Tropical Contact: Michael Kagan Symbol: TSIC
Executive Vice President & Traded: Nasdaq National
Chief Financial Officer Market
Tropical Sportswear Int'l Corporation
Tel: (813) 249-4900
Fax: (813) 249-4904
Duck Head Contact: K. Scott Grassmyer Symbol: DHA
Senior Vice President & Traded: AMEX
Chief Financial Officer
Duck Head Apparel Company, Inc.
Tel: (770) 867-3111
Fax: (770) 307-1800
FOR IMMEDIATE RELEASE
Tropical Sportswear to Acquire Duck Head Apparel
TAMPA, Florida, June 27, 2001 - Tropical Sportswear Int'l Corporation (NASDAQ:
TSIC) and Duck Head Apparel Company, Inc. (AMEX: DHA) today announced that they
have entered into an agreement whereby Tropical Sportswear ("TSI") will acquire
100% of the common stock of Duck Head pursuant to a tender offer and subsequent
merger. The offer is subject to the tender of a majority of the shares of Duck
Head on a fully-diluted basis. Prior to July 25, 2001, the offer is also subject
to a satisfactory due diligence review of Duck Head by TSI. The agreement
provides that TSI will make a cash tender offer for 100% of the approximately
2.9 million issued and outstanding common shares of Duck Head at a price of
$4.75 per share. Following completion of the tender offer, TSI expects to
consummate a merger in which any remaining Duck Head shareholders would receive
in cash the same price per share paid in the tender offer.
Giving effect to the exercise of outstanding stock options and issuance of
incentive shares under existing programs, the value of Duck Head's common stock
at $4.75 per share is approximately $16.0 million. In addition, at June 2, 2001,
Duck Head had debt of approximately $4.8 million and cash balances of
approximately $5.0 million. The transaction is expected to close in the third
calendar quarter of 2001 (TSI's fourth fiscal quarter of 2001) and is subject to
additional customary closing conditions.
The members of the board of directors of Duck Head unanimously support the
agreement with TSI. The members of the board of directors of Duck Head, who
together beneficially own approximately 40% of Duck Head's common stock on a
fully-diluted basis, have agreed with TSI to tender all of their shares in the
tender offer, have granted TSI irrevocable proxies to vote their shares against
any competing proposals and have granted TSI options to acquire their shares at
the tender offer price.
Duck Head produces men's and boy's casual sportswear products, including shirts,
shorts and pants, which are marketed under its Duck Head(R) brand to leading
apparel retailers and through its chain of 25 outlet retail stores. In addition,
Duck Head licenses its Duck Head(R) brand to producers of other apparel and
accessory products. For the year ending June 30, 2001, Duck Head management
expects that Duck Head will report net sales of approximately $45 million.
"Duck Head offers an outstanding strategic fit for us," commented William W.
Compton, Chairman and Chief Executive Officer of TSI. "Duck Head produces
similar lines of pants and shorts which fit well within our operating blueprint.
Duck Head also has a well-established complementary line of men's and boys'
casual shirts, which we plan to expand through leveraging our extensive
distribution channels. In addition, we have strong relationships with Duck
Head's major customers and we see excellent opportunities to expand key
wholesale and licensing programs."
Michael Kagan, TSI's Executive Vice President and Chief Financial Officer,
commented "we expect that Duck Head's operations will be accretive to our
earnings and cash flow for fiscal 2002. We plan to quickly consolidate Duck
Head's distribution into our operations and do not anticipate any disruption to
customer service." Mr. Kagan added, "we have received the approval of our banks
to finance this transaction under our existing revolving credit facility."
After consummating the merger, TSI intends to continue Duck Head's pending
efforts to sell its headquarters and distribution center in Winder, Georgia and
will evaluate the consolidation of Duck Head's production facilities in Costa
Rica into our existing network of contract manufacturers. In addition, TSI
expects to retain selected management and operating personnel of Duck Head.
William V. Roberti, Chairman of the Board, President & Chief Executive Officer
of Duck Head, commented "We see this combination as an opportunity to preserve
and enhance the Duck Head(R) name, which has been a time-tested and time-honored
brand since 1866. Those retailers and customers loyal to Duck Head(R) will be
well served by the marketing and operating strengths that TSI will bring to this
combined enterprise."
TSI markets and manufactures branded and private brand men's and women's casual
and dress sportswear through all major retail distribution channels. Major owned
brands include Savane(R), Farah(R), Bay to Bay(R), Flyers(TM), The Original
Khaki Co.(R), Two Pepper(R), and Authentic Chino Casuals(R). Licensed brands
include Bill Blass(R), John Henry(R), Van Heusen(R) and Victorinox(R). TSI
distinguishes itself by providing major retailers with comprehensive brand
management programs and uses advanced technology to provide retailers with
customer, product and market analyses, apparel design, and merchandising
consulting and inventory forecasting with a focus on return on investment.
Duck Head Apparel Company, Inc., which was spun-off as a separate public
reporting company on June 30, 2000 by Delta Woodside Industries, Inc., is
headquartered in Winder, Georgia, and manufactures and sells men's and boys'
apparel under the Duck Head(R) brand. The company, which employs about 500
people, operates a distribution center in Winder, Georgia, a garment assembly
plant in Costa Rica and 25 retail outlet stores primarily in the southeastern
United States.
This press release contains forward-looking statements, which are
subject to the safe harbor created by the Private Securities Litigation Reform
Act of 1995. TSI and Duck Head caution that these statements represent current
expectations of future events and involve certain risks and uncertainties that
could cause actual results to differ materially from those anticipated in these
forward-looking statements as a result of factors including, without limitation,
conditions and contingencies in connection with the tender offer and merger,
difficulties in integrating the operations of Duck Head with TSI, delays or
other difficulties in implementing TSI's operating plans for Duck Head after the
merger, the inability to achieve projected revenue and earnings in fiscal 2001;
the inability to achieve cost savings related to recent reductions in staff;
general economic conditions, including recession or other cyclical effects
impacting our customers in the US or abroad; potential changes in demand in the
retail market; the continued acceptance of TSI's and Duck Head's existing and
new products by their major customers; the financial strength of TSI's and Duck
Head's major customers; delays associated with the timing of introduction,
shipment and acceptance of the Victorinox(R) apparel line; the ability of TSI to
continue to use certain licensed trademarks and tradenames, including
Victorinox(R), John Henry(R), Bill Blass(R), and Van Heusen(R); potential
changes in price and availability of raw materials and global manufacturing
costs and restrictions; increases in costs; and other risk factors listed from
time to time in TSI's and Duck Head's reports (including their Annual Reports on
Forms 10-K) filed with the Securities and Exchange Commission.
This announcement is neither an offer to purchase nor a solicitation of
an offer to sell securities of Duck Head. The tender offer will be made pursuant
to a tender offer statement and related materials. Investors and security
holders are strongly advised to read both the tender offer statement and the
solicitation/recommendation statement regarding the tender offer when they
become available because they will contain important information that should be
read carefully before any decision is made with respect to the offer. The tender
offer statement will be filed by TSI and its acquisition subsidiary, HB
Acquisition Corp., with the Securities and Exchange Commission, and
solicitations/recommendation statement will be filed by Duck Head with the
Securities and Exchange Commission. Investors and security holders may obtain a
free copy of these statements (when available) and other documents filed by TSI
and Duck Head at the SEC's website, www.sec.gov or upon request.