Stevcoknit competes
is highly competitive with several large competitors. However,
the significant vertical integration of Stevcoknit's
manufacturing operations and its experience in performing the
more complicated manufacturing techniques required in the
production of 100% cotton fabrics provide the Company with
certain competitive advantages. The industry, nevertheless,
remains highly competitive.
The apparel segment competes with numerous domestic and
foreign manufacturers of branded and private label apparel.
Foreign competition has been an increasingly significant
factor in the apparel manufacturing industry, particularly
with respect to items that require labor-intensive production,
such as shirts and jackets, and high cost luxury items.
Although domestic apparel companies must compete to some
extent on a price basis with foreign competition, the
Company's management believes that domestic apparel companies
can best compete by selling branded products, by manufacturing
off-shore, by offering product flexibility, by responding
quickly to changes in consumer demand and by providing more
timely deliveries. The latter characteristics permit
retailers to reduce their inventory costs and lower the risk
that product availability will not match consumer demand. The
Company's operations are oriented toward providing its apparel
segment and the customers of its textile segment with all or
some of these competitive advantages. The Company believes
that it and its domestic customers can address quality control
problems more easily than can manufacturers and distributors
of foreign products. Furthermore, the customers of foreign
suppliers generally face letter of credit fees, and
occasionally face delivery delays and claims resolution
difficulties.
The Company believes that several aspects of its
operations may mitigate some of the problems posed by
competition within the domestic textile and apparel
industries. The variety of the Company's products offers some
degree of protection against the cyclical nature of the
business of individual products. Management of the Company
believes that the percentage of its production cost
attributable to labor is comparable to that of its
competitors. Other competitive strengths include: the
ability to produce special fabrics such as textured blends;
the modern equipment in several of its plants; and the
Company's achievement of substantial vertical integration in
its various divisions.
Nautilus competes in the institutional fitness market
which is fragmented and highly competitive. Nautilus competes
with several national and local companies. The fitness
equipment industry generally competes for business on price,
quality, specifications and service. Management of the
Company believes that Nautilus has a strong competitive
position because of its high name recognition in markets and
its reputation for high quality, durable equipment.
Employees
The Company has approximately 7,500 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 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 subsidiary which conducts the finished woven fabrics
operations is subject to a Consent Order with the South
Carolina Department of Health and Environmental Control dated
September 26, 1985, which was executed prior to Delta
Woodside's acquisition of the business. Pursuant to the
Consent Order, which arose from a determination that several
private drinking wells in the area of two of the subsidiary's
plants had been contaminated, the subsidiary has discontinued
the operation near these plants of a large spray field into
which waste water sludge had been disposed and has placed into
operation for such purpose a new and larger spray field.
Delta Woodside expects that any continuing expenditures to
comply with the Consent Order will be immaterial in amount.
Item 1 (Continued)
Some of the Company's plants have been unable to comply
with the acute toxicity limits contained in the National
Pollutant Discharge Elimination System (NPDES) permits held by
the Company. With respect to certain such plants in North
Carolina, the Company signed a Special Order by Consent with
the North Carolina Department of Environmental Health and
Natural Resources (DEHNR) which required the plants to achieve
compliance with the acute toxicity limits by July 1995. The
Company has applied for an extension to achieve compliance and,
based on conversations with DEHNR, believes approval of this
application is forthcoming. By a March 1992 letter, the
Natural Resources Defense Council notified the Company of its
intent to institute a "citizens' suit" under the Clean Water
Act for certain alleged NPDES violations in North Carolina. No
such suit has been initiated to date. By reason of the Special
Order, the Company believes that any such suit, and compliance
with the Special Order, would not have a material adverse
impact on the Company. With respect to certain South Carolina
plants, the Company is working with the appropriate state
agency in developing a corrective action plan for addressing
the toxicity issue. The Company has implemented several
courses of action to achieve compliance with its NPDES permits
and does not believe that the matter will have a material
adverse impact on the Company.
Generally, the environmental rules applicable to the
Company are becoming increasingly stringent. The Company
incurs capital and other expenditures in each year that are
aimed at achieving compliance with current and future
environmental standards. The Company does not expect that the
amount of such expenditures will have a material adverse
effect on its operations or financial condition. There can be
no assurance, however, that changes in federal, state or local
regulations, changes in regulatory policy 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.
Information contained under the subheading "Environmental
Matters" in Management's Discussion and Analysis of Results of
Operations and Financial Condition--Liquidity and Sources of
Capital incorporated into Item 7 of this Form 10-K is
incorporated herein by reference.
Industry Segment Information
Segment information made part of Note H of the Company's
consolidated financial statements for the fiscal year ended
July 1, 1995 is incorporated herein by reference.
Other
Information concerning order backlogs in Management's
Discussion and Analysis of Results of Operations and Financial
Condition," Consolidated Company Results, Fiscal 1995 Versus
Fiscal 1994" incorporated into Item 7 of this Form 10-K is
incorporated herein by reference.
Item 2. PROPERTIES
The following table provides a description of Delta Woodside's
production and warehouse facilities.
Approximate
Square Approximate
Location Utilization Footage Acreage
Textile Segment
Beattie Plant, Fountain Inn, SC (8) spin/weave 390,000 112
Furman Plant, Fountain Inn, SC (8) weave 116,000 21
Distribution Center, Greenville, SC (8) warehouse 88,000 12
Estes Plant, Piedmont, SC (8) spin/weave 332,000 114
Greer Plant, Greer SC (8) weave 255,000 10
Delta 3 Plant, Wallace, SC (8) dye/finish 555,000 527
Cypress Plant, Pamplico, SC (8) spin 144,000 4
Pamplico Plant, Pamplico, SC (8) spin/weave 275,000 520
Delta 2 Plant, Wallace, SC (8) dye/finish 347,000 295
Catawba Plant, Maiden, NC spin 115,000 34
Fayetteville Plant, Fayetteville, NC (6) unused 238,000 15
Carter Plant, Wallace, NC dye/finish 485,000 72
Greensboro Plant, Greensboro, NC(3) unused 195,000 10
Holly Plant, Wallace, NC knit/finish 224,000 3
Rainsford Plant, Edgefield, SC spin 296,000 43
Mickel Plant, Spartanburg, SC spin 207,000 14
Apparel Segment
Maiden Plant, Maiden NC knit/dye
finish/cut 305,000 45
Washington Plant, Washington, GA sew 129,800 6
Sandersville Plant, Sandersville, GA sew 27,000 5
Distribution Center, Knoxville, TN distribution 550,000 21
Decatur Plant, Decatur, TN (2) sew 75,000 11
Tellico Plains Plant, Tellico
Plains, TN sew 100,000 17
Ashburn Plant, Ashburn, GA (1) sew 43,000 7
Sparta Plant, Sparta, GA (1) sew 21,000 2
Honduras Plant, San Pedro Sula,
Honduras(1)(9) sew
Baldwin Plant, Baldwin, GA (7) press/distribution 148,000 24
Distribution Center,
Stone Mountain, GA(1) distribution 120,000
Monroe #3, Monroe, GA cut 52,000 7
Monroe #2, Monroe, GA sew/distribution 93,000 8
Winder Plant, Winder, GA (7) warehouse/retail 119,000 3
Harmony Plant, San Jose, Costa Rica sew 14,000
San Jose Plant, San Jose, Costa Rica (1) sew 60,000 6
Jupiter Plant, San Jose, Costa Rica sew 25,000
Winder, GA warehouse 10,000
Various (4) warehouse
Various (5) stores
Fitness Equipment Division
Independence, VA manufacturing 251,000 54
Independence, VA (1) manufacturing 33,678
Item 2 (Continued)
(1) Leased facility.
(2) "Duck Head" Outlet Stores lease a portion of the facility for
retail sales.
(3) The knitted fabrics discontinued operations at this facility during
the first quarter of fiscal 1996.
(4) The apparel segment leases certain additional warehouse space from
time to time.
Approximately 266,000 square feet is leased currently with leases
expiring through November 1995.
(5) The "Duck Head" Outlet Stores Operation leases 33 facilities in 11
states, which leased space is Approximately 121,000 square feet.
These leases expire at various dates through 2000.
(6) The knitted fabrics operation closed this facility during fiscal
1993.
(7) These locations will be closed in fiscal 1996.
(8) Title to these facilities are held by the county under a fee-in-
lieu arrangement.
(9) The knit apparel operation has begun hiring and training, and
expects to begin occupying this facility before the end of calendar
1995.
Except as noted above all of the above production and warehouse
facilities are owned by Delta Woodside and its subsidiaries, subject in
certain cases to various outstanding mortgages and security interests.
The apparel segment's Sparta plant, Sparta, Georgia and San Jose plant
in San Jose, Costa Rica are leased on a month-to-month basis, and the
Ashburn Plant in Ashburn, Georgia has a lease which expires in February
1999. The fitness division leases manufacturing capacity in
Independence, Virginia which lease expires in July 1998.
Delta Woodside leases corporate and division administrative offices
in Greenville, South Carolina. The lease on the corporate offices
expires December 1997 and leases on the administrative offices expire in
2008. Sales offices are leased in or near Charlotte, New York, Chicago,
Newport Beach, San Francisco, Dallas and Los Angeles with leases
expiring through December 2004.
At the date of execution of this Form 10-K, the Company believes,
with the exception of plants affected by the Company's modernization
program, that its finished woven all cotton plants and finished woven
synthetic plants are operating virtually at full production capacity
while its unfinished woven fabrics operations are operating at slightly
less than full production capacity. The knitted fabrics plants in the
textile segment are operating at less than full capacity. Various
factors affect the relative use by the Company's apparel segment of its
own facilities and outside contractors in the various apparel production
phases. This segment is currently using all its internal productive
capacity. The fitness equipment operation is operating at approximately
75% of its production capacity as a result of new building space in
excess of current volume.
The Company believes that its equipment and facilities are
generally adequate to allow it to remain competitive with its
principal competitors.
Item 3. LEGAL PROCEEDINGS
From time to time the Company and its subsidiaries are
defendants in legal actions involving claims arising in the normal
course of its business, including product liability claims. The
company believes that, as a result of its legal defenses, insurance
arrangements and indemnification provisions with financially capable
parties, none of these actions, if decided adversely, should have a
material adverse effect on its business or financial condition taken
as a whole.
The Company has previously reported the award on November 24,
1993 by a jury in the Circuit Court of Montgomery County, Alabama
(the "Circuit Court") of $29,056,000 to a former Duck Head
independent sales representative (Ken Hoots) and two of his salesmen
(Terry Long and Bill Pace) (the "Plaintiffs") against a subsidiary of
the Company in a suit captioned "Ken Hoots, Terry Long and Bill Pace
v. Duck Head Apparel Company, Inc., et al." (the "Hoots Suit"). The
Hoots Suit commenced on March 17, 1992.
After a hearing the Circuit Court judge reduced the verdict to
$22,852,000 and entered judgment against the Company's subsidiary
on March 28, 1994 as follows:
(a) $852,000 to the Plaintiffs on their claim of breach
of contract respecting alleged unpaid commissions,
(b) $4,000,000 to Ken Hoots, $2,000,000 to Terry Long,
and $1,000,000 to Bill Page for mental anguish on their
claim for fraud, and
(c) $15,000,000 to the Plaintiffs as punitive damages on
their claim of fraud.
On February 17, 1995, the Supreme Court of Alabama reduced the
$7,000,000 of damages awarded for mental anguish by $3.5 million
and affirmed the Circuit Court's ruling in all other respects.
In June, 1995, the Company settled the case with the Plaintiffs,
and the judgment was fully satisfied and discharged on June 8, 1995.
A lawsuit with allegations similar to those in the Hoots Suit
was commenced on October 1, 1993 against a subsidiary of the Company
in the United States District Court for the Western District of
Kentucky by an individual (Donnie Cecil) who has previously served as
an independent sales representative for the Duck Head division. In
July, 1995, this case was settled and the complaint was dismissed
with prejudice by the Court on July 19, 1995.
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 1995 fiscal year.
PART II
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 July 1, 1995 is
incorporated herein by reference.
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 July 1, 1995 is incorporated herein by reference.
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
4 through 10 (exclusive of graphs) of the Company's annual
shareholders' report for the year ended July 1, 1995 is
incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements included on pages 11, 12
and 14 through 28 of the Company's annual shareholders' report for
the year ended July 1, 1995 are incorporated herein by reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
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 "Ratification of
Selection of Auditors".
PART III
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 "Stock
Ownership of Principal Shareholders and Management".
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. 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. 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. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) (1) and (2) Financial Statements and Financial Statement
Schedules
The response to this portion of Item 14 is set forth on page F-2
included herein, which response is incorporated herein by
reference.
(3) Listing of Exhibits:*
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 By-laws of the Company, as amended:
Incorporated by reference to Exhibit 3.1.1 to the
Form S-4.
3.2.1 Amendments to By-laws of the Company:
Incorporated by reference to Exhibit 3.2 to the
December 1990 10-Q.
3.2.2 Amendment to By-laws of the Company,
adopted as of June 29, 1992: Incorporated by
reference to Exhibit 3.2.2 to the Company's Form 10-
K for the fiscal year ended June 27, 1992 (the "1992
10-K").
4.1 See Exhibits 3.1, 3.1.1, 3.1.2, 3.1.3,
3.1.4, 3.1.5, 3.2, 3.2.1. and 3.2.2.
4.1.1 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").
4.2 Credit Agreement dated as of September 7,
1994 among Delta Woodside Industries, Inc., the
Lenders named therein, and NationsBank of North
Carolina, N.A., as Agent (with exhibits and
schedules omitted) together with forms of Promissory
Note, Subsidiary Guaranty and certain other
documents. The Company agrees to furnish
supplementally to the Securities and Exchange
Commission a copy of any omitted schedule or exhibit
to the Credit Agreement upon request of the
Commission.
4.2.1 February 15, 1995 Waiver respecting Credit
Agreement: Incorporated by reference to Exhibit
4.3.1 to the Form 10-Q of the Company for the
quarterly period ended December 31, 1994.
Item 14 (Continued)
4.2.2 May 15, 1995 Waiver respecting Credit
Agreement: Incorporated by reference to Exhibit
4.3.2 to the Form 10-Q of the Company for the
quarterly period ended April 1, 1995 (the "March
1995 10-Q").
4.2.3 Amendment Agreement dated as of June 9,
1995 to Credit Agreement dated as of September 7,
1994.
4.3 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 December 27, 1987 by and
between Hammond Square, Ltd. and the Company:
Incorporated by reference to Exhibit 10.10 to
Registration Statement No. 33-22563 on Form S-4 of
Delta Woodside Industries, Inc., a Delaware
corporation ("Registration Statement No. 33-22563").
10.2** Delta Woodside Deferred Compensation Plan
for Key Employees: Incorporated by reference to
Exhibit 10.6 to the Form 10-Q of the Company for the
quarterly period ended December 30, 1989.
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.
10.4.1** 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").
10.5 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.
10.6 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.
10.7** Summary of Delta Woodside Industries,
Inc., Director Charitable Giving Program:
Incorporated by reference to Exhibit 10.11 to the
1992 10-K.
10.7.1** Resolution to amend Directors' Charitable
Giving Program dated February 2, 1995: Incorporated
by reference to Exhibit 10.7.1 to the March 1995 10-
Q.
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 See Exhibits 4.2, 4.2.1, 4.2.2 and 4.2.3.
13 Annual Report to Shareholders of the
Company for the fiscal year ended July 1, 1995.
Item 14 (Continued)
21 Subsidiaries of the Company.
23.1 Report on Schedule and Independent
Auditors' Consent for the year ended July 1, 1995.
23.2 Independent Auditors' Consent for the years
ended July 2, 1994 and July 3, 1993.
23.3 Report of Independent Auditors for the
years ended July 2, 1994 and July 3, 1993.
27 Financial Data Schedule
* 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.
(b) Reports on Form 8-K
The Company did not file any report on Form 8-K
during the fourth quarter of the fiscal year ended July
1, 1995.
(c) Exhibits
The response to this portion of Item 14 is submitted
as a separate section of this report.
(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.
9/25/95 /s/ E. Erwin Maddrey, II 9/18/95
Date E. Erwin Maddrey, II Date
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 9/26/95 /s/ E. Erwin Maddrey 9/18/95
C. C. Guy Date E. Erwin Maddrey, II Date
Director President, Chief
Executive Officer
and Director
/s/ James F. Kane 9/25/95 /s/ Bettis C. Rainsford 9/18/95
James F. Kane Date Bettis C. Rainsford Date
Director Executive Vice President,
Chief Financial Officer,
Treasurer and Director
/s/ Max Lennon 9/26/95 /s/ Douglas J. Stevens 9/18/95
Max Lennon Date Douglas J. Stevens Date
Director Controller and Assistant
Secretary
/s/ Buck A. Mickel 9/26/95
Buck A. Mickel Date
Director
/s/ Buck Mickel 9/26/95
Buck Mickel Date
Director
EXHIBIT INDEX
4.2.3 Amendment dated as of June 9, 1995 to Credit Agreement
dated as of September 7, 1994.
13 Annual Report to Shareholders of the Company for the
fiscal year ended July 1, 1995.
21 Subsidiaries of the Company.
23.1 Report on Schedule and Independent Auditors' Consent for the
year ended July 1, 1995.
23.2 Independent Auditors' Consent for the years
ended July 2, 1994 and July 3, 1993.
23.3 Report of Independent Auditors for the
years ended July 2, 1994 and July 3, 1993.
ANNUAL REPORT ON FORM 10-K
ITEM 14(a) (1) and (2), (c) and (d)
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
CERTAIN EXHIBITS
FINANCIAL STATEMENT SCHEDULES
YEAR ENDED JULY 1, 1995
DELTA WOODSIDE INDUSTRIES, INC.
GREENVILLE, SOUTH CAROLINA
F-1
FORM 10-K--ITEM 14(a)(1) AND (2)
DELTA WOODSIDE INDUSTRIES, INC.
LIST OF 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 July 1, 1995 are
incorporated by reference in Item 8:
Consolidated balance sheets--July 1, 1995 and July 2, 1994.
Consolidated statements of operations--Years ended July 1, 1995,
July 2, 1994 and July 3, 1993.
Consolidated statements of shareholders' equity--Years ended July
1, 1995, July 2, 1994 and July 3, 1993.
Consolidated statements of cash flows--Years ended July 1, 1995,
July 2, 1994 and July 3, 1993.
Notes to consolidated financial statements.
The following consolidated financial statement schedule of Delta
Woodside Industries, Inc. are included in Item 14(d):
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.
F-2
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
DELTA WOODSIDE INDUSTRIES, INC.
COL. A COL. B COL. C COL. D COL. E
ADDITIONS
Balance at
DESCRIPTION Beginning (1) (2) Deductions Balance at end
of Period Charged to Costs Charged to Other Describe of Period
and Expenses Accounts-Describe
Deducted from asset accounts:
Allowance for doubtful
and returns
Year ended July 1, 1995 $3,275,000 $3,311,000 $ 36,000 $ 988,000 $5,634,000
Year Ended July 2, 1994 $5,537,000 $3,886,000 $(1,658,000)(2) $4,490,000(1) $3,275,000
Year Ended July 3, 1993 $5,413,000 $2,025,000 $ 353,000(2) $2,254,000(1) $5,537,000
NOTES:
(1) Uncollectible accounts written off.
(2) Net change in sales allowances charged to income as a reduction of sales.