UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 29, 2001
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.
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(Exact name of registrant as specified in its charter)
SOUTH CAROLINA 57- 0535180
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
P.O. Box 6126
100 Augusta Street
Greenville, South Carolina 29606
- --------------------------------------- --------------
(Address of principal executive offices) (Zip Code)
864\255-4122
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(Registrant's telephone number, including area code)
(Not Applicable)
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(Former name, former address and former fiscal year,
if changed since last report.)
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $.01 Par Value-5,830,575 shares as of February 12, 2002, following
a 4:1 reverse stock split on February 5, 2002.
1
DELTA WOODSIDE INDUSTRIES, INC.
INDEX
PART I. FINANCIAL INFORMATION
Page
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets-- December 29, 2001 and June 30, 2001 3
Condensed consolidated statements of operations--
Three and Six months ended December 29, 2001 and December 30, 2000 4
Condensed consolidated statements of cash flows--
Six months ended December 29, 2001 and December 30, 2000 5
Notes to condensed consolidated financial statements-December 29, 2001 6-7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations 8-10
Item 3. Quantitative and Qualitative Disclosures about Market Risk 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities and use of Proceeds 11
Item 3. Defaults upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
2
PART I. FINANCIAL INFORMATION
- -----------------------------
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
(In Thousands, except share and per share data)
Delta Woodside Industries, Inc.
December 29, 2001 June 30, 2001
------------------- ---------------
Unaudited
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 13,497 $ 14,491
Accounts receivable:
Factor 38,188 37,617
Less allowances for doubtful accounts and returns 51 51
------------------- ---------------
38,137 37,566
Inventories
Finished goods 9,443 13,241
Work in process 20,085 23,195
Raw materials and supplies 5,850 6,766
------------------- ---------------
35,378 43,202
Deferred income taxes 3,340 2,966
Prepaid expenses and other current assets 299 547
------------------- ---------------
TOTAL CURRENT ASSETS 90,651 98,772
PROPERTY, PLANT AND EQUIPMENT
Cost 168,910 166,226
Less accumulated depreciation 93,957 81,195
------------------- ---------------
74,953 85,031
DEFERRED LOAN COSTS 1,470 1,680
NONCURRENT DEFERRED INCOME TAXES 10,418 4,959
OTHER ASSETS 46 74
------------------- ---------------
TOTAL ASSETS $ 177,538 $ 190,516
=================== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 7,096 $ 8,570
Accrued employee compensation 1,121 2,339
Accrued and sundry liabilities 11,655 11,966
------------------- ---------------
TOTAL CURRENT LIABILITIES 19,872 22,875
LONG-TERM DEBT 83,815 83,815
DEFERRED COMPENSATION 6,980 6,608
SHAREHOLDERS' EQUITY
Preferred Stock
Common Stock - par value $.01 a share - authorized 50,000,000 shares,
issued and outstanding 5,831,000 shares at December 29, 2001 and
5,809,000 shares at June 30, 2001,as adjusted (see Note D) 58 58
Additional paid-in capital 86,699 86,561
Accumulated deficit (19,886) (9,401)
------------------- ---------------
TOTAL SHAREHOLDERS' EQUITY 66,871 77,218
Commitments and Contingencies
------------------- ---------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 177,538 $ 190,516
=================== ===============
See notes to consolidated financial statements.
3
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In Thousands, except per share data)
Delta Woodside Industries, Inc.
Three Three Six Six
Months Ended Months Ended Months Ended Months Ended
December 29, December 30, December 29, December 30,
2001 2000 2001 2000
-------------- -------------- -------------- --------------
Net sales $ 44,140 $ 59,697 $ 81,117 $ 122,896
Cost of goods sold 42,432 53,780 78,335 107,705
-------------- -------------- -------------- --------------
Gross profit 1,708 5,917 2,782 15,191
Selling, general and
administrative expenses 2,871 3,580 5,463 6,921
Impairment and
restructuring charges 8,683
Other income (expense) 18 (12) 40 363
-------------- -------------- -------------- --------------
Operating Profit (Loss) (1,145) 2,325 (11,324) 8,633
Interest (expense) income:
Interest expense (2,468) (2,703) (4,933) (5,674)
Interest income 36 173 133 458
-------------- -------------- -------------- --------------
(2,432) (2,530) (4,800) (5,216)
-------------- -------------- -------------- --------------
Income (Loss) before Income
Taxes and Extraordinary Item (3,577) (205) (16,124) 3,417
Income tax expense (benefit) (1,251) (61) (5,639) 1,225
-------------- -------------- -------------- --------------
Income (Loss ) before
Extraordinary Item (2,326) (144) (10,485) 2,192
Extraordinary gain (net of taxes) 946 1,585
-------------- -------------- -------------- --------------
Net Income (Loss) ($2,326) $ 802 ($10,485) $ 3,777
============== ============== ============== ==============
Basic and diluted earnings (loss)
per share, as adjusted (Note D):
Income (loss) before
extraordinary item $ (0.40) $ (0.02) $ (1.80) $ 0.36
Extraordinary gain 0.00 0.16 0.00 0.26
-------------- -------------- -------------- --------------
Net earnings (loss) $ (0.40) $ 0.14 $ (1.80) $ 0.62
============== ============== ============== ==============
Weighted average number
of shares outstanding 5,831,000 6,028,000 5,832,000 6,033,000
============== ============== ============== ==============
See notes to consolidated financial statements.
4
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Delta Woodside Industries, Inc.
(In Thousands)
For the Six Months Ended
December 29, 2001 December 30, 2000
------------------- -------------------
OPERATING ACTIVITIES
Net income (loss) ($10,485) $ 3,777
Adjustments to reconcile net income (loss) to net
cash provided (used) by operating activities:
Depreciation 4,551 5,557
Amortization 211 212
Decrease in deferred loan costs 783
Discount to face value on repurchase of bonds (3,242)
Provision for impairment and restructuring 8,683
Change in deferred income taxes (5,833) 1,948
Deferred compensation 367 562
Changes in operating assets and liabilities 4,225 3,556
Other (125)
------------------- -------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,719 13,028
INVESTING ACTIVITIES
Property, plant and equipment:
Purchases (2,674) (1,956)
Proceeds of dispositions of assets 450
Other 204
------------------- -------------------
NET CASH USED BY INVESTING ACTIVITIES (2,674) (1,302)
FINANCING ACTIVITIES
Proceeds from revolving line of credit 3,003
Repayments of revolving line of credit (3,003)
Repurchase and retirement of long term debt (28,021)
Repurchase of common stock (39) (479)
------------------- -------------------
NET CASH USED BY FINANCING ACTIVITIES (39) (28,500)
------------------- -------------------
DECREASE IN CASH AND CASH EQUIVALENTS (994) (16,774)
Cash and cash equivalents at beginning of year 14,491 19,385
------------------- -------------------
CASH AND CASH EQUIVALENTS AT END OF QUARTER $ 13,497 $ 2,611
=================== ===================
See notes to consolidated financial statements.
5
DELTA WOODSIDE INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of Delta
Woodside Industries, Inc. ("the Company") have been prepared in accordance with
accounting principles generally accepted in the United States of America for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by accounting principles generally accepted in the United
States of America for complete financial statements. In the opinion of
management, all adjustments (consisting of only normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the six months ended December 29, 2001 are not necessarily
indicative of the results that may be expected for the year ending June 29,
2002. For further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's annual report on Form 10-K for
the year ended June 30, 2001.
NOTE B-LONG-TERM DEBT, CREDIT ARRANGEMENTS, AND NOTES PAYABLE
On August 25, 1997 a subsidiary of the Company, Delta Mills, Inc., ("DMI" or
"Delta Mills"), issued $150 million of unsecured ten-year Senior Notes at an
interest rate of 9.625%. These bonds will mature in August, 2007. At December
29, 2001, the outstanding balance of the notes was $83,815,000, unchanged from
June 30, 2001.
In August of 1997 a subsidiary of the Company, Delta Mills, Inc., ("DMI" or
"Delta Mills"), obtained a secured five-year $100 million revolving line of
credit subject to borrowing base limitations. The $100 million revolving line of
credit was replaced by a new credit facility on March 31, 2000. Borrowings
under the new credit facility are based on eligible accounts receivable and
inventory of the Company, subject to a maximum $50 million availability limit.
The facility is secured by the accounts receivable, inventory and capital stock
of the Company. The interest rate on the credit facility is based on a spread
over either LIBOR or a base rate. At each of June 30, 2001 and December 29,
2001, no amounts were outstanding under this facility.
The Company's secured four-year $50 million revolving bank credit facility was
amended October 5, 2001. The credit facility contains restrictive covenants
that, among other things, require that the Delta Mills' Maximum Leverage Ratio,
as defined therein, not exceed specified amounts. The agreement also restricts
additional indebtedness, dividends, and capital expenditures. The payment of
dividends with respect to the Company's stock is permitted if there is no event
of default and there is at least $1 of availability under the facility. The
amendment of October 5, 2001 substantially increases the permitted leverage
ratio for the preceding four quarters ending with the third quarter of fiscal
year 2002, and slightly reduces the permitted leverage ratio for the four
quarters ending with the fourth fiscal quarter of fiscal year 2002 and
subsequent quarters that Delta Mills is required to maintain pursuant to
covenants in the agreement. The amendment also extends the term of the
Revolving Credit Agreement to March 31, 2004, includes the lender's consent to
the sale of Delta Mills' Furman Plant, which was announced August 22, 2001, and
allows Delta Mills to exclude from the calculation of the leverage ratio the
closing costs and continuing costs associated with the closing of its Furman
Plant. During the three months ended December 29, 2001, the Company did not pay
any dividends to Delta Woodside Industries, Inc.
The Company assigns a substantial portion of its trade accounts receivable to
GMAC Commercial Credit LLC (the Factor) under a factor agreement. The
assignment of these receivables is primarily without recourse, provided that
customer orders are approved by the Factor prior to shipment of goods, up to a
maximum for each individual account. The assigned trade accounts receivables
are recorded on the Company's books at full value and represent amounts due the
Company from the Factor. There are no advances from the Factor against the
assigned receivables. All factoring fees are recorded on the Company's books as
incurred as a part of General and Administrative Expense.
6
NOTE C - STOCKHOLDERS' EQUITY
Activity in stockholders' equity during the six months ended December 29, 2001
is as follows (in thousands):
Total
Common Additional Paid Accumulated Stockholders'
Stock In Capital Deficit Equity
-------- ----------------- ------------ ---------------
Balance at June 30, 2001 $ 58 $ 86,561 ($9,401) $ 77,218
Incentive stock award plan, shares issued 1 176 177
Share repurchases (1) (38) (39)
Net Income (loss) (10,485) (10,485)
-------- ----------------- ------------ ---------------
Balance at December 29, 2001 $ 58 $ 86,699 ($19,886) $ 66,871
======== ================= ============ ===============
NOTE D - REVERSE STOCK SPLIT
The Company effected a 4:1 reverse split of its common stock on Tuesday,
February 5, 2002. The Company's shareholders adopted an amendment to the
Company's articles of incorporation that provides for the reverse split at a
special meeting held on January 28, 2002. The shareholders authorized the
Company's board of directors to determine whether to consummate the reverse
split and to determine the ratio of the reverse split within a range of whole
shares from 3:1 to10:1. The Company's board of directors set the ratio for the
reverse split at 4:1. The Company paid cash in lieu of any fractional share in
an amount based on the average of the closing sale prices of the Company's
common stock (as adjusted to reflect the reverse split of shares) for the 20
trading days immediately prior to February 5, 2002 as reported in The Wall
Street Journal. The total number of authorized shares of common stock and the
par value of the common stock remain the same and were unaffected by the reverse
split.
The common stock purchase rights attached to the Company's common stock pursuant
to its Shareholder Rights Agreement, dated December 10, 1999 as amended, with
First Union National Bank as rights agent were adjusted in connection with the
reverse stock split as required by the provisions of Section 11(a) of the Rights
Agreement to prevent any dilution or enlargement of the rights. The exercise
price of each right was increased from the pre-split $5.00 per quarter-share of
common stock to $20.00 per quarter-share. Each share of common stock will
continue to have only one right attached to it, and each right will continue to
evidence the right to acquire one quarter share of the Company's common stock.
All shares and per share amounts in the condensed consolidated financial
statements have been retroactively restated in connection with the reverse stock
split.
7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion contains certain "forward-looking statements". All
statements, other than statements of historical fact, that address activities,
events or developments that the Company expects or anticipates will or may occur
in the future, including such matters as future revenues, future cost savings,
future capital expenditures, business strategy, competitive strengths, goals,
plans, references to future success and other such information are
forward-looking statements. The words "estimate", "project", "anticipate",
"expect", "intend", "believe" and similar expressions are intended to identify
forward-looking statements.
The forward-looking statements in this Quarterly Report are based on the
Company's expectations and are subject to a number of business risks and
uncertainties, any of which could cause actual results to differ materially from
those set forth in or implied by the forward-looking statements. These risks
and uncertainties include, among others, changes in the retail demand for
apparel products, the cost of raw materials, competitive conditions in the
apparel and textile industries, the relative strength of the United States
dollar as against other currencies, changes in United States trade regulations
and the discovery of unknown conditions (such as with respect to environmental
matters and similar items). The Company does not undertake publicly to update
or revise the forward-looking statements even if it becomes clear that any
projected results will not be realized.
The Company, through its Delta Mills operating division, sells a broad range of
woven, finished apparel fabric primarily to branded apparel manufacturers and
resellers. Delta Mills also sells camouflage fabric and other fabrics used in
apparel sold to the United States Department of Defense. Delta Mills represents
the only business segment of the Company.
Net sales for the three months ended December 29, 2001 were $44.1 million as
compared to $59.7 million in the first quarter of the prior fiscal year, a
decrease of 26.1%. The decline in sales was primarily due to a reduction in
sales unit volume that reflects the downward adjustment in market demand for the
apparel industry. Some sales price declines also contributed to the decline in
sales. For the six months ended December 29, 2001, net sales were $81.1 million
as compared to $122.9 million for the six months ended December 30, 2000.
Gross profit was $1.7 million and 3.9% of sales in the second quarter of fiscal
year 2002. This compares to gross profit of $5.9 million and 9.9% of sales in
the prior year quarter. Compared to the previous year, the negative results for
the current quarter were primarily due to decreased production schedules that
were caused by the decline in sales and market demand. Continued price pressure
also had a negative impact on the current quarter results. The decline in gross
profit was somewhat offset by reduced manufacturing costs as a result of the
cost reduction plan put in place at the beginning of fiscal year 2002. For the
six months ended December 29, 2001, gross profit was $2.8 million or 3.4% of net
sales as compared to $15.2 million or 12.4% of net sales for the same six month
period of the prior fiscal year.
Selling, general and administrative expense (SG&A) was $2.9 million and 6.5% of
net sales for the second quarter of fiscal year 2002 compared to SG&A of $3.6
million and 6.0% of net sales for the prior year quarter. Selling, general and
administrative expense (SG&A) was $5.5 million and 6.7% of net sales for the six
months ended December 29, 2001 as compared to SG&A of $6.9 million and 5.6% of
net sales for the prior year six months ended December 30, 2000. The reduction
in SG&A represents reductions in expenses associated with administrative
salaries and various general expense items. Some of these reductions were part
of the cost reduction plan put in place at the beginning of fiscal year 2002.
The Company reported an operating loss of $1.1 million in the current quarter
compared to an operating profit of $2.3 million in the previous year quarter and
an operating loss of $10.2 million last quarter. Last quarter's operating loss
included asset impairment and restructuring charges of $8.6 million associated
with closing the Furman Plant, as announced August 22, 2001. The current
quarter's operating loss included continuing costs of $329,000 associated with
closed facilities. Excluding the asset impairment and continuing costs of closed
facilities, the Company's operating loss during the current quarter would have
been $816,000, an improvement over the $1.5 million operating loss in the first
quarter. For the six months ended December 29, 2001, the Company's operating
loss was $11.3 million as compared to an operating profit of $8.6 million for
the six months ended December 30, 2000. Excluding impairment and restructuring
charges, the Company's operating loss would have been $2.7 million for the six
months ended December 29, 2001. The decline in operating profit was due to the
factors discussed above.
8
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - CONTINUED
Interest expense net of interest income was $2.4 million for the quarter ended
December 29, 2001, compared to $2.5 million for the prior year quarter. Interest
expense net of interest income for the six months ended December 29, 2001 was
$4.8 million compared to $5.2 million for the same period in fiscal 2001. The
reduction in interest expense is primarily due to the reduction in the senior
notes and was somewhat offset by a reduction in interest income due to a decline
in interest rates.
The Company's subsidiary, Delta Mills, Inc., amended its $50 million revolving
bank credit facility effective October 5, 2001. At each of June 30, 2001 and
December 29, 2001, no amounts were outstanding under this facility. The
amendment substantially increases the permitted leverage ratio for the preceding
four quarters ending with the third quarter of fiscal year 2002, and slightly
reduces the permitted leverage ratio for the four quarters ending with the
fourth fiscal quarter of fiscal year 2002 and subsequent quarters that Delta
Mills is required to maintain pursuant to covenants in the agreement. The
amendment also extends the term of the Revolving Credit Agreement from March 31,
2003 to March 31, 2004, includes the lender's consent to the sale of Delta
Mills' Furman Plant, which was announced August 22, 2001, and allows Delta Mills
to exclude from the calculation of the leverage ratio the closing costs and
continuing costs associated with the closing of its Furman Plant.
The income tax benefit for the quarter was $1.3 million. This compares to an
income tax benefit of $61,000 in the previous year quarter. The income tax
benefit for the six months ended December 29, 2001 was $5.6 million. This
compares to income tax expense of $1.2 million for the six months ended December
30, 2000. The effective tax rate in both periods was approximately 35%. At
December 29, 2001, the Company had regular tax loss carry forwards of $39
million for federal purposes and $13 million for state purposes. The Federal
loss carry forwards expire at various intervals from 2012 to 2021 while the
state loss carry forwards expire at various intervals beginning in 2003. At
December 29, 2001, the Company's gross deferred tax assets are not reduced by a
valuation allowance due to management's belief that it is more likely than not
that the gross deferred tax assets will be realized in the future. The ultimate
realization of deferred tax assets is dependent upon the generation of future
taxable income during the periods in which those temporary differences become
deductible. Over the next two quarters, management will continue to evaluate
the need for a valuation allowance based upon the Company's current operations
and projections of future earnings. The potential tax effect of establishing a
full valuation allowance is approximately $14 million.
The Company reported a net loss of $2.3 million or $0.40 per common share for
the quarter ended December 29, 2001 compared to a net income of $802,000 or $.14
per common share for the quarter ended December 30, 2000. The Company's net
income for the quarter ended December 30, 2000 included an after tax
extraordinary gain of $946,000 or $0.16 per common share. The Company's net
loss for the quarter ended December 29, 2001 included continuing costs of closed
facilities of $214,000 or $.04 per share on an after tax basis. The Company
reported a net loss of $10.5 million or $1.80 per common share for the six
months ended December 29, 2001 compared to net income of $3.8 million or $.62
per common share for the six months ended December 30, 2000. The Company's net
income for the six months ended December 30, 2000 included an after tax
extraordinary gain of $1.6 million. This extraordinary gain occurred when the
Company's subsidiary, Delta Mills, Inc., purchased $15.7 million face amount of
its 9.625 % Senior Notes for $14.2 million. There was no extraordinary gain for
the current fiscal year. The net loss for the six months ended December 29,
2001 included asset impairment and continuing costs associated with closed
facilities of $5.9 million or $1.00 per share on an after tax basis. The decline
in net income was due to the factors discussed above.
In the quarter ended December 29, 2001 the Company purchased, in the open
market, 105 shares, as adjusted (see Note D), of its common stock. These shares
were retired at the time of purchase.
The Company believes that current cash balances combined with the cash flow
generated by its operations will be sufficient to service its debt, to satisfy
its day to day working capital requirements and to fund its planned capital
expenditures. The Company expects that no amounts will be outstanding against
its $50 million revolver at the end of fiscal year 2002.
9
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - CONTINUED
On October 3, 2001 the FASB issued statement No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" that is applicable to financial
statements issued for fiscal years beginning after December 15, 2001. The
FASB's new rules on asset impairment supersede FASB statement No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of", and provide a single accounting model for long-lived assets to
be disposed of. The Company will adopt the Statement effective for fiscal 2003.
The adoption of this standard is not expected to materially impact the Company.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a part of the Company's business of converting fiber to finished fabric, the
Company makes raw cotton purchase commitments and then fixes prices with cotton
merchants who buy from producers and sell to textile manufacturers. Daily price
fluctuations are minimal, yet long-term trends in price movement can result in
unfavorable pricing of cotton. Before fixing prices, the Company looks at supply
and demand fundamentals, recent price trends and other factors that affect
cotton prices. The Company also reviews the backlog of orders from customers as
well as the level of fixed price cotton commitments in the industry in general.
As of December 29, 2001, a 10% decline in market price of the Company's fixed
price contracts would have had a negative impact of approximately $1.5 million
on the value of the contracts. As of June 30, 2001, such a 10% decline would
have had a negative impact of $2.1 million. The decline in the potential
negative impact from June 30, 2001 to December 29, 2001 is due principally to
current cotton commitments being at lower average prices and because of a
decline in the quantity of cotton fixed as compared to the previous period.
10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings*
Item 2. Changes in Securities and Use of Proceeds
The Company effected a 4:1 reverse split of its common stock on Tuesday,
February 5, 2002. The Company's shareholders adopted an amendment to the
Company's articles of incorporation that provides for the reverse split at a
special meeting held on January 28, 2002. The shareholders authorized the
Company's board of directors to determine whether to consummate the reverse
split and to determine the ratio of the reverse split within a range of whole
shares from 3:1 to10:1. The Company's board of directors set the ratio for the
reverse split at 4:1. The Company paid cash in lieu of any fractional share in
an amount based on the average of the closing sale prices of the Company's
common stock (as adjusted to reflect the reverse split of shares) for the 20
trading days immediately prior to February 5, 2002 as reported in The Wall
Street Journal. The total number of authorized shares of common stock and the
par value of the common stock remain the same and were unaffected by the reverse
split.
The common stock purchase rights attached to the Company's common stock pursuant
to its Shareholder Rights Agreement, dated December 10, 1999 as amended, with
First Union National Bank as rights agent were adjusted in connection with the
reverse stock split as required by the provisions of Section 11(a) of the Rights
Agreement to prevent any dilution or enlargement of the rights. The exercise
price of each right was increased from the pre-split $5.00 per quarter-share of
common stock to $20.00 per quarter-share. Each share of common stock will
continue to have only one right attached to it, and each right will continue to
evidence the right to acquire one quarter share of the Company's common stock.
Item 3. Defaults upon Senior Securities*
Item 4. Submission of Matters to a Vote of Security Holders
The following summarizes the votes at the Special Meeting of
the Company's shareholders held on January 28, 2002.
Broker
For Against Withheld Abstentions Non-Votes
---------- ------- -------- ----------- ---------
Reverse
Stock Split 20,672,014 362,138 29,772
- -----------
Item 5. Other Information*
Item 6. Exhibits and Reports on Form 8-K
a) Listing of Exhibits
3.1.6 Articles of Amendment to the Articles of Incorporation of the
Company filed with the South Carolina Secretary of State on February
5, 2002.
b) No report on Form 8-K was filed during the fiscal quarter ended
December 29, 2001.
* Items 1,3, and 5 are not applicable.
11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Delta Woodside Industries, Inc.
-------------------------------
(Registrant)
Date February 12, 2002 By: /s/ W. H. Hardman, Jr.
---------------------------- ------------------------------
W.H. Hardman, Jr.
Chief Financial Officer
12