David R. Palmer
(864) 232-8301
DELTA WOODSIDE ANNOUNCES
PLANNED SPIN-OFFS OF APPAREL BUSINESSES
Delta Woodside Industries, Inc. (NYSE-DLW) announced today
that it plans to spin off to the Delta Woodside stockholders its
two apparel businesses (Duck Head Apparel Company and Delta
Apparel Company) as two separate publicly-owned corporations.
Consummation of these spin-offs, which is expected to occur in
the early part of calendar year 2000, is contingent upon the
satisfaction of certain conditions, including registration of
each of the apparel companies' stock with the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as
amended, and obtaining satisfactory commercial debt financing.
Delta Woodside is in the process of transferring various
corporate functions to its three operating divisions (Delta Mills
Marketing Company, Duck Head Apparel Company and Delta Apparel
Company). Upon the complete transfer of these functions or at
the time of the spin-offs (as appropriate), the functions
currently performed at the Delta Woodside level will no longer
need to be performed at that level, and the current executive
officers of Delta Woodside will resign their positions with Delta
Woodside. Upon consummation of the spin-offs, Delta Mills
Marketing Company will be Delta Woodside's sole remaining
business, and William Garrett, who currently heads the Delta
Mills Marketing Company division, will become President and Chief
Executive Officer of the remaining Delta Woodside.
Delta Mills Marketing Company, headquartered in Greenville,
South Carolina, sells a broad range of finished apparel fabrics
primarily to branded apparel manufacturers and resellers,
including Levi Strauss, Haggar Corp., the Wranglerr and Leer
divisions of V. F. Corporation, Farah Incorporated, Kellwood
Company and Liz Claiborne, Inc., and private label apparel
manufacturers for J. C. Penney Company, Inc., Sears Roebuck &
Co., Wal-Mart Stores, Inc., and other retailers.
During the 1999, 1998, and 1997 fiscal years, the Delta
Mills Marketing division of Delta Woodside had net sales of
$314.2 million, $342.4 million, and $336.2 million, respectively,
and operating profit of $40.5 million, $46.4 million and $50.6
million, respectively.
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The Duck Head Apparel division, headquartered in Winder,
Georgia, markets men's and boys' casual apparel sold under the
"Duck Head" label, including pants, shorts and shirts. "Duck
Head" labeled products are primarily marketed to regional and
national retailers. In addition, the division licenses various
other categories of apparel and accessories. The President and
Chief Executive Officer of the new Duck Head Apparel Company is
expected to be Robert Rockey, who is the current head of the Duck
Head Apparel division.
During the 1999, 1998 and 1997 fiscal years, the Duck Head
Apparel division of Delta Woodside had net sales of $72.3
million, $86.3 million and $81.3 million, respectively, and
operating profit (loss) of ($39.3 million), ($0.9 million) and
$1.4 million, respectively.
The Delta Apparel division, headquartered in Duluth,
Georgia, produces knitted T-shirts, polo-type shirts and
sweatshirts. The division markets its products primarily to
companies that screen print shirts for resale and to
distributors. The President and Chief Executive Officer of the
new Delta Apparel Company is expected to be Robert Humphreys, who
is the current head of the Delta Apparel division.
During the 1999, 1998 and 1997 fiscal years, the Delta
Apparel division of Delta Woodside had net sales of $106.3
million, $106.3 million and $112.3 million, respectively, and
operating (loss) of ($9.8 million), ($17.7 million) and ($5.6
million), respectively.
In connection with the proposed spin-offs, significant
equity incentives, in the form of stock options and incentive
stock awards for the new public companies' stock, will be granted
to the managements of the new companies.
Delta Woodside cannot determine at this time whether the
receipt of the apparel companies' stock will, or will not, be
taxable to the Delta Woodside stockholders for Federal income tax
purposes. At such time as Delta Woodside has sufficient
information to determine the appropriate Federal income tax
treatment of the spin-offs, it will promptly provide the
necessary income tax information to the Delta Woodside
shareholders. Delta Woodside believes that, even if the spin-
offs are determined to be taxable for Federal income tax
purposes, the spin-offs will still be in the best interests of
Delta Woodside shareholders.
E. Erwin Maddrey, II, President and Chief Executive Officer
of Delta Woodside, stated: "As we have previously reported, Delta
Woodside's Board has over the last several months been exploring
several strategic alternatives. Based on our examination, we
believe that the proposed spin-offs of our two apparel
businesses, together with elimination of the Delta Woodside
corporate overhead, is the best strategy available to the Company
to maximize shareholder value. We are very excited by the
prospects of the three Delta Woodside businesses in separate
corporate forms."
Delta Woodside Industries, Inc., headquartered in
Greenville, South Carolina, manufactures and sells a wide variety
of textile and apparel products. The Company, which employs
about 5,000 people, operates 15 plants and 24 garment outlet
stores. These facilities are located in 12 states, Costa Rica
and Honduras.
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