UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
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[_] Confidential, For Use of the SS.240.14a-11(c) or SS.240.14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[X] Definitive Additional Materials
Duck Head Apparel Company, Inc.
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(Name of Registrant as Specified In Its Charter)
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DUCK HEAD APPAREL COMPANY, INC.
LOGO
October 27, 2000
DON'T LET BETTIS RAINSFORD SNATCH THE FULL VALUE
OF YOUR DUCK HEAD INVESTMENT FROM YOU.
VOTE YOUR WHITE PROXY TODAY
DEAR DUCK HEAD APPAREL SHAREHOLDER:
As you may know by now, Bettis C. Rainsford, a disgruntled director of
Duck Head Apparel, who was not nominated by your Board for re-election, has
launched a proxy fight in an attempt to take control of your Company's Board of
Directors at our November 8th Annual Meeting. Rainsford will be mailing proxy
materials and a proxy card to you soon, asking you to support his slate of eight
hand-picked nominees in opposition to management's slate for election to the
Board. We strongly urge you to ignore any mailings you may receive from
Rainsford.
We urge you to return the WHITE proxy card in support of management's
nominees that we have included with this mailing. You should already have
received a WHITE management proxy card along with our proxy statement that was
mailed to you on or about October 16th.
MANAGEMENT'S TURNAROUND PLAN IS SHOWING TANGIBLE RESULTS.
Rainsford has commenced his proxy fight, which will be costly and
disruptive to management, at a critical time in the Company's financial history.
Your current Board and management is implementing a successful turnaround plan
that has returned Duck Head to operating profitability after a significant
operating loss in the fiscal year ended July 3, 1999.
A RECENT MAJOR ACHIEVEMENT FOR THE COMPANY HAS BEEN THE HIRING OF A NEW
PRESIDENT AND CHIEF OPERATING OFFICER, WILLIAM V. ROBERTI, WHO, IN JOINING THE
MANAGEMENT TEAM, BRINGS SIGNIFICANT INDUSTRY EXPERIENCE TO DUCK HEAD. Most
recently, Mr. Roberti was CEO of Plaid Clothing Group, Inc. and was President
and CEO of Brooks Brothers, Inc. for 7 years.
We are also pleased to report a number of other achievements, which are a
direct result of our focus on operating improvements and inventory reduction.
Specifically, in our first quarter that ended September 30, 2000, the Company
reported:
o OPERATING INCOME OF $731,000, ALMOST TWICE AS MUCH AS OPERATING INCOME
OF $372,000 IN THE FIRST QUARTER A YEAR AGO.
o Gross profit of 38.7% of net sales, compared with 30.7% in the first
quarter a year ago.
o INVENTORIES OF $14.3 MILLION, A SHARP REDUCTION FROM INVENTORIES OF
$17.8 MILLION ON JULY 1, 2000.
o Cash on hand of $2.6 million, which doubled from $1.3 million as of
July 30, 2000.
MANAGEMENT'S NOMINEES ARE EXPERIENCED AND INDEPENDENT AND
HAVE A SIGNIFICANT STAKE IN YOUR COMPANY
Other than myself, no member of the current board and none of our nominees
is employed by Duck Head. All other board members and nominees are
independent--they are neither officers nor employees of the Company and have no
material business relationship with Duck Head. IN ADDITION, AS MAJOR
SHAREHOLDERS, THE INTERESTS OF MANAGEMENT'S NOMINEES ARE CLEARLY ALIGNED WITH
YOURS--THEY (TOGETHER WITH RELATED ENTITIES) COLLECTIVELY OWN APPROXIMATELY 22
PERCENT OF THE COMPANY'S OUTSTANDING SHARES. Our nominees are also all respected
and capable executives who together have a combined total of 84 years of
management experience in the textile and apparel industry.
WHY IS RAINSFORD TRYING TO GAIN CONTROL OF THE BOARD NOW?
Clearly, Duck Head is on the right track and has lots of momentum, which
the market and the investment community have yet to fully recognize. In our
view, Rainsford is trying to gain control of Duck Head's Board when the stock is
still undervalued.
THE RAINSFORD NOMINEES DISCLOSE NO PLAN FOR YOUR COMPANY. THEY DO NOT TELL
YOU HOW THEY WILL MANAGE DUCK HEAD'S COMPLEX OPERATIONS.
We are concerned that if Rainsford and his colleagues take control of your
Board, they may try to sell your Company to a corporation owned by Talmadge
Knight, the CEO and controlling shareholder of Knight Textile, and one of
Rainsford's nominees for election, or to another party, at what your Board
regards as a "fire sale" price.
This would benefit Messrs. Rainsford and Knight, but not you or other Duck
Head shareholders. Our conclusion stems from the following:
o Knight, who acquired his Duck Head shares just this month, has already
publicly stated that he plans to support the Rainsford nominees.
o KNIGHT IS FUNDING HALF OF THE COSTS OF THIS COSTLY PROXY CONTEST, AS WELL
AS HALF THE COSTS OF THE PROXY CONTEST AT DELTA APPAREL.
o Rainsford has pledged a substantial percentage of his Duck Head holdings
and 98% of his holdings in Delta Apparel, Inc. to secure personal loans.
o If Rainsford can cash out his investment in Duck Head as soon as possible,
he can pay down his significant personal loans.
o WITH THE COOPERATION AND ASSISTANCE OF HIS LONGTIME BUSINESS ASSOCIATE,
TALMADGE KNIGHT, RAINSFORD IS MOVING FORWARD WITH A PLAN TO ATTEMPT TO
FACILITATE THE QUICK SALE OF DUCK HEAD.
o One way to accomplish a quick sale would be to make Duck Head's price
attractive to Knight and his apparel company, which would give Rainsford
immediate liquidity.
Clearly such a scheme would be in their best interests, but what about
yours and those of all other Duck Head shareholders?
DON'T BE FOOLED BY RAINSFORD'S ATTACK ON
THE OUTSTANDING PURCHASE RIGHT AND HIS ATTACK ON
MANAGEMENT'S COMPENSATION
Rainsford's preliminary proxy materials mislead you about my right to
purchase Duck Head shares. Don't be fooled. We believe this is just Rainsford's
attempt to distract you from the issues at hand.
You should know that I was granted an option in March 1999 to purchase up
to 1,000,000 shares of Duck Head, originally at $10 per share. In October 1999,
the exercise price was recalculated to be the average of the closing trading
prices of Duck Head common stock for a six-month period following its spin-off
from Delta Woodside Industries, Inc. As of October 5th, this price was $1.11 per
share.
Mr. Rainsford misleadingly contends that the exercise of the purchase
right would cost the Company $8,890,000, if exercised at $1.11 per share. IN
FACT, THE EXERCISE WOULD BENEFIT THE COMPANY BY GENERATING MORE THAN $1 MILLION
CASH.
Rainsford's preliminary proxy materials also attack the directors' and
management's compensation plan. Your Board believes that the Company's current
management compensation structure is in line with industry standards and is
needed to retain key employees in the current environment. Incredibly, Mr.
Rainsford attacks the directors' compensation despite the fact that Rainsford
himself voted for such compensation as a director. You should also know that as
Mr. Roberti increases his role in the Company, I intend to scale back my
responsibilities and reduce my compensation accordingly.
YOU NEED A BOARD THAT WILL WORK FOR ALL SHAREHOLDERS.
SUPPORT MANAGEMENT'S NOMINEES BY VOTING
YOUR WHITE PROXY TODAY.
Remember--all you need to do to support management's nominees is to vote
the enclosed WHITE proxy and to ignore any proxy materials from Rainsford and
his nominees.
DO NOT GIVE RAINSFORD THE OPPORTUNITY TO GAIN CONTROL OF YOUR
COMPANY WITHOUT PAYING YOU A PENNY FOR THAT PRIVILEGE.
The annual meeting is November 8th. Vote your WHITE proxy today!
We appreciate your support of Duck Head Apparel and its nominees for
election to the Board. On behalf of Duck Head's nominees,
Sincerely,
/s/ ROBERT D. ROCKEY
Chairman, President and
Chief Executive Officer
IMPORTANT
o Please sign, date and return the enclosed WHITE proxy card today in the
postage-paid envelope provided.
o DO NOT sign any proxy card that you may receive from Bettis Rainsford, even
as a protest vote. If you return the proxy card, even as a vote "against"
the Rainsford nominees, it may revoke your previous vote for our nominees.
Only the latest dated proxy card counts!
o If you have already returned a Rainsford proxy card, you may revoke your
previous proxy by signing, dating and returning a later dated WHITE proxy
card using the envelope provided.
If you have any questions regarding your proxy, or need assistance in
voting your shares, please call:
MacKenzie Partners, Inc.
156 Fifth Avenue
New York, New York 10010
CALL TOLL FREE: 800-322-2885