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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 June 29, 1996
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)
864/232-8301
(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
Exhibit Index at Page No.
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.
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 20, 1996 was :
Common Stock, $.01 par value - $76,882,739
The number of shares outstanding of each of the registrant's
classes of Common Stock, as of September 20, 1996 was:
Common Stock, par value $.01 24,511,309
DOCUMENTS INCORPORATED BY REFERENCE: Portions of the Company's
Annual Report to shareholders for the fiscal year ended June 29,
1996 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 7, 1996 are incorporated by reference into
Part III.
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: 864-232-8301). 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 41 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. The Company has
operations in 13 states, Costa Rica and Honduras, and employs
approximately 7,400 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 knit apparel
operations through the "Duck Head" and "Delta Apparel" (Reg.
trademark) divisions. 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 (70% owned). Each division has its own management
and employees and operates independently of the other divisions.
Intersegment sales accounted for no more than approximately 4% of
total sales for fiscal 1996, 1995 and 1994.
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.
Item 1 (Continued)
C. Penney, Sears and other retailers. The Company's knitted
fabrics are sold for production of apparel 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, to distributors
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 $294 million, $291 million and $289 million and the
Company's net sales of knit fabrics were $83 million, $103
million and $103 million, during fiscal 1996, 1995 and 1994,
respectively.
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 woven fabrics operation manufactures bottom-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 woven fabrics operation sells and distributes
its fabrics through Delta Mills Sales Company, a marketing office
based in New York City, with sales agents also operating from
Atlanta, Dallas, Los Angeles and San Francisco. Delta Mills
Sales Company also has international sales agents in the United
Kingdom and Hong Kong.
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 1997.
However, woven synthetic facilities are not expected to run full
schedules during fiscal 1997.
At one plant, the division also produces a variety of
unfinished light-weight woven fabrics sold for ultimate use in
manufacturing apparel such as blouses, dresses and linings, in
manufacturing home furnishings, including draperies, curtains and
comforters, and in medical and industrial products. Fabrics
include 100% polyester, 100% rayon, polyester/rayon blends,
textured polyester and other "semi-fancy" fabrics of more
complicated construction. The unfinished operation currently is
running at 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 and printers 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.
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 is currently 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 woven apparel
marketed under the "Duck Head" line of men's and boys'
casualwear, which includes pants, shorts and shirts. Knit
apparel products include T-shirts and sweatshirts which are sold
under the labels of "Duck Head", "Delta Apparel", and various
private labels.
"Duck Head" Apparel. 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
uniform, sportswear and casualwear under the private labels of
its customers. The division also licenses 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
groups as well as specialty apparel retailers and through Company-
operated outlet stores. The division currently displays "Duck
Head" products in "Duck Head" shops within some department
stores. The "shop" display format of an entire line of
sportswear in a dedicated section of a store's sportswear
department is used by the major national sportswear brands.
Gross sales of "Duck Head" labeled products were approximately
$79 million, $81 million and $95 million during fiscal 1996,
1995, and 1994, respectively.
"Duck Head" Apparel operates a total of 5 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. All of the products are warehoused in the
division's owned facilities.
"Duck Head" labeled apparel items are generally required to
be inventoried to permit quick shipment and to level production
schedules. 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.
The "Duck Head" division has 41 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.
"Delta Apparel". "Delta Apparel", which is headquartered in
Duluth, Georgia, operates a total of 7 facilities and produces
knitted T-shirts and sweatshirts. The division markets its
products primarily to companies that screen print shirts for
resale and to distributors. Net sales in this division were $123 million,
$102 million and $84 million during fiscal 1996, 1995, and 1994, 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
marketers such as discount houses. This operation also utilizes
independent sales representatives to sell to distributors and
screen printing companies. Some knit apparel items are
inventoried to permit quick shipment and to level production
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.
Private Label Division. During fiscal 1996, the Company
established a new Private Label Division with the intent of
marketing finished garments utilizing fabrics made in our
Stevcoknit division and assembled outside the U.S.
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 39 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 five 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 and targets health clubs, the public sector, YMCAs and
similar institutions and the medical, amenity and corporate
markets. After extensive review, the Company has decided to
defer its entry into the consumer market.
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 all cotton bottom-weight sportswear fabrics.
The unfinished woven fabrics' 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
these markets 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-
Item 1 (Continued)
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 domestic 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. 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 and durable equipment.
Employees
The Company has approximately 7,400 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 that 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.
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 . The Special Order by Consent has been amended
to require
the plants to achieve compliance by October 1, 1997. 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 in an effort to achieve
compliance with its NPDES permits. Although there is no
assurance that the Company will be successful in this regard, it
does not currently 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 incorporated into Item 7 of
this Form 10-K is incorporated herein by reference.
Industry Segment Information
Segment information made part of Note G of the Company's
consolidated financial statements for the fiscal year ended June
29, 1996 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 1996 Versus
Fiscal 1995" incorporated into Item 7 of this Form 10-K
incorporated herein by reference.
Item 2. PROPERTIES
The following table provides a description of Delta
Woodside's principal production and warehouse facilities.
Approximate
Square Approximate
Location Utilization Footage Acreage
Textile Segment
Beattie Plant, Fountain Inn, SC spin/weave 390,000 112
Furman Plant, Fountain Inn, SC weave 116,000 21
Distribution Center, Greenville, SC warehouse 88,000 12
Estes Plant, Piedmont, SC (4) spin/weave 332,000 114
Delta 3 Plant, Wallace, SC dye/finish 555,000 527
Cypress Plant, Pamplico, SC spin 144,000 4
Pamplico Plant, Pamplico, SC spin/weave 275,000 520
Delta 2 Plant, Wallace, SC dye/finish 347,000 295
Catawba Plant, Maiden, NC spin 115,000 34
Carter Plant, Wallace, NC dye/finish 485,000 72
Holly Plant, Wallace, NC knit/finish 224,000 3
Rainsford Plant, Edgefield, SC spin 296,000 21
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
Ashburn Plant, Ashburn, GA (1) sew 43,000 7
Honduras Plant, San Pedro Sula,
Honduras(1) sew 70,000 2
Monroe #3, Monroe, GA cut 52,000 7
Monroe #2, Monroe, GA sew 93,000 8
Harmony Plant, San Jose, Costa Rica sew 14,000
San Jose Plant, San Jose, Costa Rica (1) sew 60,000 6
316 Distribution Center, Winder, GA warehouse 200,000
Various (3) stores
Fitness Equipment Division
Independence, VA manufacturing 251,000 54
Independence, VA (1) manufacturing 33,678
(1) Leased facility.
(2) The "Duck Head" Outlet Stores lease a portion of the
facility for retail sales.
(3) The "Duck Head" Outlet Stores Operation leases 41 facilities
in 13 states, which leased space is approximately 121,000
square feet. These leases expire at various dates through
2005.
(4) Title to these facilities are held by the county under a fee-
in-lieu arrangement.
Except as noted above all of the above production and
warehouse facilities are owned by Delta Woodside or one of its
subsidiaries, subject in certain cases to various outstanding
mortgages and security interests. The apparel segment's San Jose
plant in San Jose, Costa Rica is leased on a month-to-month
basis, the Ashburn Plant in Ashburn, Georgia has a lease which
expires in February 1999 and the Honduras Plant has a lease which
expires in November 2000.
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. Although the Company expects greater utilization of
textile capacity in fiscal 1997 than in fiscal 1996, the Company
expects both the woven and knit operations to run at less than
full capacity in fiscal 1997. During fiscal 1996, the Company
established a new sewing operation for knit apparel items in
Honduras. The plant began producing garments in September 1995.
In June 1996 the plant was running at 55% of capacity with full
capacity expected by February 1997. 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 production capacity. The fitness equipment operation is
operating at approximately 75% of its production capacity as a
result of new building space in excess of the 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.
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 1996 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 June 29, 1996 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 June 29, 1996 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 June 29, 1996 is
incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements included on pages 14
through 27 of the Company's annual shareholders' report for the
year ended June 29, 1996 are incorporated herein by reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None
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" and "Executive
Officers".
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 Amended and Restated Credit Agreement
dated as of March 15, 1996 among Delta Woodside
Industries, Inc., the Lenders named therein, and
NationsBank, N.A. as Agent (with exhibits and
schedules omitted) together with forms of
Promissory Notes, Subsidiary Guaranty, Borrower Security
Agreement, Subsidiaries Security Agreement and
certain other documents: Incorporated by
reference to Exhibit 4.4 to the Form 10-Q of the
Company for the quarterly period ended March 30,
1996. The Company agrees to furnish
supplementally to the Securities and Exchange
Commission a copy of any omitted schedules or
exhibits to such agreement upon request of the
Commission.
4.2.1 Amendment and Waiver Agreement dated as
of May 20, 1996, by and among Delta Woodside
Industries, Inc., the guarantors identified on the
signature pages attached thereto and the lenders
and agents thereto: Incorporated by reference to
Exhibit 4.4.1 to the Form 8-K of the Company with
date of May 28, 1996 (the "May 1996 8-K"). The
Company agrees to furnish supplementally to the
Securities and Exchange Commission a copy of any
omitted schedules or exhibits to such agreement
upon request of the Commission.
4.2.2 Pledge Agreement dated as of May 20,
1996 by and among Delta Woodside Industries, Inc.,
the guarantors from time to time party thereto and
NationsBank, N.A., in its capacity as agent for
the lenders from time to time party to the Credit
Agreement described therein: Incorporated by
reference to Exhibit 4.4.2 to the May 1996 8-K.
The Company agrees to furnish supplementally to
the Securities and Exchange Commission a copy of
any omitted schedules or exhibits to such agreement
upon request of the Commission.
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.
10.3.1** 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").
10.4.1** 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.
10.5 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 and 4.2.2.
13 Annual Report to Shareholders of the
Company for the fiscal year ended June 29, 1996.
21 Subsidiaries of the Company.
23.1 Report on Schedule and Independent
Auditors' Consent for the years ended June 29,
1996 and July 1, 1995.
23.2 Independent Auditors' Consent for the
year ended July 2, 1994.
23.3 Report of Independent Auditors for the
year ended July 2, 1994.
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
During the fourth quarter of the fiscal year ended
June 29, 1996, the Company filed Form 8-K with date of
May 28, 1996, which reported the following items:
Item 5. Other Events
Item 7. Financial Statements and Exhibits
(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.
9/26/96 /s/ E. Erwin Maddrey, II
Date E. Erwin Maddrey, II
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 9/26/96 /s/ E. Erwin Maddrey 9/26/96
C. C. Guy Date E. Erwin Maddrey, II Date
Director President, Chief Executive Officer
and Director
/s/ James F. Kane 9/26/96 /s/ Bettis C. Rainsford 9/26/96
James F. Kane Date Bettis C.Rainsford Date
Director Executive Vice President,
Chief Financial Officer, Treasurer
and Director
/s/ Max Lennon 9/26/96 /s/ Douglas J. Stevens 9/26/96
Max Lennon Date Douglas J. Stevens Date
Director Controller and Assistant Secretary
/s/ Buck A. Mickel 9/26/96
Buck A. Mickel Date
Director
/s/ Buck Mickel 9/26/96
Buck Mickel Date
Director
EXHIBIT INDEX
13 Annual Report to Shareholders of the Company for the fiscal
year ended June 29, 1996.
21 Subsidiaries of the Company.
23.1 Report on Schedule and Independent Auditors' Consent for the
years ended June 29,1996 and July 1, 1995.
23.2 Independent Auditors' Consent for the year ended July 2,1994.
23.3 Report of Independent Auditors for the year ended July 2,1994.
27 Financial Data Schedule.
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 JUNE 29, 1996
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 June 29, 1996 are
incorporated by reference in Item 8:
Consolidated balance sheets--June 29, 1996 and July 1, 1995.
Consolidated statements of operations--Years ended June 29, 1996,
July 1, 1995 and July 2, 1994.
Consolidated statements of shareholders' equity--Years ended June
29, 1996, July 1, 1995 and July 2, 1994.
Consolidated statements of cash flows--Years ended June 29, 1996,
July 1, 1995 and July 2,1994.
Notes to consolidated financial statements.
The following consolidated financial statement schedule of Delta
Woodside Industries, Inc. is 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 accounts:
Year ended June 29, 1996 $ 5,634,000 $ 2,577,000 $ 695,000(2) $ 2,648,000(1) $ 6,528,000
Year ended July 1, 1995 $ 3,275,000 $ 3,311,000 $ 36,000(2) $ 988,000(1) $ 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
Inventory reserves:
Year ended June 29, 1996 $14,052,000 $26,827,000 $40,879,000
NOTES:
(1) Uncollectible accounts written off.
(2) Net change in sales allowances charged to income as a reduction of sales.