-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IOM5Q5wDobUNTjfnPrxWRt5MD4/ykq/bMLOH7hJIwcYRniA9WJ9bTucsHeFLGzIh hRZj/x/1h9USVauVhr3uzg== 0001019892-02-000120.txt : 20021004 0001019892-02-000120.hdr.sgml : 20021004 20021004164456 ACCESSION NUMBER: 0001019892-02-000120 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20021107 FILED AS OF DATE: 20021004 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DELTA WOODSIDE INDUSTRIES INC /SC/ CENTRAL INDEX KEY: 0000806624 STANDARD INDUSTRIAL CLASSIFICATION: BROADWOVEN FABRIC MILLS, COTTON [2211] IRS NUMBER: 570535180 STATE OF INCORPORATION: SC FISCAL YEAR END: 0628 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-10095 FILM NUMBER: 02782276 BUSINESS ADDRESS: STREET 1: P O BOX 6126 CITY: GREENVILLE STATE: SC ZIP: 29606 BUSINESS PHONE: 8642554100 MAIL ADDRESS: STREET 1: P O BOX 6126 CITY: GREENVILLE STATE: SC ZIP: 29606 DEF 14A 1 proxystatement.txt PROXY STATEMENT SCHEDULE 14A (Rule 14a-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant [X] Filed by a Party other than the Registrant [_] Check the appropriate box: [_] Preliminary Proxy Statement [_] Soliciting Material Under Rule [_] Confidential, For Use of the 14a-12 Commission Only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [_] Definitive Additional Materials Delta Woodside Industries, Inc. - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if Other Than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. 1) Title of each class of securities to which transaction applies: ________________________________________________________________________________ 2) Aggregate number of securities to which transaction applies: ________________________________________________________________________________ 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): ________________________________________________________________________________ 4) Proposed maximum aggregate value of transaction: ________________________________________________________________________________ 5) Total fee paid: ________________________________________________________________________________ [_] Fee paid previously with preliminary materials: ________________________________________________________________________________ [_] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. 1) Amount previously paid: ________________________________________________________________________________ 2) Form, Schedule or Registration Statement No.: ________________________________________________________________________________ 3) Filing Party: ________________________________________________________________________________ 4) Date Filed: ________________________________________________________________________________ DELTA WOODSIDE INDUSTRIES, INC. 100 AUGUSTA STREET (29601) POST OFFICE BOX 6126 GREENVILLE, SOUTH CAROLINA 29606 TELEPHONE (864) 255-4122 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD NOVEMBER 7, 2002 TO OUR SHAREHOLDERS: Notice is hereby given that the Annual Meeting of Shareholders of Delta Woodside Industries, Inc., a South Carolina corporation ("Delta Woodside"), will be held at the Union League Club, Mary Murray Room, 38 East 37th Street, New York, New York on Thursday, November 7, 2002, at 11:00 a.m., local time, for the following purposes: 1. To elect six directors to serve until the next annual meeting of shareholders of Delta Woodside or until their successors have been duly elected and qualified; 2. To vote on the ratification of the appointment of KPMG LLP as independent auditors for Delta Woodside for fiscal year 2003; and 3. To act on such other business as may properly come before the Annual Meeting or any adjournment or adjournments thereof. The Board of Directors of Delta Woodside recommends that shareholders vote FOR the nominees for director listed in the Delta Woodside proxy statement enclosed with this notice and FOR approval of proposal number 2 above. Delta Woodside has fixed the close of business on September 18, 2002 as the record date for the determination of the shareholders of Delta Woodside entitled to receive notice of and to vote at the Annual Meeting. Only shareholders of record of Delta Woodside at the close of business on September 18, 2002 will be entitled to vote at the Annual Meeting and any adjournment or adjournments thereof. Whether or not you expect to be present at the Annual Meeting, please complete, date and sign the enclosed form of proxy and return it promptly in the enclosed envelope, which requires no additional postage if mailed in the United States. By Order of the Board of Directors, /s/ W. H. Hardman, Jr. W.H. Hardman, Jr., October 7, 2002 Secretary DELTA WOODSIDE INDUSTRIES, INC. 100 Augusta Street (29601) Post Office Box 6126 Greenville, South Carolina 29606 Telephone (864) 255-4122 PROXY STATEMENT ANNUAL MEETING OF SHAREHOLDERS NOVEMBER 7, 2002 This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of Delta Woodside Industries, Inc., a South Carolina corporation ("Delta Woodside" or the "Company"), to be voted at the 2002 Annual Meeting of Shareholders (the "Annual Meeting") of the Company to be held at the Union League Club, Mary Murray Room, 38 East 37th Street, New York, New York at 11:00 a.m. on Thursday, November 7, 2002. The approximate date of mailing this Proxy Statement and the accompanying proxy is Monday, October 7, 2002. Only shareholders of record at the close of business on September 18, 2002 are entitled to receive notice of and to vote at the Annual Meeting. As of such date, there were outstanding 5,582,216 shares of common stock, $.01 par value (the only voting securities), of the Company. Each share is entitled to one vote. Each shareholder described above will be sent this Proxy Statement, the accompanying Notice of Annual Meeting and a proxy card. Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time before it is voted. A proxy may be revoked by (i) delivery to the Secretary of the Company, at or before the Annual Meeting, of a written notice of revocation bearing a later date than the proxy, (ii) duly executing a subsequent proxy relating to the same shares and delivering it to the Secretary of the Company at or before the Annual Meeting or (iii) attending the Annual Meeting and giving notice of revocation to the Secretary of the Company or in open meeting prior to the proxy being voted (although attendance at the Annual Meeting will not in and of itself constitute a revocation of a proxy). Any written notice revoking a proxy should be sent to: Delta Woodside Industries, Inc., Post Office Box 6126, Greenville, South Carolina 29606, Attention: Secretary. All shares represented by valid proxies received pursuant to the solicitation and prior to voting at the meeting and not revoked before they are exercised will be voted. If a choice is specified with respect to any matter to be acted upon, the shares will be voted in accordance with such specification. If no contrary instructions are indicated, all shares represented by a proxy will be voted (1) FOR election to the Board of Directors of the nominees described herein, and (2) FOR ratification of the appointment of KPMG LLP as independent auditors for the Company for fiscal year 2003, and in the discretion of the proxy holders as to all other matters that may properly come before the Annual Meeting. The presence, either in person or by proxy, of the holders of a majority of the outstanding shares of common stock at September 18, 2002 is necessary to constitute a quorum at the Annual Meeting. Directors will be elected by a plurality of the votes cast at the Annual Meeting. Shareholders do not have the right to cumulate their votes in the election of directors. Shareholders do not have any dissenters' rights or appraisal rights with respect to any matter described in this proxy statement. Abstentions or broker non-votes will count as shares present at the annual meeting for purposes of determining whether a quorum is present but will otherwise have no effect on the matters to be voted on at the Annual Meeting. ITEM 1 ELECTION OF DIRECTORS The by-laws of the Company provide that the number of Directors to be elected at any meeting of shareholders may be determined by the Board of Directors. The Board has determined that six Directors shall be elected at the Annual Meeting. The shareholders' common stock may not be voted cumulatively in the election of Directors. 1 The following six persons are nominees for election as Directors at the Annual Meeting to serve until the next annual meeting of shareholders of the Company or until their successors are duly elected and qualified. Unless authority to vote at the election of Directors is withheld, it is the intention of the persons named in the enclosed form of proxy to nominate and vote for the persons named below, all of whom are currently Directors of the Company. Except as otherwise noted below, the business address of each nominee is Delta Woodside Industries, Inc., 100 Augusta Street (zip code 29601), Post Office Box 6126, Greenville, South Carolina 29606. Each such person is a citizen of the United States. There are no family relationships among the Directors and the executive officers of the Company. Management of the Company believes that all of the nominees will be available and able to serve as Directors, but in the event any nominee is not available or able to serve, the shares represented by the proxies will be voted for such substitute as shall be designated by the Board of Directors. THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR ALL OF THE NOMINEES LISTED BELOW.
NAME AND AGE PRINCIPAL OCCUPATION DIRECTOR SINCE (1) William F. Garrett (61) President and Chief Executive Officer 1998 of the Company (2) C. C. Guy (69) Retired Businessman 1984 Shelby, North Carolina (3) (8) (9) Dr. James F. Kane (70) Dean Emeritus of the College of 1986 Business Administration of the University of South Carolina Columbia, South Carolina (4) (8) (9)(10) Dr. Max Lennon (62) President of Education Research 1986 Consortium (5) (8) (9)(10)(11) E. Erwin Maddrey, II (61) President of Maddrey & Associates 1984 Greenville, South Carolina (6)(11) Buck A. Mickel (46) President and Chief Executive Officer 1984 of RSI Holdings, Inc. Greenville, South Carolina (7) (9)(11)
(1) Includes service as a director of the Company's predecessor by merger, Delta Woodside Industries, Inc., a Delaware corporation ("Old Delta Woodside"), or any predecessor company to Old Delta Woodside. (2) William F. Garrett served as a divisional Vice President of J. P. Stevens & Company, Inc. from 1982 to 1984, and as a divisional President of J. P. Stevens & Company, Inc. from 1984 until 1986, at which time the Delta Mills Marketing Company division was acquired by a predecessor of Old Delta Woodside. From 1986 until June 2000 he served as the President of Delta Mills Marketing Company, a division of a subsidiary of the Company. Mr. Garrett became President and Chief Executive Officer of the Company in June 2000. Mr. Garrett is also a director of Delta Apparel, Inc. ("Delta Apparel"). (3) C. C. Guy served as Chairman of the Board of Old Delta Woodside or its predecessors from the founding of Old Delta Woodside's predecessors in 1984 until November 1989. Since before the November 15, 1989 merger (which this document refers to as the "RSI Merger") of Old Delta Woodside into RSI Corporation, a South Carolina corporation which changed its name to Delta Woodside Industries, Inc. and is now Delta Woodside, he has been a director of RSI Holdings, Inc., and from before the RSI Merger until January 1995 he also served as President of RSI Holdings, Inc. RSI Holdings, Inc. until 1992 was engaged in the sale of outdoor power equipment, until 1994 was engaged in the sale of turf care products, until January 2000 was engaged in the consumer finance business and currently is engaged in the business of providing temporary labor primarily to manufacturing concerns in the Southeastern United States. Prior to November 15, 1989, RSI Holdings, Inc. was a subsidiary of RSI Corporation. Mr. Guy served from October 1979 until November 1989 as President, Treasurer and a director of RSI Corporation. Prior to the RSI Merger, RSI Corporation owned approximately 40% of the outstanding shares of common stock of 2 Old Delta Woodside and, among other matters, was engaged in the office supply business, as well as the businesses of selling outdoor power equipment and turf care products. Mr. Guy also serves as a director of Delta Apparel. (4) Dr. James F. Kane is Dean Emeritus of the College of Business Administration of the University of South Carolina, having retired in 1993 as Dean, in which capacity he had served since 1967. He also serves as a director of Delta Apparel and Glassmaster Company. (5) Dr. Max Lennon was President of Clemson University from March 1986 until August 1994. He was President and Chief Executive Officer of Eastern Foods, Inc., which was engaged in the business of manufacturing and distributing food products, from August 1994 until March 1996. He served as President of Mars Hill College from March 1996 until January 2002. He is currently the President of Education Research Consortium, a not for profit organization that financially supports projects that improve education and have the potential to improve the economy. He also serves as a director of Delta Apparel and Duke Power Company. (6) E. Erwin Maddrey, II was President and Chief Executive Officer of Old Delta Woodside or its predecessors from the founding of Old Delta Woodside's predecessors in 1984 until the RSI Merger and he served in these positions with Delta Woodside from the RSI Merger until June 2000. He is currently the President of Maddrey & Associates, which oversees its investments and provides consulting services. He also serves as a director of Delta Apparel, Kemet Corporation, Blue Cross Blue Shield of South Carolina, and Renfro Corporation. (7) Buck A. Mickel was a Vice President of Old Delta Woodside or its predecessors from the founding of Old Delta Woodside's predecessors until November 1989, Secretary of Old Delta Woodside from November 1986 to March 1987, and Assistant Secretary of Old Delta Woodside from March 1987 to November 1988. He served as Vice President and a director of RSI Holdings, Inc. from before the RSI Merger until January 1995 and as Vice President of RSI Holdings, Inc. from September 1996 until July 1998 and has served as President, Chief Executive Officer and a director of RSI Holdings, Inc. from July 1998 to the present. He served as Vice President of RSI Corporation from October 1983 until November 1989. Mr. Mickel also serves as a director of Delta Apparel. (8) Member of Audit Committee. (9) Member of Compensation Committee. (10) Member of Compensation Grants Committee. (11) Member of Corporate Governance Committee. The Company's Directors hold office until the next annual meeting of shareholders or until their successors are duly elected and qualified. The Board of Directors of the Company met physically or by telephone eleven times during the fiscal year ended June 29, 2002. The Compensation Committee and the Compensation Grants Committee of the Company met one time, the Audit Committee of the Company met five times and the Corporate Governance Committee met one time during fiscal 2002. Each Director attended or participated in at least 75 percent of the meetings of the Board and of any committee of which he was a member. The Audit Committee reviews the Company's annual financial statements and any reports or other financial information submitted to any governmental body or the public, makes recommendations to the Board regarding the selection of the Company's independent public accountants, reviews the independence of such accountants, approves the scope of the annual audit, approves the fee payable to the independent accountants, reviews the audit results, reviews the integrity of the Company's internal and external financial reporting process, establishes and maintains a code of ethical conduct for the Company's management and performs other functions set forth in its charter. The Compensation Committee reviews and submits to the Board of Directors suggested executive officers' salaries and bonuses. The Compensation Grants Committee grants awards under the Company's previous incentive stock award plan originally adopted in 1990 (the "Old Incentive Stock Award Plan") and its New Incentive Stock Award Plan adopted in 2000 and options under the Company's previous stock option plan originally 3 adopted in 1990 (the "Old Stock Option Plan") and its New 2000 Stock Option Plan adopted in 2000. The Corporate Governance Committee identifies, interviews and recommends to the Board candidates for election to the Board. The Corporate Governance Committee also reviews and reports to the Board as to various corporate governance matters. The Corporate Governance Committee will consider director nominees recommended by holders of the Company's common stock. Pursuant to the Company's bylaws, shareholder nominations must be in writing and must be received by the Company no later than (i) 120 days prior to the first anniversary of the last annual meeting if the election is to take place at an annual meeting of shareholders or (ii) the close of business on the tenth day after notice of the meeting is first given to shareholders if the election is to take place at a special meeting of the shareholders. The written nomination must include (a) the name and address of the shareholder who intends to make the nomination and the name(s) of the nominee(s), (b) the class and number of shares held by the nominator as of the record date of the meeting and as of the date of the notice and certain information about record ownership, (c) a description of all arrangements between the nominator and the nominee(s) relating to the nomination, (d) the same information about the nominee(s) that the Company would be required to include in a proxy statement under the Securities and Exchange Commission's proxy rules if the Company were making the nomination, (e) the written consent of each nominee to serve as a director of the Company and (f) any other information the Company may reasonably request. Shareholders must also comply with the requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the rules promulgated thereunder in making director nominations. Copies of the Company's bylaws may be obtained by writing or calling the Company at 100 Augusta Street (29601), Post Office Box 6126, Greenville, South Carolina 29606, Telephone (864) 255-4122, attention: William H. Hardman, Secretary. STOCK OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT The following table sets forth certain information as of September 18, 2002, regarding the beneficial ownership of the Company's common stock by (i) persons beneficially owning in any case more than five percent of the common stock, (ii) the directors, (iii) the executive officers named in the Summary Compensation Table under "Management Compensation", and (iv) all current directors and executive officers as a group. Unless otherwise noted in the notes to the table, the Company believes that the persons named in the table have sole voting and investment power with respect to all shares of common stock of the Company shown as beneficially owned by them.
SHARES BENEFICIALLY BENEFICIAL OWNER OWNED PERCENTAGE Bettis C. Rainsford (1) 679,484 12.2% 108-1/2 Courthouse Square Post Office Box 388 Edgefield, SC 29824 Franklin Resources, Inc. (2) 560,000 10.0% Franklin Advisory Services, Inc. Charles B. Johnson Rupert H. Johnson, Jr. 777 Mariners Island Boulevard San Mateo, California 94404 Dimensional Fund Advisors Inc. (3) 478,280 8.6% 1299 Ocean Avenue, 11th Floor Santa Monica, California 90401 Towle & Co. (4) 470,417 8.4% 12855 Flushing Meadow Dr. St. Louis, MO 63131 4 Berno, Gambal & Barbee, Inc. (5) 303,700 5.4% 1100 N. Glebe Road Suite 1040 Arlington, VA 22201 E. Erwin Maddrey, II (6) 870,188 15.6% 233 North Main Street, Suite 200 Greenville, SC 29601 Buck A. Mickel (7) (8) 399,834 7.2% Post Office Box 6721 Greenville, SC 29606 Micco Corporation (8) 310,158 5.6% Post Office Box 795 Greenville, SC 29602 Minor H. Mickel (8) (9) 394,512 7.1% 415 Crescent Avenue Greenville, SC 29605 Minor M. Shaw (8) (10) 375,459 6.7% Post Office Box 795 Greenville, SC 29602 Charles C. Mickel (8) (11) 373,332 6.7% Post Office Box 6721 Greenville, SC 29606 William F. Garrett (12) 215,432 3.9% C. C. Guy (13) 9,949 (19) James F. Kane (14) 3,371 (19) Max Lennon (15) 10,899 (19) William H. Hardman, Jr. (16) 22,600 (19) Donald C. Walker (17) 15,104 (19) All current directors and executive officers as a group (8 Persons) (18) 1,547,377 27.7%
(1) This information is based on a Form 4 filed by Mr. Rainsford on March 2, 2001 with the Securities and Exchange Commission with respect to the Company's common stock and confirmed by telephone on September 26, 2002. Mr. Rainsford was a director of the Company until September 14, 2000 and until October 1, 1999 was the Executive Vice President, Treasurer and Chief Financial Officer of the Company. (2) This information is based on a Schedule 13F that was filed on August 12, 2002 with the Securities and Exchange Commission by Franklin Resources, Inc. ("FRI") and on a Schedule 13G/A filed by FRI with the Securities and Exchange Commission on January 20, 2000 with respect to the Company's common stock. In the amendment, FRI reported that, with respect to the Company's common stock, the shares shown in the table above were beneficially owned by one or more investment companies or other managed accounts that are advised by one or more direct and indirect investment advisory subsidiaries of FRI. The amendment reported that the investment advisory subsidiary(ies) have investment and/or voting power over the securities owned by their investment advisory clients. Accordingly, such subsidiary(ies) may be deemed to be the beneficial owner of the shares shown in the table. The amendment reported that Charles B. Johnson and Rupert H. Johnson, Jr. (the "FRI Principal Shareholders") (each of whom has 5 the same business address as FRI) each own in excess of 10% of the outstanding common stock and are the principal shareholders of FRI and may be deemed to be the beneficial owners of securities held by persons and entities advised by FRI subsidiaries. The amendment reported that one of the investment advisory subsidiaries, Franklin Advisory Services, Inc. (whose address is One Parker Plaza, Sixteenth Floor, Fort Lee, New Jersey 07024), has sole voting and dispositive power with respect to all of the shares shown. FRI, the FRI Principal Shareholders and the investment advisory subsidiaries disclaim any economic interest or beneficial ownership in the shares shown in the table above and are of the view that they are not acting as a "group" for purposes of the Securities Exchange Act of 1934, as amended. (3) This information is based on a Schedule 13F that was filed on August 6, 2002 and on a Schedule 13G/A filed on February 12, 2002 with the Securities and Exchange Commission by Dimensional Fund Advisors Inc. ("Dimensional") with respect to the Company's common stock. Dimensional reported that it had sole voting power and sole dispositive power with respect to all of the shares shown. The Schedule 13G/A reports that Dimensional furnishes investment advice to four investment companies and serves as investment manager to certain other investment vehicles, including commingled group trusts, that all of the shares of the Company's common stock were owned by such investment companies or investment vehicles, that Dimensional disclaims beneficial ownership of such securities and that, to the knowledge of Dimensional, no such investment company or investment vehicle client owned more than 5% of the outstanding shares of the Company's common stock. (4) This information is based on a Schedule 13D filed on May 15, 2002 with the Securities and Exchange Commission by Towle & Co. ("Towle") with respect to the Company's common stock. Towle reported that it has sole voting power and sole dispositive power as to 200,675 of the shares shown, and no voting power but shared dispositive power as to 269,742 of the shares shown. (5) This information related to the ownership of the Company's common stock by Berno, Gambel & Barbee, Inc. ("Berno") is based on reports obtained by the Company from The New York Stock Exchange and on a telephone conversation with Berno of September 26, 2002. (6) Mr. Maddrey is a director of the Company and was its President and Chief Executive Officer until June 2000. The number of shares shown as beneficially owned by Mr. Maddrey includes approximately 8,373 shares allocated to Mr. Maddrey's account in the Company's Employee Stock Purchase Plan and 107,867 shares held by the E. Erwin and Nancy B. Maddrey, II Foundation, a charitable trust, as to which shares Mr. Maddrey holds sole voting and investment power but disclaims beneficial ownership (7) Buck A. Mickel is a director of the Company. The number of shares shown as beneficially owned by Buck A. Mickel includes 88,959 shares directly owned by him, all of the 310,158 shares owned by Micco Corporation, and 717 shares held by him as custodian for a minor. See Note (7). (8) Micco Corporation owns 310,158 shares of the Company's common stock. The shares of common stock of Micco Corporation are owned in equal parts by Minor H. Mickel, Buck A. Mickel (a director of the Company), Minor M. Shaw and Charles C. Mickel. Buck A. Mickel, Minor M. Shaw and Charles C. Mickel are the children of Minor H. Mickel. Minor H. Mickel, Buck A. Mickel, Minor M. Shaw and Charles C. Mickel are officers and directors of Micco Corporation. Each of Minor H. Mickel, Buck A. Mickel, Minor M. Shaw and Charles C. Mickel disclaims beneficial ownership of three-quarters of the shares of the Company's common stock owned by Micco Corporation. Minor H. Mickel directly owns 84,354 shares of the Company's common stock. Buck A. Mickel, directly or as custodian for a minor, owns 89,676 shares of the Company's common stock. Charles C. Mickel, directly or as custodian for his children, owns 63,149 shares of the Company's common stock. Minor M. Shaw, directly owns 65,045 shares of the Company's common stock. Minor M. Shaw's husband, through an individual retirement account, beneficially owns approximately 256 shares of the Company's common stock, as to which shares Minor M. Shaw may also be deemed a beneficial owner. Minor M. Shaw disclaims beneficial ownership with respect to these shares. The spouse of Charles C. Mickel owns 25 shares of the Company's common stock, as to which shares Charles C. Mickel may also be deemed a beneficial owner. Charles C. Mickel disclaims beneficial ownership with respect to these shares and with respect to the 877 shares of the Company's common stock held by him as custodian for his children. Buck A. Mickel disclaims beneficial ownership with respect to the 717 shares of the Company's common stock held by him as custodian for a minor. (9) The number of shares shown as beneficially owned by Minor H. Mickel includes 84,354 shares directly owned by her and all of the 310,158 shares owned by Micco Corporation. See Note (7). 6 (10) The number of shares shown as beneficially owned by Minor M. Shaw includes 65,045 shares owned by her directly, approximately 256 shares beneficially owned by her husband through an individual retirement account, and all of the 310,158 shares owned by Micco Corporation. See Note (7). (11) The number of shares shown as beneficially owned by Charles C. Mickel includes 63,149 shares owned by him directly or as custodian for his children, 25 shares owned by his wife and all of the 310,158 shares owned by Micco Corporation. See Note (7). (12) William F. Garrett is President and Chief Executive Officer and a director of the Company. Included in the table are 125,000 unissued shares covered by options that are exercisable within 60 days. (13) C. C. Guy is a director of the Company. The number of shares shown as beneficially owned by C. C. Guy includes 4,742 shares owned by his wife, as to which shares Mr. Guy disclaims beneficial ownership. (14) Dr. Kane is a director of the Company. The shares shown as beneficially owned by him are held in a Keogh account or an IRA account. (15) Dr. Lennon is a director of the Company. (16) William H. Hardman, Jr. is a Vice President and the Chief Financial Officer, Secretary and Treasurer of the Company. Included in the table are 11,986 unissued shares covered by options that are exercisable within 60 days. (17) Donald C. Walker is a Vice President and the Controller and Assistant Secretary of the Company. Included in the table are 8,522 unissued shares covered by options that are exercisable within 60 days. (18) Includes all shares deemed to be beneficially owned by any current director or executive officer. The number of shares shown in the table includes an aggregate of 145,508 unissued shares subject to employee stock options held by executive officers that are or may be exercisable within 60 days or less. (19) Less than one percent. 7 EXECUTIVE OFFICERS The following provides certain information regarding the current executive officers of the Company. NAME AND AGE POSITION William F. Garrett (61) President and Chief Executive Officer (1) William H. Hardman, Jr. (61) Vice President, Chief Financial Officer, Secretary and Treasurer (2) Donald C. Walker (58) Vice President, Controller and Assistant Secretary (3) (1) See information under "Election of Directors." (2) William H. Hardman, Jr. was Vice President of Administration for Delta Mills Marketing Company, a division of a subsidiary of the Company, from 1986 until June of 2000 when he was elected Vice President, Chief Financial Officer, Secretary and Treasurer of the Company. (3) Donald C. Walker was Controller of Delta Mills Marketing Company, a division of a subsidiary of the Company, from 1987 until June 2000 when he was elected Vice President, Controller and Assistant Secretary of the Company. The Company's executive officers are appointed by the Board of Directors and serve at the pleasure of the Board. 8 MANAGEMENT COMPENSATION SUMMARY COMPENSATION TABLE The following table sets forth certain information for the fiscal years ended June 29, 2002, June 30, 2001, and July 1, 2000 respecting the compensation earned by the current Chief Executive Officer and the other current executive officers who earned salary and bonus in fiscal 2002 in excess of $100,000. All of the forgoing persons are referred to collectively as the "Named Executives."
SUMMARY COMPENSATION TABLE Annual Compensation Long-Term Compensation ------------------------------- ----------------------- Awards Payouts ------------ --------- Other All Annual Securities Other Compen- Underlying LTIP Compen- Name and Salary Bonus sation Options Awards sation Principal Position Year ($)(a) ($)(a)(b) ($)(c) (#)(d) ($) ($) - ------------------------------------------------------------------------------------------------------- William F. Garrett 2002 584,616 210,000(e) 37,831 0 0 80,103(g)(j) President & Chief 2001 500,000 650,000 105,067 243,750(k) 0 42,954 Executive Officer 2000 420,000 520,000 0 0 306,000(f) 34,785 William H. Hardman, Jr. 2002 210,000 23,000 3,593 0 0 16,358(h)(j) Vice President, 2001 200,000 20,000 11,651 24,902(k) 0 7,401 Chief Financial 2000 176,500 50,000 0 0 0 6,179 Officer, Treasurer & Secretary Donald C. Walker 2002 136,500 15,000 1,642 0 0 7,511(i)(j) Vice President, 2001 130,000 13,000 5,320 17,075(k) 0 4,338 Controller & 2000 89,537 16,000 0 0 0 3,546 Assistant Secretary
(a) The amounts shown in the column include sums the receipt of which has been deferred pursuant to the 401(k) Plan or the Company's deferred compensation plan (the "Deferred Compensation Plan"). (b) Amounts in this column are cash bonuses paid to reward performance. Bonuses are recorded in the above table in the fiscal year for which they were earned, though such bonuses are actually paid in the following fiscal year. (c) The amounts in this column were paid by the Company in connection with the vesting of awards under the Company's Old and New Incentive Stock Award Plans and were in each case approximately sufficient, after the payment of all applicable income taxes, to pay the participant's federal and state income taxes attributable to the vesting of the award. The tax assistance related to the vesting of these awards is earned, and recorded above, in the year vested though such amounts are actually paid in the fiscal year after the fiscal year in which they are earned. When an award vests, the recipient must pay a $.01 per share exercise price in order to receive the stock subject to the award and the related tax assistance. (d) For purposes of this table, awards under the Company's New Incentive Stock Award Plan are treated as options. (e) Includes $150,000 as the third of seven payments constituting a special bonus for prior service and as an incentive to remain in the employment of the Company. If Mr. Garrett remains in the service of the Company for the full payment period, the total special bonus will be $1,000,000. In addition, The Compensation Committee of the Board of Directors granted Mr. Garrett a $60,000 discretionary bonus. 9 (f) 62% of this award constituted a grant of Common Stock valued at $1.50 per share, the closing price for the Common Stock on March 15, 2000, the date of Board authorization of issuance. The remainder of the award consisted of cash to pay expected income taxes on the value of the total award. The award was made in connection with the termination of the Company's Long Term Incentive Plan prior to the spin-offs of Delta Apparel, Inc and Duck Head Apparel Company, Inc on June 30, 2000. (g) The fiscal 2002 amount represents $6,923 contributed by the Company to the 401(k) Plan for Mr. Garrett with respect to his compensation deferred under the 401(k) Plan, $11,308 contributed by the Company to the Deferred Compensation Plan for Mr. Garrett with respect to his compensation deferred under the Deferred Compensation Plan, and $61,872 earned on Mr. Garrett's deferred compensation at a rate in excess of 120% of the Federal mid-term rate. (h) The fiscal 2002 amount represents $4,346 contributed by the Company to the 401(k) Plan for Mr. Hardman with respect to his compensation deferred under the 401(k) Plan, $1,846 contributed by the Company to the Deferred Compensation Plan for Mr. Hardman with respect to his compensation deferred under the Deferred Compensation Plan, and $10,166 earned on Mr. Hardman's deferred compensation at a rate in excess of 120% of the Federal mid-term rate. (i) The fiscal 2002 amount represents $2,730 contributed by the Company to the 401(k) Plan for Mr. Walker with respect to his compensation deferred under the 401(k) Plan, $975 contributed by the Company to the Deferred Compensation Plan for Mr. Walker with respect to his compensation deferred under the Deferred Compensation Plan, and $3,806 earned on Mr. Walker's deferred compensation at a rate in excess of 120% of the Federal mid-term rate. (j) The 401(k) Plan allocation shown for the fiscal year was allocated to the participant's account during that fiscal year, although all or part of the allocation may have been determined in whole or in part on the basis of the participant's compensation during the prior fiscal year. (k) Adjusted for the 4:1 reverse stock split of February 5, 2002. The amounts shown in the table above do not include reimbursement by the Company or its subsidiaries for certain automobile expenses, club memberships and other items. The non-business personal benefit to any Named Executive of these amounts does not exceed the lesser of $50,000 or 10% of the Named Executive's total salary and bonus. 10 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES The following table provides certain information respecting the exercise by any Named Executive during fiscal 2002 of awards granted under the Company's Old and New Incentive Stock Award Plans and the fiscal year end value of any unexercised outstanding awards and options. No named executive exercised any options issued under the Old or New 2000 Stock Option Plan in fiscal 2002.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES Shares Acquired Value On Exercise Realized ------------------------------------------------------------------ Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable - ------------------- ------------- ------------- --------------- -------------------------------- ----------------- William F 15,000 (a) 32,850 (b) 125,000 101,250 0 98,550 (b) Garrett William H. 1,647 (a) 3,607 (b) 11,986 10,496 0 10,821 (b) Hardman, Jr. Donald C. Walker 915 (a) 2,004 (b) 8,522 6,912 0 6,012 (b)
(a) These represent a portion of the Shares covered by an award granted on September 5, 2000 under the New Incentive Stock Award Plan, pursuant to which a participant can acquire Shares for $.01 cash per share upon the vesting of the award respecting such Shares. Twenty percent of the incentive stock award vested and was exercised on June 29, 2002. (b) Based on the closing price of the Company's common stock on July 1, 2002 of $2.20 per share. July 1, 2002 was the next business day following June 29, 2002, the date of vesting of the applicable incentive stock awards and the last day of fiscal year 2002. EMPLOYMENT CONTRACTS AND SEVERANCE ARRANGEMENTS In recognition of William F. Garrett's past service to the Company and in order to provide him with an additional incentive to remain with the Company, the Company's board in March 2000 authorized the payment to him of $100,000 in connection with the spin-offs of Delta Apparel and Duck Head and the payment to him of six additional annual payments of $150,000 each, with the first of these annual payments to be made in October 2000. Mr. Garrett will forfeit any of these payments remaining to be made in the event that he voluntarily leaves employment with the Company or such employment is terminated by the Company for cause. Any remaining amounts payable to him under the arrangement will be paid to him in the event of his death or disability or in the event there is a change of control of the Company and he does not remain with the Company. Unless otherwise provided by agreement, each of the Company's executive officers is eligible to participate in the Company's severance plan for salaried employees. In the event a covered employee's employment terminates in specified circumstances, this plan provides that the employee will receive severance equal in amount to one week's base salary for each year of service credit, with a minimum of two weeks' base salary. 11 DIRECTOR COMPENSATION For fiscal 2002, the Company paid each director who was not an officer of the Company an annual cash fee of $11,733, plus it provided an annual payment of approximately $5,867 for each such director with which shares of the Company's common stock were purchased. Beginning in fiscal 2001, non-employee directors who are newly appointed or elected for the first time will receive an annual cash fee of $13,334 and a payment for the purchase of stock of $6,666. The Company expects that the amounts for continuing non-employee directors will be increased over five years such that in fiscal 2005, continuing non-employee directors will receive the same amounts as newly appointed or elected non-employee directors. The shares purchased may be newly issued or acquired in the open market for such purpose. Each director is also reimbursed for his reasonable travel expenses in attending each meeting. Each non-officer director is paid $500 ($750 for the committee chair) for each committee meeting attended, $250 for each telephonic board and committee meeting in which the director participates, and $500 for each board meeting attended in addition to four quarterly board meetings. 12 NOTWITHSTANDING ANY STATEMENT IN ANY OF THE COMPANY'S PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, INCORPORATING FUTURE FILINGS, INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING PERFORMANCE GRAPH AND THE COMPENSATION COMMITTEE REPORT BELOW SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY SUCH FILING. PERFORMANCE GRAPH [PERFORMANCE GRAPH OMITTTED]
Cumulative Total Return ---------------------------------------------------------------- 6/97 6/98 6/99 6/00 6/01 6/02 DELTA WOODSIDE INDUSTRIES, INC. 100.00 78.25 90.21 32.63 11.98 8.83 S & P 500 100.00 130.16 159.78 171.36 145.95 119.70 TEXTILES PEER GROUP 100.00 108.40 66.50 26.01 16.94 7.04
This performance graph assumes that $100 was invested in the common stock of Delta Woodside Industries, Inc. and the comparison groups on June 30, 1997 and that all dividends have been reinvested. The Peer Group is composed of the following companies: Galey & Lord, Burlington Industries, Inc., and Cone Mills Corporation. 13 REPORT OF THE COMPENSATION COMMITTEE AND THE COMPENSATION GRANTS COMMITTEE OF THE BOARD OF DIRECTORS This report of the Compensation Committee and the Compensation Grants Committee (collectively, the "Committees") of the Board of Directors of the Company sets forth the Committees' policies with regard to compensation of the executive officers of the Company, including the relationship of corporate performance to executive compensation. EXECUTIVE COMPENSATION POLICIES Decisions regarding certain aspects of the compensation of the Company's executive officers are made by the four member Compensation Committee or the two member Compensation Grants Committee of the Board. Each Committee member is a non-employee director. The Committees believe that their respective compensation practices are designed to attract, retain, and motivate key Company executives to achieve short-, medium-, and long-term goals that the Committees believe will enhance the value of the shareholders' investment in the Company. Generally, these objectives are implemented through: A. Cash bonuses to reward the achievement of specific performance goals, B. Grants of stock awards under an incentive stock award plan, C. Grants of stock options under a stock option plan, and D. Payment of base salaries at levels that are competitive with those paid by the peer group of companies shown on the Performance Graph above. In June of 2002, the Compensation Committee retained a consulting firm to conduct a review of the Company's compensation policies with respect to its Chief Executive Officer and other executive officers. The Compensation Committee and the Compensation Grants Committee expect to consider the recommendations of the consultant in setting their compensation policies for fiscal year 2003. COMPENSATION OF EXECUTIVE OFFICERS OTHER THAN MR. GARRETT The Company's executive officers other than Mr. Garrett (the "Other Officers") received compensation for fiscal 2002 that included both fixed and performance-based components. The Other Officers' compensation consisted of one or more of the following elements: base salary, cash bonuses, the vesting of options under the Old Stock Option Plan and the New 2000 Stock Option Plan, and the vesting of awards under the New Incentive Stock Award Plan. The Company ordinarily pays a cash bonus to its Other Officers based on whether a certain target return on capital employed is obtained. The Company did not achieve the target set for 2002; however, the Company paid discretionary cash bonuses to Messrs. Hardman and Walker in fiscal 2002 as an incentive to remain with the Company and to reward them primarily for achieving certain goals for developing a new capital structure. For fiscal 2002, the total cash bonuses awarded to these Other Officers amounted to approximately 10% of their combined base salaries. In fiscal 2002, each Other Officer participated in the Old Incentive Stock Award Plan that was approved by the shareholders of the Company in November 1990 and amended by approval of the shareholders in November 1995 and in November 1997. Each Other Officer also participated in the New Incentive Stock Award Plan approved by the shareholders of the Company in November 2000. No new awards were made under either plan in fiscal 2002; however, previously outstanding awards vested in fiscal 2002. Awards made under the Old and New Incentive Stock Award Plans to the Other Officers were structured so that sixty percent of each individual's award vests if he remains in service with the Company through predetermined anniversary dates, and up to forty percent of his award vests if the Company meets specified performance targets respecting cumulative operating profits. While the number of shares covered by any award to an Other Officer is not determined by specific, non-subjective criteria, the determination of such number takes into account the level and responsibility of the executive's position, the executive's performance, the executive's compensation, the 14 assessed potential of the executive, and any other factors that are deemed relevant to the accomplishment of the purposes of the incentive stock award plans. The Committees believe that the plans are an important tool for the achievement of medium-term goals. In fiscal 2002, each Other Officer also participated in the Old Stock Option Plan that was approved by the shareholders of the Company in November 1990, amended by approval of the shareholders in November 1995 and in November 1997, and terminated in May 2000. Each Other Officer also participated in the New 2000 Stock Option Plan that was approved by the shareholders of the Company in November 2000. No new options were granted under either plan in fiscal 2002; however, previously outstanding options vested in fiscal 2002. The purpose of these plans is to promote the growth and profitability of the Company over a longer term by enabling the Company to attract and retain key and middle level managers of outstanding competence and by increasing the personal participation of its executives in the Company's performance by providing these executives with an additional equity ownership opportunity in the Company. In making option grants to the Other Officers, no specific, non-subjective criteria were used, but the factors taken into account included the level and responsibility of the executive's position, the executive's performance, the executive's compensation, the assessed potential of the executive, and any other factors that were deemed relevant to the accomplishment of the purposes of the plan. Each option granted under the New 2000 Stock Option Plan to an Other Officer provides that the option becomes exercisable in stages over a period of three years. Section 162(m) of the Internal Revenue Code ("Section 162(m)") imposes limits on the ability of the Company to claim income tax deductions for compensation paid to the Named Executives. Section 162(m) generally denies a corporate income tax deduction for annual compensation in excess of $1,000,000 paid to any of the Named Executives. Certain types of compensation, including performance-based compensation, are generally excluded from this deduction limit. The portions of awards under the Old and New Incentive Stock Award Plans that vest solely upon the grantee's continued employment with the Company and options granted under the Old Stock Option Plan do not qualify as performance-based compensation under Section 162(m); however, no Other Officer subject to Section 162(m) received in fiscal 2002 aggregate compensation in excess of $1,000,000. COMPENSATION PAID TO W. F. GARRETT The compensation of the Chief Executive Officer includes both fixed and performance-based components. In setting the base salary level for the Chief Executive Officer, the Compensation Committee considers possible bonus awards in addition to base salary and attempts to set the base salary level so that total compensation, including bonuses, will be near to that of the median of Chief Executive Officers of the peer group of companies. To guide them in this task, the Compensation Committee has engaged a consulting firm to study Mr. Garrett's compensation package. Mr. Garrett's bonus for fiscal year 2002 includes $150,000 as the third of seven payments pursuant to a prior commitment made in a board resolution adopted in March 2000 constituting a special bonus for prior service and as an incentive to remain in the employment of the Company. If Mr. Garrett remains in the service of the Company for the full payment period, the total special bonus will be $1,000,000. Also, the Company ordinarily pays a cash bonus to its Chief Executive Officer based on whether a certain target return on capital employed is obtained. The Company did not achieve the target set for 2002; however, the Company paid a discretionary cash bonus to Mr. Garrett in fiscal 2002 to reward him primarily for implementing a cost reduction plan that contributed to returning the Company to profitability in the Fourth Quarter of Fiscal Year 2002, and achieving certain goals for developing a new capital structure. For fiscal 2002, the total cash bonus, including the special bonus, awarded to Mr. Garrett amounted to approximately 35% of his base salary. In fiscal 2002, Mr. Garrett participated in the Old Incentive Stock Award Plan that was approved by the shareholders of the Company in November 1990 and amended by approval of the shareholders in November 1995 and in November 1997. Mr. Garrett also participated in the New Incentive Stock Award Plan approved by the shareholders of the Company in November 2000. No new awards were made to Mr. Garrett under either plan in fiscal 2002; however previously outstanding awards vested in fiscal 2002. Awards made under the Old and New Incentive Stock Award Plans to Mr. Garrett were structured so that sixty percent of his award vests if he remains in service with the Company through predetermined anniversary dates, and up to forty percent of his award vests if the Company meets specified performance targets respecting cumulative operating profits. While the number of shares covered by any award to Mr. Garrett is not determined by specific, non-subjective criteria, the determination of such number takes into account his 15 position and responsibilities, his performance, his compensation, his assessed potential, and any other factors that are deemed relevant to the accomplishment of the purposes of the incentive stock award plans. The Committees believe that the plans are an important tool for the achievement of medium-term goals. In fiscal 2002, Mr. Garrett also participated in the Old Stock Option Plan that was approved by the shareholders of the Company in November 1990, amended by approval of the shareholders in November 1995 and in November 1997, and terminated in May 2000. Mr. Garrett also participated in the New 2000 Stock Option Plan that was approved by the shareholders of the Company in November 2000. No new options were granted to Mr. Garrett in fiscal 2002; however, previously outstanding options vested in fiscal 2002. The purpose of these plans is to promote the growth and profitability of the Company over a longer term by enabling the Company to attract and retain key and middle level managers of outstanding competence and by increasing the personal participation of its executives in the Company's performance by providing these executives with an additional equity ownership opportunity in the Company. In making option grants to Mr. Garrett, no specific, non-subjective criteria were used, but the factors taken into account included his position and responsibilities, his performance, his compensation, his assessed potential, and any other factors that were deemed relevant to the accomplishment of the purposes of the plan. Each option granted under the New 2000 Stock Option Plan to Mr. Garrett provides that the option becomes exercisable in stages over a period of three years. Section 162(m) of the Internal Revenue Code imposes limits on the ability of the Company to claim income tax deductions for compensation paid to the Named Executives. Section 162(m) generally denies a corporate income tax deduction for annual compensation in excess of $1,000,000 paid to any of the Named Executives. Mr. Garrett did not receive compensation for fiscal year 2002 in excess of $1,000,000. Compensation Compensation Committee Grants Committee Dr. James F. Kane, Chair Dr. James F. Kane, Chair Dr. Max Lennon Dr. Max Lennon C.C. Guy Buck A. Mickel COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The following directors served on the Compensation Committee of the Company's Board of Directors during fiscal 2002: C.C. Guy, Dr. James F. Kane, Dr. Max Lennon and Buck A. Mickel. The following directors served on the Compensation Grants Committee of the Company's Board of Directors during fiscal 2002: Dr. James F. Kane and Dr. Max Lennon. C.C. Guy served as Chairman of the Board of Old Delta Woodside or its predecessors from the founding of Old Delta Woodside's predecessors in 1984 until November 1989. Buck A. Mickel was a Vice President of Old Delta Woodside or its predecessors from the founding of Old Delta Woodside's predecessors until November 1989, Secretary of Old Delta Woodside from November 1986 to March 1987, and Assistant Secretary of Old Delta Woodside from March 1987 to November 1988. 16 RELATED PARTY TRANSACTIONS THE SPIN-OFFS OF DELTA APPAREL AND DUCK HEAD Until June 30, 2000, the Company had two apparel businesses and a textile fabrics business. One of the apparel businesses was conducted by the Company's Delta Apparel Company division, a vertically integrated supplier of knit apparel, particularly T-shirts, sportswear and fleece goods. The other apparel business was conducted by the Company's Duck Head Apparel Company division, which designed, sourced, produced, marketed and distributed boys' and men's value-oriented casual sportswear. The textile fabrics business was conducted by the Company's Delta Mills Marketing Company division, which engages in the manufacture and sale of a broad range of finished apparel fabrics primarily to branded apparel manufacturers and resellers and private label apparel manufacturers. During fiscal 2000, the Company's board of directors determined that it was in the best interest of the Company and its shareholders to separate the three businesses into three independent companies. In May of 2000, the Company internally reorganized its business operations such that (i) all of the assets and operations of the Delta Apparel Company division were transferred to a newly-formed direct subsidiary of the Company named Delta Apparel, Inc. ("Delta Apparel") or to a subsidiary of Delta Apparel, (ii) all of the assets and operations of the Duck Head Apparel Company division were transferred to another newly-formed direct subsidiary of the Company named Duck Head Apparel Company, Inc. ("Duck Head") or to a subsidiary of Duck Head, and (iii) the Company's subsidiary Delta Mills, Inc., which includes all of the assets and operations of the Delta Mills Marketing Company division, became a direct subsidiary of the Company. On June 30, 2000, the Company simultaneously spun-off Delta Apparel and Duck Head. All of the outstanding common stock of Delta Apparel and all of the outstanding common stock of Duck Head were distributed to the shareholders of the Company pro rata based on their record ownership on June 19, 2000 of the Company's common stock. RELATIONSHIPS OR TRANSACTIONS WITH DELTA APPAREL AND DUCK HEAD BOARDS OF DIRECTORS OF THE COMPANY, DELTA APPAREL AND DUCK HEAD All of the directors of the Company are also directors of Delta Apparel and were directors of Duck Head. On July 20, 2001, W.F. Garrett resigned as a director of Duck Head. All other directors of the Company were directors of Duck Head until its acquisition by Tropical Sportswear Int'l Corporation in August of 2001. In the event that any material issue were to arise between the Company, on the one hand, and Delta Apparel on the other hand, the directors could be deemed to have a conflict of interest with respect to that issue. PRINCIPAL STOCKHOLDERS OF THE COMPANY, DELTA APPAREL AND DUCK HEAD In the spin-offs of Delta Apparel and Duck Head, the common stock of each of Delta Apparel and Duck Head was distributed on June 30, 2000 to the Company's stockholders pro rata based on such stockholders' record ownership on June 19, 2000 of the Company's common stock. Therefore, immediately following the spin-offs, the Company's principal stockholders were the same individuals and entities as Delta Apparel's and Duck Head's principal stockholders, and those principal stockholders had the same respective percentages of outstanding beneficial ownership in each of Delta Woodside, Delta Apparel and Duck Head (assuming no acquisitions or dispositions of shares by those stockholders between the record date for the Delta Apparel and Duck Head spin-offs and the completion of those spin-offs). E. Erwin Maddrey, II and Buck A. Mickel, directors of the Company, continue to beneficially own substantial percentages of the stock of Delta Apparel. The Company believes that certain third party substantial shareholders of the Company are also substantial shareholders of Delta Apparel. 17 AGREEMENTS BETWEEN THE COMPANY, DELTA APPAREL AND DUCK HEAD AMENDMENT OF TAX SHARING AGREEMENT - ---------------------------------- In connection with the Spin-off by Delta Woodside of Delta Apparel and Duck Head, Delta Woodside, Delta Apparel and Duck Head entered into a tax sharing agreement as of June 30, 2000. Among other matters, the tax sharing agreement allocated tax liabilities and benefits among the three companies, described each company's rights and obligations relating to tax payments and refunds for periods before and after the spin-off and related matters such as the filing of tax returns and handling of audits and other tax proceedings, and set forth the indemnification arrangements among the three companies with respect to tax matters. The tax sharing agreement provided that Delta Woodside would resolve all disagreements and disputes relating to the agreement. At the request of Duck Head, the parties entered into an amendment to the tax sharing agreement as of August 6, 2001. The amendment clarified the rights and obligations of the companies with respect to their respective tax assets and tax liabilities. The amendment also modified the parties' respective indemnification obligations. Under the tax sharing agreement, as amended, Delta Woodside is generally responsible for all taxes with respect to pre-spin-off periods and the spin-off. The amendment further provides that all disputes arising under the tax sharing agreement, as amended, are to be resolved by arbitration in accordance with the commercial arbitration rules of the American Arbitration Association. Prior to the negotiation of the terms of the amendment to the tax sharing agreement Duck Head agreed to reimburse Delta Woodside for all of Delta Woodside's attorneys' fees incurred in connection with this amendment. Mr. Garrett resigned from his position as a director of Duck Head in connection with the negotiation of the amendment so that the Company would have an independent director with respect to the negotiations. Any transaction entered into between the Company and any officer, director, principal shareholder or any of their affiliates has been and will be on terms which the Company then believes comparable to those which would be available to the Company at such time from non-affiliated persons and will be in the future subject to the approval at the time of a majority of the Company's disinterested directors. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE There were no late filings of reports for fiscal year 2002 pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended, except that C.C. Guy filed one form four late pertaining to one transaction. To the Company's knowledge, Bettis C. Rainsford, the beneficial owner of more than 10% of the Company's outstanding common stock, has neither filed a Form 5 with respect to fiscal year 2002 nor has he certified to the Company in writing that no such Form 5 is required to be filed. 18 ITEM 2 RATIFICATION OF APPOINTMENT OF KPMG LLP AS INDEPENDENT AUDITORS APPOINTMENT OF INDEPENDENT AUDITORS Upon recommendation of the Audit Committee of the Board of Directors, the Board of Directors has appointed KPMG LLP as independent auditors for the Company and its subsidiaries to audit its consolidated financial statements for the year ended June 28, 2003. KPMG LLP currently serves the Company and its subsidiaries as independent auditors and from time to time advises the Company on tax and other matters. Representatives of KPMG LLP will be present at the Annual Meeting with the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions from shareholders. AUDIT FEES The aggregate fees billed for professional services rendered for the audit of the Company's annual financial statements for the most recent fiscal year and the reviews of the financial statements included in the Company's Forms 10-Q for that fiscal year were $99,500. FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES There were no fees billed for professional services described in Paragraph(c)(4)(ii) of Rule 2-01 of Regulation S-X rendered by KPMG LLP for the most recent fiscal year. ALL OTHER FEES The aggregate fees billed for all professional services rendered by KPMG LLP for the most recent fiscal year other than those described in the prior two paragraphs were approximately $88,000 (principally for tax services and employee benefit plans). The Audit Committee has considered whether the provision of these services is compatible with maintaining KPMG LLP's independence. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE TO RATIFY THE APPOINTMENT OF KPMG LLP AS INDEPENDENT AUDITORS. OTHER BUSINESS As of the date of this Proxy Statement, the Board of Directors was not aware that any business not described above would be presented for consideration at the Annual Meeting. If any other business properly comes before the meeting, it is intended that the shares represented by proxies will be voted with respect thereto in accordance with the judgment of the person or persons voting them. FINANCIAL INFORMATION THE COMPANY'S FISCAL 2002 ANNUAL REPORT IS BEING MAILED TO SHAREHOLDERS ON OR ABOUT OCTOBER 7, 2002. THE COMPANY WILL PROVIDE WITHOUT CHARGE TO ANY SHAREHOLDER OF RECORD AS OF SEPTEMBER 18, 2002, AND TO EACH PERSON TO WHOM THIS PROXY STATEMENT IS DELIVERED IN CONNECTION WITH THE ANNUAL MEETING OF SHAREHOLDERS, UPON WRITTEN REQUEST OF SUCH SHAREHOLDER OR PERSON, A COPY OF SUCH FISCAL 2002 ANNUAL REPORT OR THE COMPANY'S FISCAL 2002 ANNUAL REPORT ON FORM 10-K, INCLUDING FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES (BUT EXCLUDING EXHIBITS), FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. ANY SUCH REQUEST SHOULD BE DIRECTED TO DELTA WOODSIDE INDUSTRIES, INC., POST OFFICE BOX 6126, GREENVILLE, SOUTH CAROLINA 29606, ATTENTION: WILLIAM H. HARDMAN, VICE PRESIDENT, TREASURER AND SECRETARY. 19 NOTWITHSTANDING ANY STATEMENT IN ANY OF THE COMPANY'S PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, INCORPORATING FUTURE FILINGS, INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE AUDIT COMMITTEE REPORT BELOW SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY SUCH FILING. The Audit Committee is responsible for the duties set forth in its charter (which was attached as Appendix A to the Company's proxy statement for its 2000 annual meeting of shareholders) but is not responsible for either the preparation of the financial statements or the auditing of the financial statements. The Company's management has the responsibility for preparing the financial statements and implementing internal controls, and the Company's independent accountants have the responsibility for auditing the financial statements and monitoring the effectiveness of the internal controls. The review of the financial statements by the Audit Committee is not the equivalent of an audit. REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS The Board of Directors adopted a written Audit Committee Charter on February 17, 2000, a copy of which is included as Appendix A to the Company's proxy statement for the 2000 annual meeting. All members of the Audit Committee are independent as defined in Section 303.01(B)(2)(a) and (3) of the New York Stock Exchange's listing standards. The Audit Committee has reviewed and discussed with the Company's management and the Company's independent auditors the audited financial statements of the Company contained in the Company's fiscal 2002 Annual Report. The Audit Committee has also discussed with the Company's independent auditors the matters required to be discussed pursuant to SAS 61 (Codification of Statements on Auditing Standards, AU - 380). The Audit Committee has received the written disclosures and the letter from the Company's independent accountants required by Independence Standards Board Standard No. 1 (titled, "Independence Discussions with Audit Committees") and has discussed with the Company's independent auditors such independent auditors' independence. Based on the review and discussions described in the immediately preceding paragraph, the Audit Committee recommended to the Board of Directors that the audited financial statements included in the Company's fiscal 2002 Annual Report be included in that report, which is incorporated by reference into the Company's Annual Report on Form 10-K for the fiscal year ended June, 29, 2002, filed with the U.S. Securities and Exchange Commission. AUDIT COMMITTEE C. C. Guy, Chair Dr. Max Lennon Dr. James F. Kane SOLICITATION OF PROXIES The Company will pay the cost of soliciting proxies in the accompanying form. In addition to solicitation by mail, proxies may be solicited by directors, officers and other regular employees of the Company by telephone, telecopy or personal interview for no additional compensation. Arrangements will be made with brokerage houses and other custodians, nominees and fiduciaries to forward solicitation material to beneficial owners of the stock held of record by such persons, and the Company will reimburse such persons for reasonable out-of-pocket expenses incurred by them in so doing. The Company has engaged Corporate Investor Communications to assist in these contacts with brokerage houses, custodians, nominees and fiduciaries for an estimated fee of $2,000 plus reasonable out-of-pocket expenses. 20 PROPOSALS OF SECURITY HOLDERS Any shareholder of the Company who desires to present a proposal at the 2003 Annual Meeting of Shareholders for inclusion in the Company's proxy statement and form of proxy relating to that meeting must submit such proposal to the Company at its principal executive offices on or before June 9, 2003. Pursuant to the requirements of the Company's bylaws, if a shareholder of the Company desires to present a proposal at the 2003 Annual Meeting of Shareholders that will not be included in the Company's proxy statement and form of proxy relating to that meeting, such proposal must be submitted to the Company at its principal executive offices no later than July 10, 2003 for the proposal to be considered timely. The above Notice and Proxy Statement are sent by order of the Board of Directors. William H. Hardman, Secretary Greenville, South Carolina October 7, 2002 21 APPENDIX A DELTA WOODSIDE INDUSTRIES, INC. [DELTA WOODSIDE INDUSTRIES, INC. LOGO] PLEASE SIGN PROXY CARD ON REVERSE SIDE, DETACH AND RETURN IN ENCLOSED POSTAGE-PAID ENVELOPE ------------------------------- Fold and Detach Here------------------------- PROXY DELTA WOODSIDE INDUSTRIES, INC. ANNUAL MEETING OF SHAREHOLDERS NOVEMBER 7, 2002 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF DELTA WOODSIDE INDUSTRIES, INC. The undersigned shareholder of Delta Woodside Industries, Inc. (the "Company"), as a shareholder of record as of the close of business on September 18, 2002, revokes all previous proxies, acknowledges receipt of the Notice of the Annual Meeting of Shareholders to be held November 7, 2002 and the Proxy Statement, each dated October 7, 2002, and appoints William F. Garrett, President and Chief Executive Officer, W.H. Hardman, Jr., Vice President and Secretary, Donald C. Walker, Vice President and Controller, and each of them, the Proxy of the undersigned, with full power of substitution, to vote all shares of Common Stock of the Company which the undersigned is entitled to vote, either on his or her own behalf or on behalf of any entity or entities, at the Annual Meeting of Shareholders of the Company to be held at the Union League Club, Mary Murray Room, 38 East 37th Street, New York, New York at 11:00 a.m. on Thursday, November 7, 2002 (the "Annual Meeting"), and at any adjournment or postponement thereof, with the same force and effect as the undersigned might or could do if personally present at the Annual Meeting. The shares represented by this Proxy shall be voted in the manner set forth below: 1. Election of Directors |_| FOR all nominees listed below |_| WITHOLD authority to vote (except as marked to the contrary below). for all nominees listed below. Messrs. W.F. Garrett, C.C. Guy, J.F. Kane, M. Lennon, E.E. Maddrey, II, B.A. Mickel (INSTRUCTION: To withhold authority to vote for an individual nominee, write that nominee's name in the space provided below). - ------------------------------------------------------------------------------------------------------------------- 2. Proposal to ratify the selection of KPMG LLP as the independent auditors of Delta Woodside Industries, Inc. for fiscal year 2003. |_| FOR |_| AGAINST |_| ABSTAIN 3. AT THEIR DISCRETION, TO ACT UPON ALL MATTERS INCIDENT TO THE CONDUCT OF THE MEETING AND UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING. (OVER)
-------------------------------- Fold and Detach Here------------------------ The Board of Directors recommends a vote FOR all of the nominees for director listed in item number 1 on the reverse side of this Proxy and a vote IN FAVOR OF proposal number 2 on the reverse side of this Proxy. This Proxy, when properly executed, will be voted as specified above by the undersigned shareholder. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE DEEMED TO GRANT AUTHORITY TO VOTE, AND WILL BE VOTED, FOR ELECTION OF THE NOMINEES FOR DIRECTOR LISTED ON THE REVERSE SIDE OF THIS PROXY AND FOR APPROVAL OF PROPOSAL NUMBER 2. DELTA WOODSIDE INDUSTRIES, INC. PROXY PLEASE SIGN AND DATE PROXY BELOW, DETACH AND RETURN IN SUPPLIED ENVELOPE PLEASE PRINT THE NAME(S) APPEARING ON EACH SHARE CERTIFICATE(S) OVER WHICH YOU HAVE VOTING AUTHORITY: ---------------------------------------------------- -----------------------------------(if held jointly) (Print name(s) on certificate) PLEASE SIGN YOUR NAME: ---------------------------------------------------- Signature (title, if any) ---------------------------------------------------- Additional Signature (if held jointly) Date: ---------------------------------------------- (JOINT OWNERS SHOULD EACH SIGN. PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEARS ON THE ENVELOPE IN WHICH THIS CARD WAS MAILED. WHEN SIGNING AS ATTORNEY, TRUSTEE, EXECUTOR, ADMINISTRATOR, GUARDIAN OR CORPORATE OFFICER, PLEASE SIGN UNDER FULL TITLE, CORPORATE OR ENTITY NAME.)
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