DELTA APPAREL, INC.
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
o
Check the appropriate box:
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o Preliminary
Proxy Statement
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o Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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x Definitive
Proxy Statement
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o Definitive
Additional Materials
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o Soliciting
Material under Rule 14a-12
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DELTA APPAREL, 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):
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No fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11.
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Title of each class of securities to which
transaction applies:
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(2) |
Aggregate number of securities to which
transaction applies:
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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):
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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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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.
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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DELTA APPAREL, INC.
2750 Premiere Parkway, Suite 100
Duluth, Georgia 30097
Telephone (678) 775-6900
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
NOVEMBER 10, 2005
TO THE SHAREHOLDERS OF DELTA APPAREL, INC.:
NOTICE IS HEREBY GIVEN that the annual meeting of the shareholders of Delta Apparel, Inc., a
Georgia corporation, will be held on Thursday, November 10, 2005, at 10:00 a.m. local time at our
corporate offices located at 2750 Premiere Parkway, Suite 100, Duluth, Georgia 30097, for the
following purposes, as more fully described in the proxy statement accompanying this notice:
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To elect eight directors to serve until the next annual meeting of shareholders or
until their successors have been duly elected and qualified; |
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To ratify the appointment of Ernst & Young LLP as our independent auditors for the
fiscal year ending July 1, 2006; and |
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To transact such other business as may properly come before the annual meeting or any
adjournment or adjournments thereof. |
Only stockholders of record at the close of business on September 16, 2005, are entitled to
notice of, and to vote at, the annual meeting and any adjournment or postponement thereof.
All shareholders are cordially invited to attend the annual meeting in person. Whether or not
you plan to attend, please sign and return the enclosed proxy as promptly as possible in the
envelope enclosed for your convenience. In the event you are able to attend the meeting, you may
revoke your proxy and vote your shares in person.
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By Order of the Board of Directors, |
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Martha M. Watson |
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Secretary |
October 3, 2005
Duluth, Georgia
TABLE OF CONTENTS
DELTA APPAREL, INC.
2750 Premiere Parkway, Suite 100
Duluth, Georgia 30097
Telephone (678) 775-6900
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
November 10, 2005
General
This proxy statement is furnished in connection with the solicitation by the Board of
Directors of Delta Apparel, Inc., a Georgia corporation, of proxies for the annual meeting of
shareholders to be held on November 10, 2005, at 10:00 a.m. local time. The annual meeting will be
held at our corporate offices located at 2750 Premiere Parkway, Suite 100, Duluth, Georgia 30097.
This proxy statement, form of proxy, and accompanying materials shall be first mailed on or about
Monday, October 3, 2005, to all shareholders entitled to notice of, and to vote at, the annual
meeting. We will refer to Delta Apparel, Inc. in this proxy statement as either Delta Apparel or
the company.
All materials filed by us with the Securities and Exchange Commission can be obtained through
the SECs web site at www.sec.gov or through our web site at www.deltaapparel.com.
Purpose of the Annual Meeting
At our annual meeting, holders of our common stock will be asked:
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To elect eight directors to serve until the next annual meeting of shareholders or
until their successors have been duly elected and qualified; |
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To ratify the appointment of Ernst & Young LLP as our independent auditors for the
fiscal year ending July 1, 2006; and |
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To transact such other business as may properly come before the annual meeting or any
adjournment or adjournments thereof. |
Members of Delta Apparels management team will be present at the meeting to respond to
appropriate questions from shareholders.
Record Date and Share Ownership
The record date for the meeting is Friday, September 16, 2005. Only shareholders of record at
the close of business on that date are entitled to vote at the annual meeting and any adjournment
or postponement thereof. As of that date, there were 8,522,052 shares of our common stock, $0.01
par value, outstanding. Each share is entitled to one vote on all matters before the meeting.
Voting
Only shareholders of record on the record date will be entitled to vote at the annual meeting.
If any shareholder is unable to attend the annual meeting, the shareholder may vote by proxy.
When a properly completed proxy is returned to the address indicated on the enclosed proxy card, it
will be voted as directed by
the shareholder on the proxy. Shareholders are urged to specify their choices on the enclosed
proxy. If a proxy is signed and returned without choices specified, in the absence of contrary
instructions, the shares of our common stock represented by the proxy will be voted FOR the
election to the Board of Directors of the nominees described herein, FOR the ratification of the
appointment of Ernst & Young LLP as independent auditors for the company for fiscal year 2006, and
in the discretion of the proxy holders as to all other matters that may properly come before the
annual meeting or any adjournment or adjournments thereof.
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by the person giving it at any
time before it is voted. If the shares are held in the shareholders name, the proxy may be
revoked by (i) sending written notice of revocation to our Secretary, Martha M. Watson, (ii)
executing and delivering to our Secretary a proxy bearing a later date, or (iii) attending the
annual meeting and giving notice of revocation to our Secretary or giving notice of revocation in
open meeting prior to the proxy being voted. 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 Apparel, Inc., 2750 Premiere Parkway, Suite 100, Duluth, Georgia 30097, Attention: Martha M.
Watson, Secretary. If you are a beneficial owner of shares held in street name by your broker,
you should follow the directions provided by your broker regarding how to revoke the proxy.
Quorum and Voting Requirement
The presence, either in person or by proxy, of the holders of two-thirds of the outstanding
shares of common stock at September 16, 2005 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. This
means that the eight nominees will be elected if they receive more affirmative votes than any other
person. Shareholders do not have the right to cumulate their votes with respect to the election of
directors. Ratification of the appointment of Ernst & Young LLP as independent auditors will
require the affirmative vote of holders of a majority of the shares voting on the issue at the
annual meeting. Abstentions and broker non-votes, which are separately tabulated, are included in
the determination of the number of shares present for quorum purposes, but have no effect on the
election of directors or the ratification of the appointment of Ernst & Young as independent
auditors.
Other
A copy of our 2005 Annual Report to Shareholders is being furnished with this Proxy Statement
to each shareholder of record as of the record date. Although the 2005 Annual Report is being
distributed with this proxy statement, it is not incorporated by reference into this proxy
statement.
ELECTION OF DIRECTORS
(Item 1)
Our by-laws provide that the number of directors to be elected at any meeting of shareholders
will be determined by the board of directors. Our board of directors has determined that eight
directors shall be elected at the annual meeting. Shareholders do not have the right to cumulate
their votes with respect to the election of directors.
The eight persons listed below are nominees for election as directors at the annual meeting to
serve until our next annual meeting of shareholders or until their successors are duly elected and
qualified. Unless you vote Withheld with respect to one or more nominees, the proxy holders will
vote your shares for the persons named below, all of whom are currently directors.
We believe that all of the nominees will be available and able to serve as directors. In the
event any nominee is not available or able to serve, the Board of Directors may either reduce the
number of directors to be
elected or select a substitute nominee. If a substitute nominee is selected, the proxy
holders will vote your shares for the substitute nominee, unless you have withheld authority.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF EACH OF THE EIGHT NOMINESS.
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Committee |
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Name, Age & |
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Assignments 2005 |
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Director |
Business Address |
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Principal Occupation |
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and 2006 |
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Since |
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David S. Fraser (67)* |
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Business Consultant |
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Audit |
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2002 |
3010 Rivermeade Lane, NW |
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Atlanta, Georgia (1) |
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Atlanta, GA 30327 |
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William F. Garrett (64)* |
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President & Chief Executive Officer |
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Compensation |
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1999 |
1071 Avenue of the Americas |
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Delta Woodside Industries, Inc. |
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Compensation Grants |
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New York, NY 10018 |
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Fountain Inn, South Carolina (2) |
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Robert W. Humphreys (48) |
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President & Chief Executive Officer |
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1999 |
300 N. Main Street, Suite 201 |
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Delta Apparel |
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Greenville, SC 29601 |
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Duluth, Georgia (3) |
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Dr. Max Lennon (65)* |
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President |
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Audit |
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1999 |
Post Office Box 1775 |
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Education & Research Services (ERS) |
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Compensation |
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Mars Hill, NC 28754 |
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Mars Hill, North Carolina (4) |
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Corporate Governance |
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E. Erwin Maddrey, II (64)* |
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President |
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Compensation |
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1999 |
233 N. Main Street, Suite 200 |
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Maddrey & Associates |
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Corporate Governance |
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Greenville, SC 29601 |
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Greenville, South Carolina (5) |
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Philip J. Mazzilli, Jr. (64)* |
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Business Consultant |
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Audit |
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2004 |
321 Edwards Brook Lane |
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Atlanta, Georgia (6) |
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Canton, GA 30115 |
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Buck A. Mickel (49)* |
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President & Chief Executive Officer |
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Compensation |
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1999 |
Post Office Box 6721 |
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RSI Holdings, Inc. |
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Corporate Governance |
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Greenville, SC 29606 |
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Greenville, South Carolina (7) |
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David Peterson (53)* |
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Chairman & Chief Executive Officer |
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Compensation |
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2003 |
1002 Lullwater Road |
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The North Highland Company |
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Compensation Grants |
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Atlanta, GA 30307 |
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Atlanta, Georgia (8) |
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Independent within the meaning of AMEX Rule 121A as determined by our board of directors. |
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David S. Fraser is currently a private investor and a business consultant. From 1998
until 2000, Mr. Fraser was Vice President and Chief Financial Officer of Crown Crafts, Inc., a
publicly held manufacturer of home textile products. Previously, he served as Chief Financial
Officer and Treasurer of Graphic Industries, Inc., a publicly held commercial printing company,
from 1994 until 1997. Mr. Fraser is also a director of Jameson Inns, Inc. and is chairman of their
audit committee. |
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William F. Garrett is currently the President and Chief Executive Officer of Delta
Woodside, a publicly held textile company, and has served in this capacity since June 2000. From
1986 until June 2000 Mr. Garrett served as the President of Delta Mills Marketing Company, a
division of a subsidiary of Delta Woodside Industries, Inc. or its predecessors (collectively,
Delta Woodside). Previously, he served as a divisional Vice |
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President of J. P. Stevens & Company, Inc., a textile company, from 1982 to 1984, and as a
divisional President of J. P. Stevens & Company, Inc. from 1984 until 1986. Mr. Garrett is also a
director of Delta Woodside. |
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Robert W. Humphreys currently serves as President and Chief Executive Officer of Delta
Apparel, Inc. and has served in this capacity since December 1999. Mr. Humphreys served as
President of the Delta Apparel Company division of Delta Woodside from April 1999 until December
1999. Previously, he served as Vice President-Finance and Assistant Secretary of Delta Woodside
from May 1998 to November 1999. From January 1987 to May 1998, Mr. Humphreys was President of
Stevcoknit Fabrics Company, the former knit fabrics division of a subsidiary of Delta Woodside. |
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Dr. Max Lennon is currently the President of Education and Research Services (ERS), a
nonprofit economic development organization, and has served in this capacity since 2002. From 1996
until 2002, Dr. Lennon served as President of Mars Hill College. Previously, he served a President
and Chief Executive Officer of Eastern Foods, Inc., a food product manufacturer and distributor,
from August 1994 until March 1996 and was President of Clemson University from March 1986 until
August 1994. Dr. Lennon also serves as a director of Delta Woodside and Duke Energy Corporation.
During fiscal year 2005, he attended the KPMG Audit Committee Institute Spring 2005 Roundtable for
continuing education on board governance. |
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E. Erwin Maddrey, II is currently the President of Maddrey & Associates, which oversees
its investments and provides consulting services. He served as President and Chief Executive
Officer of Delta Woodside from its founding in 1984 until June 2000. Mr. Maddrey is currently the
chairman of our board of directors. He also serves as a director of Delta Woodside and Kemet
Corporation. |
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Philip J. Mazzilli, Jr. is currently a financial and business consultant. From February
2000 until December 2003, Mr. Mazzilli was the Chief Financial Officer of Equifax, a publicly
traded company in the business of providing information for global commerce. Previously, he served
as Executive Vice President and Chief Financial Officer of Nova Corporation, a payment services
company, from 1999 until 2000. During fiscal year 2005, Mr. Mazzilli attended Emory University
Goizueta Directors Institute for continuing education on Board Governance. |
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Buck A. Mickel is currently the President, Chief Executive Officer and a director of RSI
Holdings, Inc., which is in the business of locating and providing labor to industrial companies in
the United States. He has served in this capacity since July 1998. Previously, Mr. Mickel served
as Vice President RSI Holdings, Inc. from 1990 until 1998, and was a Vice President of Delta
Woodside from its founding in 1984 until November 1989. Mr. Mickel also serves as a director of
Delta Woodside. |
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David Peterson is currently the Chairman and Chief Executive Officer of The North
Highland Company, a management and technology consulting services firm based in Atlanta, Georgia.
Mr. Peterson has served in this role since the start of the North Highland Company in 1992.
Previously, he held management positions with Georgia-Pacific Corporation and Arthur Andersen & Co.
Mr. Peterson has over thirty years of business experience, including assisting large
multi-national enterprises, small entrepreneurial and medium sized organizations improve their
businesses. |
Board and Committee Information
Our board of directors held ten meetings during the fiscal year ended July 2, 2005. Each
director attended or participated in at least 75% of the meetings of the board and of any committee
on which he served.
Code of Ethics
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, rules
promulgated thereunder by the SEC and Section 807 of the American Stock Exchange (AMEX) Listed
Companies Manual,
our board of directors adopted a code of business conduct and ethics known as the Ethics
Policy Statement that applies to all of our employees, officers and directors, including but not
limited to our Chief Executive Officer and our Chief Financial Officer (who is also our principal
accounting officer). The Ethics Policy Statement is available on our web site at
www.deltaapparel.com. Any amendments or waivers to provisions applicable to our Chief Executive
Officer or our Chief Financial Officer will be posted on our web site.
Director Independence
The AMEX requires that a majority of our directors meet the criteria for independence set
forth in Sections 121(A) and 802 of the AMEX Listed Company Guide. Generally, an independent
director is a director who is not also an officer or employee of the company or any parent or
subsidiary of the company. In addition, no director qualifies as independent unless the board of
directors affirmatively determines that the director does not have a material relationship with the
company that would interfere with the exercise of independent judgment. Our board of directors has
reviewed the relationships between each member of the board and the company. Based on its review,
our board of directors has determined that with the exception of Robert W. Humphreys, President and
Chief Executive Officer, each of our current directors is independent within the independence
standards set forth in Section 121(A) of the AMEX Listed Company Guide at this time.
Board Committees
Our board of directors has an audit committee, a compensation committee, a compensation grants
committee and a corporate governance committee. All members of these committees are independent as
defined by Section 121(A) of the AMEX Listed Company Guide. Our board designates the members of
these committees and has adopted written charters for each of these committees, setting forth the
roles and responsibilities of each committee. These charters are available on our web site at
www.deltaapparel.com.
Audit Committee
Our audit committee serves as an independent and objective party to oversee the financial and
reporting processes of our company, the audits of the financial statements of our company and our
companys internal control system. Our audit committee appoints (subject to shareholder
ratification), evaluates, and, when appropriate, replaces the registered public accounting firm or
outside auditors engaged to audit our financial statements and perform other audit, review, or
attest services for our company, determines the compensation and other terms of engagement of our
outside auditors, and oversees their work. The outside auditors report directly to our audit
committee. Our audit committee also oversees the internal audit function of our company. In
addition, our audit committee is responsible for establishing procedures for the receipt,
retention, and treatment of complaints received by the company regarding accounting, internal
accounting controls, or auditing matters and the confidential, anonymous submission by company
employees of concerns regarding questionable accounting or auditing matters. Our audit committee
held four meetings during the fiscal year ended July 2, 2005.
After considering relationships between each member of the audit committee and our company and
our subsidiaries and reviewing the qualifications of the members of the audit committee, our board
of directors has determined that all current members of the audit committee are independent as
that term is defined in both Section 121(A) of the AMEXs listing standards and Section 10A of the
Securities Exchange Act of 1934, as amended, and Rule 10A-3(b)(1) thereunder. Furthermore, our
board of directors has determined that Mr. David S. Fraser qualifies as an audit committee
financial expert, as defined in Item 401(h) of Regulation S-K promulgated under the Securities
Exchange Act of 1934, as amended.
Compensation Committee and Compensation Grants Committee
Our compensation and compensation grants committees assist our board in fulfilling its
oversight responsibilities relating to senior executive and director compensation. Our
compensation committee oversees, reviews and administers all of the companys present and future
compensation and executive benefit plans and
programs except for the plans for which the compensation grants committee has responsibility.
The compensation grants committee oversees, reviews and administers equity compensation plans,
director benefit plans and plans pursuant to which performance-based compensation may be granted
which is intended to qualify as performance-based compensation under Section 162(m) of the Internal
Revenue Code of 1986, as amended (Section 162(m)), except that the full board oversees, reviews
and administers the Non-Employee Director Stock Plan.
Our compensation committee reviews and submits to the board of directors suggested executive
officers salaries and bonuses, other than bonuses under our Short-Term Incentive Compensation Plan
(the Short-Term Incentive Compensation Plan). Our compensation grants committee grants awards
under our Incentive Stock Award Plan (the Incentive Stock Award Plan), options under our 2000
Stock Option Plan (the Stock Option Plan), and bonuses under our Short-Term Incentive
Compensation Plan. Our compensation committee held two meetings and our compensation grants
committee held four meetings during the fiscal year ended July 2, 2005.
Corporate Governance Committee
Our corporate governance committee identifies, interviews and recommends to the board
candidates for election to the board. The committee also reviews and reports to the board as to
various corporate governance matters. Our corporate governance committee held one meeting during
the fiscal year ended July 2, 2005.
The corporate governance committee does not currently retain the services of any director
search firm to assist in identifying and evaluating director candidates for its consideration,
although it may do so from time to time in the future. Accordingly, no fees have been paid to a
search firm or other third party in the past fiscal year.
The process for identifying and evaluating nominees for director, including nominees
recommended by shareholders, involves compiling names of potentially eligible candidates,
evaluating candidates qualifications, conducting interviews with candidates, and meeting to
consider and recommend final candidates to the board of directors. The corporate governance
committee will consider director nominees recommended by holders of our common stock, and there is
no difference in the manner in which our corporate governance committee evaluates nominees for
directors who are recommended by a shareholder and nominees who are selected by our company. The
corporate governance committee is authorized to retain (and terminate) search firms to assist it in
identifying candidates to serve as directors of the company and has sole authority to approve the
fees payable to such search firm and other terms of their retention.
Our director nominations policy is posted on our web site at www.deltaapparel.com. At a
minimum, a nominee for our board must (i) be over 21 years of age at the time of election; (ii)
have experience in a position with a high degree of responsibility in a business or other
organization; (iii) be able to read and understand basic financial statements; (iv) possess
integrity and have high moral character; (v) be willing to apply sound, independent business
judgment; and (vi) have sufficient time to devote to the company. It is our policy for our
corporate governance committee to consider the following criteria when evaluating candidates to be
nominated for director:
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whether the potential nominee has leadership, strategic, or policy setting experience
in a complex organization, including any governmental, educational, or other non-profit
organization; |
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whether the potential nominee has experience and expertise that is relevant to the
companys business, including any specialized business experience, technical expertise, or
other specialized skills, and whether the potential nominee has knowledge regarding issues
affecting the company; |
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whether the potential nominee is highly accomplished in his or her respective field; |
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in light of the relationship of the companys business to the textile industry, whether
the potential nominee has received any awards or honors from any industry groups or
associations or other relevant professional associations or actively participates in any
such groups or associations; |
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whether the addition of the potential nominee to our board would assist the board in
achieving a mix of board members that represents a diversity of background and experience; |
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whether the potential nominee has high ethical character and a reputation for honesty,
integrity, and sound business judgment; |
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whether the potential nominee is independent, as defined by AMEX listing standards,
whether he or she is free of any conflict of interest or the appearance of any conflict of
interest with the best interests of the company and its shareholders, and whether he or she
is willing and able to represent the interests of all shareholders of the company; |
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whether the potential nominee is financially sophisticated, as defined by AMEX listing
standards, or qualifies as an audit committee financial expert, as defined by SEC rules
and regulations; and |
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any factor affecting the ability or willingness of the potential nominee to devote
sufficient time to Board activities and to enhance his or her understanding of the
companys business. |
In determining whether to re-nominate an incumbent director, it is our policy that our
corporate governance committee review and consider the incumbent directors service to the company
during his or her term, including the number of meetings attended, level of participation, and
overall contribution to the company, in deciding whether to nominate such incumbent director for
re-election.
If a shareholder desires to recommend one or more director nominees to the corporate
governance committee for nomination by the company, the shareholder must provide the company with
the following information in writing:
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the name, telephone number, and address of the nominating shareholder and the name(s),
telephone number(s), and address(es) of his or her nominee(s); |
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biographical information regarding each nominee, including each nominees employment
and other relevant experience; and |
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the written consent of each nominee to serve as a director of the company. |
The director candidate recommendation materials are to be sent to our Secretary, Martha M. Watson,
at our principal executive offices by mail to 2750 Premiere Parkway, Suite 100, Duluth Georgia
30097, or by fax to (678) 775-6999, or by e-mail to
martha.watson@deltaapparel.com. Director
candidate recommendations may be submitted at any time; however, the corporate governance committee
is not required to consider shareholder nominees for a given annual meeting of shareholders unless
the written notice is received no later than 120 days prior to the first anniversary of the date of
the companys proxy statement for the previous years annual meeting. Thus shareholder
recommendations for nominees to be considered at the 2006 annual meeting of shareholders must be
received no later than June 4, 2006.
If a shareholder desires to actually nominate one or more director candidates himself or
herself, our bylaws require the shareholder to provide written notice of the intent to nominate to
our Secretary, Martha M. Watson. If the shareholder desires to make the nomination at our regular
annual meeting of shareholders, the notice must be received not less than 120 days prior to the
anniversary of the preceding years annual meeting of shareholders. If we move our annual meeting
to a date more than 30 days away from the anniversary of the previous years annual meeting, or if
the shareholder desires to make the nomination at a special meeting of shareholders, the notice
must be received no later than 10 days after we notify shareholders of, or publicly disclose, the
meeting date. A shareholders notice must contain the following information:
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the name and address of the shareholder who intends to make the nomination and the name
and address of each of that shareholders nominees; |
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the class and number of shares held of record, beneficially owned and represented by
proxy by the nominator as of the record date of the meeting (if the record date has been
established) and as of the date of the notice, the name in which those shares are
registered and a representation that the nominator intends to appear in person or by proxy
at the meeting to make the nominations; |
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a description of all arrangements or understandings between the nominator, the
nominee(s) and any other persons (whose names must be disclosed) relating to the
nomination; |
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the same information about the nominee(s) that we would be required to include in a
proxy statement under the Securities and Exchange Commissions proxy rules if we were
making the nomination; |
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the written consent of each nominee to serve as a director of the company; and
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any other information we may reasonably request. |
Copies of our bylaws may be obtained by writing or calling us at 2750 Premiere Parkway, Suite 100,
Duluth, Georgia, 30097, Tel: (678) 775-6900, Attention: Martha M. Watson, Secretary.
Communicating with the Board of Directors
It is the policy of our board of directors to encourage all forms of information to be
provided to the board of directors and/or its members by our shareholders. All such communications
shall be in written form, addressed to the board of directors or to one or more individual members
of the board of directors, and sent care of our Secretary, Martha M. Watson, at 2750 Premiere
Parkway, Suite 100, Duluth, Georgia, 30097 or via fax to 678-775-6999 or by email to
martha.watson@deltaapparel.com. Such communications will be reviewed by our Secretary, who
shall remove communications relating to solicitations, junk mail, or other correspondence relating
to customer service concerns. All other shareholder communications shall be promptly forwarded to
the applicable member(s) of our board of directors or to the entire board of directors, as
requested in the shareholder communication.
Director Attendance at Shareholder Meetings
We encourage, but do not require, that all members of our board of directors attend the annual
meeting of our shareholders. All directors then in office attended our 2004 annual meeting of
shareholders.
STOCK OWNERSHIP OF PRINCIPAL SHAREHOLDERS
AND MANAGEMENT
The following table sets forth certain information as of September 16, 2005, regarding the
beneficial ownership of our common stock by (i) persons beneficially owning 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, we believe 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 |
|
|
Name and Address of |
|
Beneficially |
|
|
Beneficial Owner |
|
Owned |
|
Percentage |
|
Royce & Associates (1) |
|
|
960,960 |
|
|
|
11.3 |
|
1414 Avenue of the Americas |
|
|
|
|
|
|
|
|
Ninth Floor |
|
|
|
|
|
|
|
|
New York, NY 10019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FMR Corporation (2) |
|
|
808,000 |
|
|
|
9.5 |
|
Edward C. Johnson |
|
|
|
|
|
|
|
|
Abigail P. Johnson |
|
|
|
|
|
|
|
|
82 Devonshire Street |
|
|
|
|
|
|
|
|
Boston, MA 02109 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares |
|
|
Name and Address of |
|
Beneficially |
|
|
Beneficial Owner |
|
Owned |
|
Percentage |
|
Franklin Resources, Inc. (3) |
|
|
680,000 |
|
|
|
8.0 |
|
Franklin Advisory Services, LLC |
|
|
|
|
|
|
|
|
Charles B. Johnson |
|
|
|
|
|
|
|
|
Rupert H. Johnson, Jr. |
|
|
|
|
|
|
|
|
One Franklin Parkway |
|
|
|
|
|
|
|
|
San Mateo, CA 94403 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dimensional Fund Advisors Inc. (4) |
|
|
666,006 |
|
|
|
7.8 |
|
1299 Ocean Avenue, 11th Floor |
|
|
|
|
|
|
|
|
Santa Monica, CA 90401 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
E. Erwin Maddrey, II (5) |
|
|
1,393,548 |
|
|
|
16.4 |
|
233 North Main Street, Suite 200 |
|
|
|
|
|
|
|
|
Greenville, SC 29601 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buck A. Mickel (6)(7) |
|
|
686,124 |
|
|
|
8.1 |
|
Post Office Box 6721 |
|
|
|
|
|
|
|
|
Greenville, SC 29606 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Micco Corporation (7) |
|
|
496,252 |
|
|
|
5.8 |
|
Post Office Box 9278 |
|
|
|
|
|
|
|
|
Greenville, SC 29604 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minor M. Shaw (7)(8) |
|
|
646,558 |
|
|
|
7.6 |
|
16 Hemlock Drive |
|
|
|
|
|
|
|
|
Greenville, SC 29601 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles C. Mickel (7)(9) |
|
|
643,760 |
|
|
|
7.6 |
|
Post Office Box 6847 |
|
|
|
|
|
|
|
|
Greenville, SC 29606 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David S. Fraser (10) |
|
|
4,236 |
|
|
|
(* |
) |
|
|
|
|
|
|
|
|
|
William F. Garrett (10) |
|
|
3,604 |
|
|
|
(* |
) |
|
|
|
|
|
|
|
|
|
Robert W. Humphreys (11) |
|
|
379,432 |
|
|
|
4.5 |
|
|
|
|
|
|
|
|
|
|
Dr. Max Lennon (10) |
|
|
14,462 |
|
|
|
(* |
) |
|
|
|
|
|
|
|
|
|
Philip J. Mazzilli, Jr. (10) |
|
|
1,692 |
|
|
|
(* |
) |
|
|
|
|
|
|
|
|
|
Herbert M. Mueller (12) |
|
|
110,536 |
|
|
|
1.3 |
|
|
|
|
|
|
|
|
|
|
David Peterson (10) |
|
|
7,384 |
|
|
|
(* |
) |
|
|
|
|
|
|
|
|
|
Martha M. Sam Watson (13) |
|
|
57,964 |
|
|
|
(* |
) |
|
|
|
|
|
|
|
|
|
All current
directors and executive officers |
|
|
|
|
|
|
|
|
as a group (10 Persons) (14) |
|
|
2,658,982 |
|
|
|
31.2 |
|
|
|
|
(1) |
|
The information set forth above is based on a Schedule 13F-HR that was filed by Royce &
Associates, LLC with the Securities and Exchange Commission on August 4, 2005 with respect to our
common stock. In Amendment No. 5 to Schedule 13G that was filed by Royce with the Securities and
Exchange Commission on January 25, 2005 with respect to the companys common stock, Royce reported
that it has sole power to vote and/or dispose of the shares disclosed above. |
|
(2) |
|
The information set forth above is based on a Schedule 13F-HR that was filed by FMR
Corporation (FMR) with the Securities and Exchange Commission on August 15, 2005 with respect to
our common stock. In Amendment No. 3 to Schedule 13G that was filed by FMR with the Securities and
Exchange Commission on February 17, 2004 with respect to the companys common stock, FMR reported
that Fidelity Management & Research Company (Fidelity), which has the same business address as
FMR, is a wholly-owned subsidiary of FMR and is an investment adviser registered under Section 203
of the Investment Advisers Act of 1940. As a result of acting as investment adviser to various
investment companies registered under Section 8 of the Investment Company Act of 1940, Fidelity is
the beneficial owner of all of the shares reported above. The Schedule 13G/A reported that one
investment company, Fidelity Low Priced Stock Fund, owns all shares set forth above. The Schedule
13G/A reported that Edward C. Johnson III, Chairman of FMR, owns 12.0% and Abigail P. Johnson,
Director of FMR, owns 24.5% of the aggregate outstanding voting stock of FMR. They have entered
into a shareholders voting agreement with the other holders of all of the other Class B shares
under which all Class B shares will be voted in accordance with the majority vote of Class B
shares. Accordingly, through their ownership of voting common stock and the execution of the
shareholders voting agreement, they may be deemed to form a controlling group with respect to FMR.
The Schedule 13G/A indicates that neither FMR nor Edward C. Johnson III has the sole power to vote
or direct the voting of the shares owned directly by the Fidelity Funds, which power resides with
the Funds Boards of Trustees. Fidelity carries out the voting of the shares under written
guidelines established by the Funds Boards of Trustees. |
|
(3) |
|
The information set forth above is based on a Schedule 13F-HR that was filed by Franklin
Resources, Inc. (FRI) with the Securities and Exchange Commission on August 15, 2005 with respect
to our companys common stock. In Amendment No. 3 to Schedule 13G that was filed by FRI with the
Securities and Exchange Commission on February 10, 2004 with respect to our companys common stock,
FRI reported that the shares are beneficially owned by one or more investment companies or other
managed accounts that are advised by direct and indirect investment advisory subsidiaries of FRI.
The Schedule 13G/A reported that the advisory contracts grant to the applicable investment advisory
subsidiary(ies) all 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 Schedule 13G/A reported that Charles B. Johnson and Rupert H.
Johnson, Jr. (the FRI Principal Shareholders) (each of whom has 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 Schedule 13G/A reported that one of the investment advisory subsidiaries,
Franklin Advisory Services, LLC (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 and are of the view that they are not acting as a
group for purposes of the Securities Exchange Act of 1934, as amended. The Schedule 13G/A
reported that Franklin Microcap Value Fund, a series of Franklin Value Investors Trust, a company
registered under the Investment Company Act of 1940, has an interest in more than 5% of the class
of securities reported. |
|
(4) |
|
The number of shares currently held by Dimensional Fund Advisors Inc. (Dimensional) is
based on a Schedule 13F-HR that was filed by Dimensional with the Securities and Exchange
Commission on July 21, 2005. In the Schedule 13F-HR, Dimensional reported that it has sole voting
power with respect to 660,406 of these shares, and no voting power as to 5,600 of these shares. In
an Amendment to Schedule 13G that was filed by Dimensional with the Securities and Exchange
Commission on February 9, 2005, Dimensional reported that it furnishes investment advice to four
investment companies and serves as investment manager to certain other commingled group trusts and
separate accounts. The Schedule 13G/A reported that all of the shares of our companys common
stock were owned by such investment companies, trusts or accounts. The Schedule 13G/A |
|
|
|
|
|
reported that Dimensional disclaims beneficial ownership of such securities and that, to the
knowledge of Dimensional, no such investment company, trust or account client owned more than 5% of
the outstanding shares of our companys common stock. |
|
(5) |
|
Mr. Maddrey is the chairman of the board and a director of our company. The number of
shares shown as beneficially owned by Mr. Maddrey includes 172,588 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. The number of shares shown as
beneficially owned in the table above includes 692 shares awarded pursuant to the 2004 Non-Employee
Director Stock Plan that vested as of July 2, 2005 and were awarded on September 23, 2005, the date
the company filed its Form 10-K for the fiscal year ended July 2, 2005. |
|
(6) |
|
Buck A. Mickel is a director of our company. The number of shares shown as beneficially
owned by Buck A. Mickel includes 185,680 shares directly owned by him, all of the 496,252 shares
owned by Micco Corporation, and 3,500 shares held by him as custodian for a minor. Buck A. Mickel
disclaims beneficial ownership with respect to the 3,500 shares of our companys common stock held
by him as custodian for a minor. The number of shares shown as beneficially owned in the table
above includes 692 shares awarded pursuant to the 2004 Non-Employee Director Stock Plan that vested
as of July 2, 2005 and were awarded on September 23, 2005, the date the company filed its Form 10-K
for the fiscal year ended July 2, 2005. |
|
(7) |
|
Micco Corporation owns 496,252 shares of our companys common stock. The shares of common
stock of Micco Corporation are owned in equal parts by Buck A. Mickel (a director of the company),
Minor M. Shaw and Charles C. Mickel, who are siblings. Each of them is an officer and director of
Micco Corporation, and each of them disclaims beneficial ownership of two thirds of the Delta
Apparel shares owned by Micco Corporation. |
|
(8) |
|
The number of shares shown as beneficially owned by Minor M. Shaw includes 149,880 shares
owned by her directly, 426 shares beneficially owned by her husband through an individual
retirement account, and all of the 496,252 shares owned by Micco Corporation. Minor M. Shaw
disclaims beneficial ownership with respect to the 426 shares beneficially owned by her husband. |
|
(9) |
|
The number of shares shown as beneficially owned by Charles C. Mickel includes 146,064
shares owned by him directly, 1,404 shares held by him as custodian for his children, 40 shares
owned by his wife and all of the 496,252 shares owned by Micco Corporation. Charles C. Mickel
disclaims beneficial ownership with respect to the 40 shares owned by his wife and to the 1,404
shares of the held by him as custodian for his children. |
|
(10) |
|
The number of shares shown as beneficially owned in the table above includes 692 shares
awarded pursuant to the 2004 Non-Employee Director Stock Plan that vested as of July 2, 2005 and
were awarded on September 23, 2005, the date the company filed its Form 10-K for the fiscal year
ended July 2, 2005. |
|
(11) |
|
Robert W. Humphreys is President and Chief Executive Officer and a director of our
company. The number of shares shown as beneficially owned in the table above includes 95,500
shares subject to options exercisable within 60 days of the record date for the annual meeting. |
|
(12) |
|
Herbert M. Mueller is Vice President, Chief Financial Officer and Treasurer of our
company. The number of shares shown as beneficially owned in the table above includes 23,600
shares subject to options exercisable within 60 days of record date for the annual meeting. |
|
(13) |
|
Martha M. Sam Watson is Vice President and Secretary of our company. The number of
shares shown as beneficially owned in the table above includes 14,400 shares subject to options
exercisable within 60 days of the record date for the annual meeting. |
|
|
|
(14) |
|
Includes all shares deemed to be beneficially owned by any current director or executive
officer. |
|
(*) |
|
Less than one percent. |
EXECUTIVE OFFICERS
The following provides certain information regarding our current executive officers. Our
companys primary business address is Delta Apparel, Inc., 2750 Premiere Parkway, Suite 100,
Duluth, Georgia, 30097.
|
|
|
Name and Age |
|
Position |
Robert W. Humphreys (48)
|
|
President and Chief Executive Officer (1) |
|
|
|
Herbert M. Mueller (48)
|
|
Vice President, Chief Financial Officer
and Treasurer (2) |
|
|
|
Martha M. Sam Watson (52)
|
|
Vice President and Secretary (3) |
|
|
|
(1) |
|
See information under the subheading Election of Directors. |
|
(2) |
|
Herbert M. Mueller is currently the Vice President, Chief Financial Officer and Treasurer
of the company and has served in this capacity since December 1999. From April 1998 to December
1999, Mr. Mueller served as Vice President of the Delta Apparel Company division of Delta Woodside.
Prior to joining the Delta Apparel Company division, Mr. Mueller served as Corporate Controller
(from June 1991 to June 1997 and from October 1997 to April 1998) and Senior Director of Business
Planning (from July 1997 to October 1997) of Swift Denim, a manufacturer of denim fabric. |
|
(3) |
|
Martha M. Watson is currently the Vice President and Secretary of the company and has
served in this capacity since October 2000. Prior to joining Delta Apparel, Inc., Ms. Watson
served as President of Carolina Benefit Services (from September 1999 to October 2000), Vice
President of Operations for Sunland Distribution, Inc., a public warehousing company (from January
1999 to September 1999), and Director of Human Resources for the following divisions of Delta
Woodside: Stevcoknit Fabrics Company (from January 1990 to January 1999) and Delta Apparel Company
(from July 1987 to January 1990). |
Our executive officers are appointed by the board of directors and serve at the pleasure of
the board.
MANAGEMENT COMPENSATION
Summary Compensation Table
The following table provides summary information concerning the compensation earned by our
Chief Executive Officer and the other executive officers for their services to our company and our
subsidiaries, for the fiscal years ended July 2, 2005, July 3, 2004 and June 28, 2003. The
executive officers listed below are referred to as the Named Executive Officers.
SUMMARY COMPENSATION TABLE
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual |
|
|
|
|
|
|
Long Term |
|
|
|
|
|
|
|
|
|
|
Compensation |
|
|
|
|
|
|
Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual |
|
|
|
|
|
|
Underlying |
|
|
All Other |
|
|
|
|
|
Name and |
|
|
|
|
|
Salary |
|
|
Bonus |
|
|
|
|
|
|
Compensation |
|
|
|
|
|
|
Options |
|
|
Compensation |
|
|
|
|
|
Principal Position |
|
Year |
|
|
($)(a) |
|
|
($)(a)(b) |
|
|
|
|
|
|
($)(c) |
|
|
|
|
|
|
(#)(d)(e) |
|
|
|
($) |
|
|
|
|
|
|
Robert W. Humphreys |
|
|
2005 |
|
|
|
618,750 |
|
|
|
740,200 |
|
|
|
(f |
) |
|
|
535,561 |
|
|
|
(g |
)(h) |
|
|
16,000 |
|
|
|
3,675 |
|
|
|
(k |
) |
President & Chief |
|
|
2004 |
|
|
|
568,462 |
|
|
|
427,294 |
|
|
|
|
|
|
|
165,328 |
|
|
|
|
|
|
|
16,000 |
|
|
|
3,714 |
|
|
|
|
|
Executive Officer |
|
|
2003 |
|
|
|
500,000 |
|
|
|
487,500 |
|
|
|
|
|
|
|
113,268 |
|
|
|
|
|
|
|
48,000 |
|
|
|
3,975 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Herbert M. Mueller |
|
|
2005 |
|
|
|
215,833 |
|
|
|
190,720 |
|
|
|
|
|
|
|
155,901 |
|
|
|
(g |
)(i) |
|
|
4,800 |
|
|
|
3,823 |
|
|
|
(k |
) |
Vice President, Chief |
|
|
2004 |
|
|
|
200,385 |
|
|
|
160,067 |
|
|
|
|
|
|
|
49,143 |
|
|
|
|
|
|
|
4,800 |
|
|
|
3,810 |
|
|
|
|
|
Financial Officer & |
|
|
2003 |
|
|
|
188,462 |
|
|
|
113,750 |
|
|
|
|
|
|
|
33,848 |
|
|
|
|
|
|
|
14,400 |
|
|
|
4,778 |
|
|
|
|
|
Treasurer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martha M. Watson |
|
|
2005 |
|
|
|
143,500 |
|
|
|
89,400 |
|
|
|
|
|
|
|
94,793 |
|
|
|
(g |
)(j) |
|
|
3,200 |
|
|
|
4,133 |
|
|
|
(k |
) |
Vice President & |
|
|
2004 |
|
|
|
134,890 |
|
|
|
68,910 |
|
|
|
|
|
|
|
26,666 |
|
|
|
|
|
|
|
3,200 |
|
|
|
3,606 |
|
|
|
|
|
Secretary |
|
|
2003 |
|
|
|
123,500 |
|
|
|
56,875 |
|
|
|
|
|
|
|
14,582 |
|
|
|
|
|
|
|
9,600 |
|
|
|
3,034 |
|
|
|
|
|
|
|
|
(a) |
|
The amounts shown in the column include sums, the receipt of which were deferred
pursuant to our companys Savings and Investment Plan (the Delta Apparel 401(k) Plan) and our
companys deferred compensation plan. |
|
(b) |
|
Amounts in this column are cash bonuses paid to reward performance. |
|
(c) |
|
The amounts shown in the column were paid by our company in connection with the vesting of
awards under our companys Incentive Stock Award Plan and were approximately sufficient to pay the
participants federal and state income taxes attributable to the acquisition of the vesting shares
and the receipt of the tax reimbursement itself. Shares are issued upon vesting, subject to
payment of $0.01 (the par value) per share. The tax assistance related to the vesting of these
awards is earned in, and shown above for, the fiscal year in which the related award vests (which
is generally the last day of the fiscal year), though such amounts in some instances were actually
paid in the fiscal year following vesting of the related award. |
|
(d) |
|
Includes awards under our companys Incentive Stock Award Plan. These awards are treated
as options. |
|
(e) |
|
Adjusted to reflect the companys 2-for-1 stock split effective on May 31, 2005. |
|
(f) |
|
Amount includes a special cash bonus of $25,000 received by Mr. Humphreys for the
successful integration of the M. J. Soffe Co. after its acquisition by the company. |
|
(g) |
|
The three-year performance portion of awards that were granted in fiscal 2003
(constituting 40% of each award) under our companys Incentive Stock Award Plan vested on September
23, 2005 when we filed our Annual Report on Form 10-K for fiscal 2005 based on the achievement of
performance criteria for the three-year period ended July 2, 2005 measured by financial data in the
fiscal 2005 Form 10-K. The related payments to cover applicable income taxes were made later in
fiscal year 2006; however, these amounts are included in fiscal 2005 compensation because the
vesting of the performance portion of the awards was based on achieving fiscal 2005 performance
goals. |
|
(h) |
|
The fiscal 2005 amount represents $514,362 of payments made to Mr. Humphreys to cover the
applicable income taxes associated with awards under our companys Incentive Stock Award Plan and
$21,199 earned on Mr. Humphreys deferred compensation at a rate in excess of 120% of the federal
mid-term rate. |
|
|
|
(i) |
|
The fiscal 2005 amount represents $148,138 of payments made to Mr. Mueller to cover the
applicable income taxes associated with awards under our companys Incentive Stock Award Plan and
$7,763 earned on Mr. Muellers deferred compensation at a rate in excess of 120% of the federal
mid-term rate. |
|
(j) |
|
The fiscal 2005 amount represents $94,793 of payments made to Ms. Watson to cover the
applicable income taxes associated with awards under our companys Incentive Stock Award Plan. |
|
(k) |
|
Represents the amount contributed by our company to the Delta Apparel 401(k) Plan. The
amount shown for the fiscal year was allocated to the participants 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 participants compensation during the prior fiscal year. |
The amounts shown in the table above do not include reimbursement by our company or our
subsidiaries for certain automobile expenses and other items. The non-business personal benefit to
any Named Executive of these amounts does not exceed the lesser of $50,000 or 10% of the Named
Executives total salary and bonus.
Option Grants in Last Fiscal Year
The following table provides certain information respecting the grant to any Named Executive
during fiscal 2005 of awards under our companys Incentive Stock Award Plan or options under our
companys Stock Option Plan. For purposes of this table, awards under our companys Incentive Stock
Award Plan are treated as options.
OPTION GRANTS IN LAST FISCAL YEAR
|
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|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Individual Grants |
|
|
Potential Realizable Value At |
|
|
|
Number of |
|
|
Percent Of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assumed Annual Rate of |
|
|
|
Securities |
|
|
Total Options |
|
|
|
|
|
|
Market |
|
|
|
|
|
|
Stock Price Appreciation for |
|
|
|
Underlying |
|
|
Granted To |
|
|
Exercise Or |
|
|
Price on |
|
|
|
|
|
|
Option Term (b) |
|
|
|
Options Granted |
|
|
Employees |
|
|
Base Price |
|
|
Date of |
|
|
Expiration |
|
|
0% |
|
|
5% |
|
|
10% |
|
Name |
|
(#)(a) |
|
|
In Fiscal Year |
|
|
($/Sh)(a) |
|
|
Grant (a) |
|
|
Date |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
Robert W. Humphreys |
|
|
16,000 |
(c) |
|
|
32.2 |
|
|
$ |
0.01 |
|
|
$ |
11.275 |
|
|
|
(c |
) |
|
|
180,240 |
|
|
|
189,260 |
|
|
|
198,280 |
|
President & CEO |
|
|
62,500 |
(d) |
|
|
38.2 |
|
|
$ |
11.275 |
|
|
|
|
|
|
|
(d |
) |
|
|
|
|
|
|
443,174 |
|
|
|
1,123,090 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Herbert M. Mueller
Vice President, |
|
|
4,800 |
(c) |
|
|
9.7 |
|
|
$ |
0.01 |
|
|
$ |
11.275 |
|
|
|
(c |
) |
|
|
54,072 |
|
|
|
56,778 |
|
|
|
59,484 |
|
CFO & Treasurer |
|
|
14,000 |
(d) |
|
|
8.6 |
|
|
$ |
11.275 |
|
|
|
|
|
|
|
(d |
) |
|
|
|
|
|
|
99,271 |
|
|
|
251,572 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martha M. Watson
Vice President & |
|
|
3,200 |
(c) |
|
|
6.4 |
|
|
$ |
0.01 |
|
|
$ |
11.275 |
|
|
|
(c |
) |
|
|
36,048 |
|
|
|
37,852 |
|
|
|
39,656 |
|
Secretary |
|
|
8,000 |
(d) |
|
|
4.9 |
|
|
$ |
11.275 |
|
|
|
|
|
|
|
(d |
) |
|
|
|
|
|
|
56,726 |
|
|
|
143,756 |
|
|
|
|
(a) |
|
Adjusted to reflect the companys 2-for-1 stock split effective on May 31, 2005. |
|
(b) |
|
Based on annual compounding at assumed appreciation rate from the market value at the date of
grant until the termination date. |
|
(c) |
|
Represents shares covered by an award granted during fiscal 2005 under our companys Incentive
Stock Award Plan, pursuant to which a participant can acquire shares of our companys common stock
for $0.01 cash |
|
|
|
|
|
per share upon the vesting of the award respecting such shares. Each award provided that the award
would vest in full if the recipient remained employed with our company on July 2, 2005 or upon a
change of control occurring before such date and that any part of an award that did not vest would
be forfeited. In connection with the vesting of any award, our company pays the participant cash
in an amount approximately sufficient to pay the participants federal and state income taxes
attributable to the vesting of the award and the receipt of the tax reimbursement itself. These
awards were exercised on July 2, 2005. |
|
(d) |
|
Represents shares covered by an option granted during fiscal 2005 under the Companys Stock
Option Plan, pursuant to which a participant is granted the right to acquire shares of the
Companys Common Stock for an exercise price per share equal to the fair market value on the date
of the grant. Each option granted under the plan sets forth the circumstances under which all or
part of the option can be exercised. These options became exercisable on July 5, 2005 and expire
on July 5, 2014. |
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 2005 of awards granted under our companys Incentive Stock Award Plan and
options granted under our companys Stock Option Plan, and the fiscal year end value of any
unexercised outstanding awards and options under these plans. For purposes of this table, awards
under our companys Incentive Stock Award Plan are treated as options.
AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities |
|
|
Value of Unexercised |
|
|
|
Shares Acquired on |
|
|
|
|
|
|
Underlying Unexercised |
|
|
In-the-Money Options at |
|
|
|
Exercise |
|
|
Value Realized |
|
|
Options at FY-End (#)(a)(c) |
|
|
FY-End ($)(a)(b)(c) |
|
Name |
|
(#)(a) |
|
|
($) |
|
|
Exercisable |
|
|
Unexercisable |
|
|
Exercisable |
|
|
Unexercisable |
|
Robert W. Humphreys |
|
|
16,000 |
(d) |
|
|
209,280 |
(f) |
|
|
|
|
|
|
94,500 |
|
|
|
|
|
|
|
531,998 |
|
|
|
|
62,500 |
(e) |
|
|
660,531 |
(g) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Herbert M. Mueller |
|
|
4,800 |
(d) |
|
|
62,784 |
(f) |
|
|
|
|
|
|
23,600 |
|
|
|
|
|
|
|
150,978 |
|
|
|
|
14,000 |
(e) |
|
|
123,109 |
(h) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martha M. Watson |
|
|
3,200 |
(d) |
|
|
41,856 |
(f) |
|
|
|
|
|
|
14,400 |
|
|
|
|
|
|
|
98,232 |
|
|
|
|
24,000 |
(e) |
|
|
208,680 |
(i) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Adjusted to reflect the companys 2-for-1 stock split effective on May 31, 2005. |
|
(b) |
|
Based on the closing price of our companys common stock on July 1, 2005, the last trading
day of fiscal year 2005, of $13.09 per share. All of the unexercised options were in-the-money
on July 2, 2005. |
|
(c) |
|
Includes shares under our companys Stock Option Plan that vested on July 5, 2005 and shares
under our Incentive Stock Award Plan that vested on September 23, 2005. As the vesting of the
Incentive Stock Award Plan relates to performance achieved in fiscal years 2003 through 2005,
the tax reimbursement for the federal and state income taxes attributable to the acquisition of
the vesting shares and the receipt of the tax reimbursement itself were included as compensation
in fiscal year 2005 in the Summary Compensation Table. |
|
(d) |
|
Amounts represent shares acquired through the vesting of awards granted under our companys
Incentive Stock Award Plan. |
|
|
|
(e) |
|
Amounts represent shares acquired through the exercise of options granted under our
companys Stock Option Plan. |
|
(f) |
|
Based on the closing price of our companys common stock on July 1, 2005, the last trading
day before the July 2, 2005 date of vesting of the applicable incentive stock awards, of $13.09
per share. |
|
(g) |
|
Based on the closing price of our companys stock on February 7, 2005, the date of exercise
of the applicable stock options, of $15.225 per share (adjusted to reflect 2-for-1 stock split
effective on May 31, 2005). |
|
(h) |
|
Based on the closing price of our companys stock on May 12, 2005, the date of exercise of
the applicable stock options, of $13.45 per share (adjusted to reflect 2-for-1 stock split
effective on May 31, 2005). |
|
(i) |
|
Based on the closing price of our companys stock on February 23, 2005, the date of exercise
of the applicable stock options, of $14.82 per share (adjusted to reflect 2-for-1 stock split
effective on May 31, 2005). |
Employment Contracts and Severance Arrangements
Robert W. Humphreys. Our company does not maintain an employment agreement with Robert W.
Humphreys, President and Chief Executive Officer.
Herbert M. Mueller & Martha M. Watson. Mr. Mueller and Ms. Watson are parties to employment
agreements with our company dated September 30, 2003 with terms extending to December 31, 2006.
Mr. Muellers agreement provides that he will serve as Vice President, Chief Financial Officer and
Treasurer of the company and receive a base annual salary of at least $200,000. Ms. Watsons
agreement provides that she will serve as Vice President and Secretary of the company and receive a
base annual salary of at least $129,500.
Both agreements provide that the employees will be entitled to participate in our companys
Short-Term Incentive Compensation Plan and receive perquisites comparable to those of other
similarly situated executives of our company. The agreements provide for 6 months base salary
continuation following the death of the employee and base salary and benefits continuation for 6
months following termination of employment because of disability. We may terminate the employees
with or without cause upon written notice, and the agreements require the employee to give our
company 60 days prior written notice of his or her voluntary termination of employment. If we
terminate the employees employment without cause or the employee terminates his or her employment
because of breach of the agreement by our company, we, for a period of 12 months, shall continue to
pay the employees base salary and certain incentive compensation based on the amount received for
the most recent fiscal year and continue to provide the life, medical and disability insurance
provided prior to termination or to other executives during such 12 month period.
If within one year of a change of control (as defined in the agreements), the employee
terminates his or her employment for good reason (as defined in the agreements) or we terminate the
employees employment for any reason other than Cause (as defined in the agreement), death or
disability, then we must pay the executive (i) an amount equal to his or her annual base salary in
effect on the termination date, (ii) an amount equal to the cash bonus paid during the fiscal year
preceding termination, (iii) all benefits under our companys various welfare and benefit plans for
12 months after the date of termination and (iv) outplacement assistance. Such change of control
severance payments are subject in certain circumstances to reduction to avoid constituting an
excess parachute payment under Section 280G of the Internal Revenue Code.
The agreements prohibit the employee during the term of his or her agreement, and in certain
circumstances for a period of 4 months after termination of employment, from providing services to
a competing business in the United States similar to the services provided by the employee at the
time of termination. The agreements also prohibit the employee for a period of two years after the
term of the agreement or termination of employment for any reason from (i) soliciting or inducing
employees of our company or our affiliates to leave their employment with our company or (ii)
soliciting any customer or supplier or actively sought after customer or supplier of our company
for or on behalf of any competing business in the United States. The agreements generally
prohibit the employee from disclosing our trade secrets at any time during or after the term of his
or her employment except as required by the course of his or her employment or as required in
connection with a court or administrative proceeding.
Director Compensation
For fiscal year 2005, we paid each director who was not an officer of our company a fee of
$14,000 and provided each of these directors with 692 shares of our companys common stock pursuant
to the 2004 Non-Employee Director Stock Plan. Board members were also paid an annual fee for
committee meetings. Each of the audit committee members was paid a fee of $2,000 ($3,000 for the
committee chair), and each of the compensation, compensation grants and corporate governance
committee members was paid a fee of $1,500 ($2,000 for the committee chair). Each director was
also reimbursed for reasonable travel expenses in attending each meeting.
For fiscal year 2006, we expect the annual fee paid to each non-officer board member to be
$15,000 and pursuant to the 2004 Non-Employee Director Stock Plan, grant each of these directors
692 shares of our companys common stock. We expect payments for committee meetings and additional
board meetings to be the same as in fiscal year 2005.
PERFORMANCE GRAPH
The stock performance graph below is not soliciting material, is not deemed filed with the
Securities and Exchange Commission and is not incorporated by reference in any of our filings under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether
made before or after this filing and irrespective of any general language to the contrary.
Our companys common stock began trading on the American Stock Exchange on June 30, 2000, the
last trading day of fiscal year 2000. Prior to that date, no securities of the company were
publicly traded. Set forth below is a line graph comparing the yearly change in the cumulative
total stockholder return, assuming dividend reinvestment, on our companys common stock with (1)
the American Stock Exchange US Market Index (the AMEX US Market Index) and (2) the American Stock
Exchange Wholesale and Retail Trade Index (the AMEX Wholesale and Retail Trade Index), which is
comprised of all AMEX companies with SIC codes from 5000 through 5999.
COMPARISON OF TOTAL RETURN AMONG DELTA APPAREL, INC., AMEX US MARKET
INDEX, AND AMEX WHOLESALE & RETAIL TRADE INDEX
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2000 |
|
|
2001 |
|
|
2002 |
|
|
2003 |
|
|
2004 |
|
|
2005 |
|
|
|
|
Delta Apparel, Inc. |
|
$ |
100.00 |
|
|
$ |
196.00 |
|
|
$ |
308.07 |
|
|
$ |
369.96 |
|
|
$ |
555.53 |
|
|
$ |
624.53 |
|
AMEX US Market Index |
|
|
100.00 |
|
|
|
91.22 |
|
|
|
79.31 |
|
|
|
79.59 |
|
|
|
96.44 |
|
|
|
107.52 |
|
AMEX Wholesale & Retail Trade Index |
|
|
100.00 |
|
|
|
74.84 |
|
|
|
86.86 |
|
|
|
81.39 |
|
|
|
100.10 |
|
|
|
124.60 |
|
This Performance Graph assumes that $100 was invested in the common stock of our company and
comparison groups on June 30, 2000 and that all dividends have been reinvested.
REPORT OF THE COMPENSATION COMMITTEE AND
COMPENSATION GRANTS COMMITTEE
The compensation committee and compensation grants committee report below is not soliciting
material, is not deemed filed with the Securities and Exchange Commission and is not
incorporated by reference in any of our filings under the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, whether made before or after this filing and
irrespective of any general language to the contrary.
This report of the compensation committee and compensation grants committee of the board of
directors (referred to in this report collectively as we, us or the committees) sets forth
the companys policies regarding executive officer compensation, including the relationship of
corporate performance to executive compensation.
General Executive Compensation Policies
The committees believe that our compensation practices should attract, retain, and motivate
key executives to achieve short-, medium- and long-term goals that the committees believe will
enhance the value of the shareholders investment in our company. We design our compensation
packages with a focus on performance based compensation. Base salaries are generally moderate and
executives have the opportunity to earn substantial additional amounts through bonuses and stock
awards and options based on performance targets and the companys share price appreciation.
Generally, these objectives are implemented through:
|
|
|
Payment of base salaries at levels that are competitive with those paid by a peer group of companies, |
|
|
|
|
Cash bonuses to reward the achievement of specific performance goals, |
|
|
|
|
Grants of stock awards under an incentive stock award plan, and |
|
|
|
|
Grants of stock options under a stock option plan. |
The company had offered a deferred compensation plan pursuant to which our executive officers
and certain senior and middle level management employees were permitted to defer a portion of their
compensation. Deferred compensation accounts were credited with interest at an annual rate of
9.625% and were distributable upon retirement, disability or termination of employment. In fiscal
year 2005, in part due to recent changes in the federal tax regulations pertaining to deferred
compensation arrangements, we decided to terminate the plan and pay out all accrued plan balances
to the participants.
Short-Term Incentive Compensation Plan (Annual Cash Bonus)
At the beginning of each fiscal year, our compensation grants committee selects objective
company performance targets and awards potential bonuses to our Chief Executive Officer and Named
Executives that are scaled to the companys achievement of the targets. The base bonus levels are
individually determined for each executive and the amount of the base bonus levels are greater, and
therefore more significant to, the senior executives as more of their total compensation package is
performance driven. The performance goals are objective in that a third party having knowledge of
the relevant facts would be able to determine whether the performance targets had been met. No
bonuses are paid until the compensation grants committee certifies that the performance targets
have been met.
For fiscal year 2005, targets were based on the companys return on capital employed and sales
growth. For fiscal year 2005, the company achieved 119.2% of its target and therefore bonuses were
paid at 119.2% of the base bonus amount. Bonuses are actually paid in the fiscal year following
the fiscal year in which they are earned, so fiscal year 2005 bonuses were paid in fiscal year
2006.
Incentive Stock Awards
The company has an Incentive Stock Award Plan that was adopted in 2000. Awards are structured
like options with a strike price of $0.01 per share (the par value of the companys common stock)
but are intended to function like stock grants since awards are subject to vesting conditions and
the exercise price is nominal. Historically, we have granted incentive stock awards on three year
cycles. Twenty percent of the awards in each cycle vests each year of the cycle if the participant
remains employed by the company on the vesting date (for a total of sixty percent, which we refer
to as the service-vesting portion). Forty percent of the awards in each cycle vests upon the
filing of the companys Form 10-K for the third year of the cycle if the recipient remains employed
by the company on the filing date and company performance criteria are met as measured by the
financial information in the Form 10-K (which we refer to as the performance-vesting portion).
For the fiscal 2003 to 2005 cycle, we issued four separate awards, with a performance-vesting
award made in fiscal year 2003, and three service-vesting awards made in each of fiscal years 2003,
2004 and 2005. Vesting of the performance-vesting award for the 2003 to 2005 cycle was determined
by the companys cumulative operating profit for the three-year period. The company makes a cash
payment to each award recipient upon the vesting of an award in an amount approximately sufficient
to pay all of the recipients income taxes attributable to both the vesting of the award and the
cash payment itself.
Stock Options
The company has a 2000 Stock Option Plan, the purpose of which is to promote our companys
growth and profitability over a longer term by enabling our company to attract and retain key and
middle level managers by
increasing managements personal participation in our companys performance by providing management
with an additional equity ownership opportunity in our company.
Historically, 25% of each option granted under the plan vests on each of the first four
anniversaries of the grant date. The company last granted options with these terms in fiscal year
2001, and the last vesting date for these options was the end of fiscal year 2004. As we wanted to
align the start of a new option cycle with the start of a new incentive stock award cycle in fiscal
year 2006, in fiscal year 2005 we made an one-year grant of options that would vest in full on July
5, 2005.
All options granted under the 2000 Stock Option Plan have been intended to qualify as
incentive stock options within the meaning of Section 422 of the Internal Revenue Code and have
therefore had per share exercise prices equal to the closing price of the companys common stock on
the date of grant, which in the case of the fiscal year 2005 grant was $11.275 per share.
Compensation Paid to the Chief Executive Officer (Robert W. Humphreys)
The fiscal year 2005 compensation package of Mr. Humphreys, our Chief Executive Officer,
included the elements described above, and his performance-based compensation was measured by the
performance measures described above. In addition to the elements previously described, Mr.
Humphreys also received a special cash bonus of $25,000 for the successful integration of the M. J.
Soffe Co. after its acquisition by the company. We believe that Mr. Humphreys total fiscal year
2005 compensation package is reasonable.
During fiscal year 2005, total interest of $41,068 accrued on Mr. Humphreys deferred
compensation plan account. In connection with the termination of the deferred compensation plan,
the company distributed to Mr. Humphreys his account balance totaling $455,253 which is the
accumulation of deferrals and interest accrued on the balances since 1989.
Mr. Humphreys is an at-will employee of the company and the company is not obligated to make
any payments as a consequence of the termination of his employment except for severance payments
afforded to all employees (generally one week of base pay for each one year of service). In the
event of termination of his employment because of his death, disability or retirement, if his
incentive stock awards would have vested had his employment continued until the normal vesting
date, he would receive a pro rata portion of his award based on the portion of the term of the
award for which he was employed.
Section 162(m) of the Internal Revenue Code (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. We believe that the cash bonus paid to Mr. Humphreys in fiscal
2005 under the Short-Term Incentive Compensation Plan, the performance-based portion of his awards
to date under the Incentive Stock Award Plan and options granted to date to him under our companys
Stock Option Plan will qualify as performance-based compensation exempt from the $1,000,000 cap
on executive compensation paid to Mr. Humphreys that is deductible by our company for federal
income tax purposes under Section 162(m).
Compensation of Other Named Executive Officers (Herbert M. Mueller & Martha M. Watson)
Our Named Executives other than our Chief Executive Officer are Herbert M. Mueller, our Vice
President, Chief Financial Officer and Treasurer, and Martha M. Watson, our Vice President of Human
Resources and Corporate Secretary. Mr. Muellers and Ms. Watsons fiscal year 2005 compensation
packages included the elements described above in this report under General Executive Compensation
Policies, and their performance-based compensation was measured by the performance measures
described above. We believe that Mr. Muellers and Ms. Watsons total fiscal year 2005
compensation packages were reasonable.
During fiscal year 2005, total interest of $15,039 accrued on Mr. Muellers deferred
compensation plan account. In connection with the termination of the deferred compensation plan,
the company distributed to Mr. Mueller his account balance totaling $167,153 which is the
accumulation of deferrals and interest accrued on the balances since 1998. Ms. Watson did not
participate in the deferred compensation plan at her own election.
Mr. Mueller and Ms. Watson are parties to employment agreements that provide for severance
payments as described above under the heading Management Compensation Employment Contracts and
Severance Arrangements.
Compensation Committee
William F. Garrett, Chair Dr. Max Lennon E. Erwin Maddrey, II Buck A. Mickel David Peterson
Compensation Grants Committee
David Peterson, Chair William F. Garrett
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPANTS
The following directors currently serve on the compensation committee of our board of
directors: William F. Garrett, Dr. Max Lennon, E. Erwin Maddrey, II, Buck A. Mickel and David
Peterson. William F. Garrett and David Peterson currently serve on the compensation grants
committee of our board of directors. No member of the committees is a current officer or employee
or former officer of our company or its subsidiaries, except that prior to the June 2000 spin-off
of Delta Apparel by Delta Woodside, E. Erwin Maddrey, II was an officer of corporations that either
were predecessors by merger of Delta Apparel or were subsidiaries of Delta Apparel.
The information set forth below under the headings Related Party TransactionsMinority
Ownership of Foreign Subsidiaries is incorporated herein by reference.
RELATED PARTY TRANSACTIONS
Turn One Motorsports, LLC
During fiscal year 2005, we engaged Turn One Motorsports, LLC to provide services for a
company event to which we invited Parkdale America representatives for an appreciation day. For
the services provided, we paid a total of $18,800 to Turn One Motorsports. We believe the price
paid by our company for these services was equal to the fair market value of these services. Mr.
Robert Humphreys (President and Chief Executive Officer and director of Delta Apparel, Inc.)
beneficially owns approximately 50% of Turn One Motorsports, LLC.
Minority Ownership of Foreign Subsidiaries
Delta Apparel Honduras, S.A., a Honduran sociedad anonima (Delta Apparel Honduras), conducts
some of our Honduran operations. Honduran law formerly required that a Honduran sociedad anonima
have at least five shareholders. As a result, we own 2,496 shares, and each of E. Erwin Maddrey,
II, Buck A. Mickel, William F. Garrett and Robert W. Humphreys owns one share, of Delta Apparel
Honduras. Each of these individual shareholders has agreed that, at the request of our company for
any reason or in the event the individual ceases to be a member of our board for any reason, the
one share owned by him shall be transferred to another individual selected by our company or, if so
requested by us, to our company in exchange for $100.
Delta Cortes, S.A., a Honduran sociedad anonima (Delta Cortes), conducts some of our
Honduran operations. Honduran law has changed and now requires that a Honduran sociedad anonima
have at least two shareholders. As a result, we own 2,499 shares and Robert W. Humphreys owns one
share, of Delta Cortes. Mr. Humphreys has agreed that, at the request of our company for any
reason or in the event he ceases to be a member of our board for any reason, the one share owned by
him shall be transferred to another individual selected by our company or, if so requested by us,
to our company in exchange for $100.
Delta Campeche, S.A., a Mexican sociedad anonima (Delta Campeche), conducts our Mexican
operations. Mexican law requires that a sociedad anonima have at least two shareholders. As a
result, we own 49 shares, and Robert W. Humphreys owns one share, of Delta Campeche. Mr. Humphreys
has agreed that, at the request of our company for any reason or in the event he ceases to be a
member of our board for any reason, the one share owned by him shall be transferred to another
individual selected by our company or, if so requested by us, to our company in exchange for $100.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The members of our board of directors, our executive officers and persons who hold more than
10% of our common stock are subject to the reporting requirements of Section 16(a) of the
Securities Exchange Act of 1934, as amended, which requires them to file reports with the
Securities and Exchange Commission with respect to their ownership and changes in ownership of our
common stock. To our knowledge, all Section 16(a) filing requirements applicable to our directors,
executive officers, and 10% holders were satisfied during fiscal year 2005, except that Mr. Mueller
filed one late Form 4 with respect to stock acquired upon the exercise of stock options.
RATIFICATION OF SELECTION OF AUDITORS
(Item 2)
The firm of Ernst & Young LLP has been retained by our audit committee as our independent
auditors for the fiscal year ending July 1, 2006. The audit committee is responsible for selecting
the companys independent auditors. Accordingly, shareholder approval is not required to appoint
Ernst & Young LLP as the companys independent auditors for fiscal year 2006. The board of
directors believes, however, that submitting the appointment of Ernst & Young LLP to the
shareholders for approval is a matter of good corporate governance. Ernst & Young LLP audited our
companys financial statements for fiscal year 2005 and has served as our independent accountants
since 2001.
In the event our shareholders fail to ratify the selection of Ernst & Young LLP, our audit
committee will reconsider the selection (but is not required to select a different independent
auditor). Even if the selection is ratified, our audit committee in its discretion may direct the
appointment of a different independent auditing firm at any time during the fiscal year if our
audit committee believes that such a change would be in our best interests and the best interests
of our shareholders.
Representatives of Ernst & Young LLP will be present at the Annual Meeting and such
representatives will have the opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions from the shareholders.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF ERNST & YOUNG LLP AS OUR
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING ON JULY 1, 2006.
INFORMATION RELATED TO OUR INDEPENDENT ACCOUNTANTS
The following table presents fees for professional audit services rendered by Ernst & Young
LLP for the audit of our annual consolidated financial statements for the years ended July 2, 2005
and July 3, 2004, and fees billed for other services rendered by Ernst & Young LLP during those
periods.
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2005 |
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2004 |
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Audit Fees |
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$ |
333,942 |
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$ |
212,330 |
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Audit-Related Fees |
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9,200 |
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222,680 |
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Tax Fees |
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58,199 |
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97,000 |
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All Other Fees |
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2,500 |
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Total |
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401,341 |
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$ |
534,510 |
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Audit FeesConsists of fees for professional services rendered for the audit of our fiscal
year 2005 and fiscal year 2004 consolidated annual financial statements and review of the interim
consolidated financials statements included in quarterly reports and services that are normally
provided by Ernst & Young LLP in connection with SEC filings.
Audit Related FeesConsists of fees billed for assurance and related services that are
reasonably related to the performance of the audit or review of our consolidated financial
statements but are not reported under Audit Fees. For fiscal year 2005, such fees related to
consultation regarding Sarbanes Oxley 404 documentation. For fiscal year 2004, such fees primarily
related to Ernst & Young LLPs performance of due diligence in preparation for the acquisition of
M. J. Soffe Co.
Tax FeesConsists of fees billed for professional services rendered for tax compliance,
including preparation of federal, state and international tax returns, tax advice and tax planning,
and transfer price consulting. For fiscal year 2005, the fees related primarily to the preparation
of the companys tax returns for fiscal year 2004. For fiscal year 2004, approximately $86,000 of
these fees were for consulting services resulting in a determination that the company was entitled
to an $8.3 million tax refund and to preparing the tax returns to obtain this refund. The balance
of these fees was paid for tax services related to the companys ex-patriots.
All Other FeesFor fiscal year 2004, the fees were for an annual subscription fee for Ernst &
Young LLPs web-based accounting research service.
In accordance with the Sarbanes-Oxley Act of 2002 and rules promulgated thereunder, all audit
and non-audit services performed by Ernst & Young LLP, our independent auditors, must be approved
in advance by our audit committee to assure that such services do not impair the auditors
independence from the company. Under our audit committees charter, the audit committee is
authorized to establish and maintain pre-approval policies and procedures relating to the
engagement of the independent auditors to render services, provided the policies and procedures are
detailed as to the particular service and the audit committee is informed of each service and such
policies and procedures do not include delegation of the audit committees responsibilities to
management. The pre-approval duty may be delegated to one or more designated members of the audit
committee with any such pre-approval reported to the audit committee at its next regularly
scheduled meeting. The audit committee does not have any pre-approval policies or procedures, so
the committee itself reviews and approves all services of Ernst & Young, LLP prior to the
performance of such services.
The audit committee has approved a number of audit and non-audit services to be provided by
Ernst & Young LLP, including services in connection with the attestation required under the
Sarbanes-Oxley Act of 2002 and tax services. As part of this approval, the audit committee
requires that our management report to it at each of the audit committees next regularly scheduled
meetings as to the status of each such service by the independent auditors to the extent such
service has been carried out, in full or in part, prior to such meeting.
OTHER BUSINESS
As of the date of this Proxy Statement, our board of directors was not aware of any business
that will be presented for consideration at the Annual Meeting other than the election of directors
and ratification of the appointment of Ernst & Young LLP as independent auditors for fiscal year
2006. If any other business properly comes before the meeting, the shares represented by proxies
will be voted with respect thereto in accordance with the judgment of the proxy holders.
FINANCIAL INFORMATION
Our fiscal year 2005 Annual Report is being mailed to shareholders on or about October 3,
2005. The 2005 Annual Report contains our fiscal year 2005 Annual Report on Form 10-K filed with
the Securities and Exchange Commission, including financial statements and financial statement
schedules but excluding exhibits. We will provide without charge to any shareholder of record as
of September 16, 2005, 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 year 2005 Annual Report and all exhibits to our fiscal year 2005 Annual Report on
Form 10-K. Any such request should be directed to Delta Apparel, Inc., 2750 Premiere Parkway,
Suite 100, Duluth, Georgia, 30097, Attention: Herbert M. Mueller, Vice President.
REPORT OF THE AUDIT COMMITTEE
The audit committee report is not soliciting material, is not deemed filed with the
Securities and Exchange Commission and is not incorporated by reference in any of our companys
filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, whether made before or after this filing and irrespective of any general language to the
contrary.
The audit committee assists the board of directors in its oversight of the integrity of our
companys financial statements, compliance with legal and regulatory requirements, the
qualifications, independence and performance of the independent accountants and the performance of
the internal audit function. Management is responsible for the financial statements, internal
controls and the financial reporting process. Our independent accountants are responsible for
expressing an opinion on the financial statements based on an audit conducted in accordance with
generally accepted auditing standards.
The audit committee hereby reports as follows:
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The audit committee has reviewed and discussed the audited financial statements with
the companys management. |
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2. |
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The audit committee has discussed with Ernst & Young LLP the matters required to be
discussed by Statement on Auditing Standards No. 61, as amended. |
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The audit committee has received the written disclosures and the letter from Ernst &
Young LLP required by Independence Standards Board Standard No. 1 (Independence Discussions
with Audit Committees), and has discussed with Ernst & Young LLP their independence from
the company. |
Based on the review and discussions referred to in paragraphs 1 through 3 above, the audit
committee recommended to the board of directors that the audited financial statements should be
included in the companys annual report on Form 10-K for the fiscal year ended July 2, 2005, that
was filed with the Securities and Exchange Commission on September 23, 2005.
Audit Committee
David S. Fraser, Chair Dr. Max Lennon Philip J. Mazzilli, Jr.
SOLICITATION OF PROXIES
We will pay the cost of soliciting proxies in the accompanying form. In addition to
solicitation by mail, our directors, officers and other regular employees may solicit proxies 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 we will reimburse
such persons for reasonable out-of-pocket expenses incurred by them in so doing. We have engaged
Georgeson Shareholder to assist in these contacts with brokerage houses, custodians, nominees and
fiduciaries for an estimated fee of $1,000 plus reasonable out-of-pocket expenses.
PROPOSALS OF SECURITY HOLDERS
Any shareholder who desires to present a proposal at the 2006 Annual Meeting of Shareholders
for inclusion in our proxy statement and form of proxy relating to that meeting must submit such
proposal to us at our principal executive offices on or before June 5, 2006. Pursuant to the
requirements of our bylaws, if a shareholder desires to present a proposal at the 2006 Annual
Meeting of Shareholders that will not be included in our proxy statement and form of proxy relating
to that meeting, such proposal must be submitted to us at our principal executive offices no later
than July 13, 2006 for the proposal to be considered timely.
The above Notice and Proxy Statement are sent by order of the board of directors.
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Martha M. Watson
Secretary
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Duluth, Georgia
October 3, 2005
DELTA APPAREL, INC.
PLEASE SIGN, DETACH
AND RETURN PROXY CARD
IN SUPPLIED ENVELOPE
6 FOLD AND DETACH HERE 6
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PROXY
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DELTA APPAREL, INC.
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PROXY |
ANNUAL MEETING, NOVEMBER 10, 2005
Please sign on reverse side and return in the enclosed postage-paid envelope.
The undersigned shareholder of Delta Apparel, Inc., a Georgia corporation, hereby constitutes and
appoints Robert W. Humphreys, Herbert M. Mueller and E. Erwin Maddrey II, and each of them,
attorneys and proxies on behalf of the undersigned to act and vote at the Annual Meeting of
Shareholders to be held at 2750 Premiere Parkway, Suite 100, Duluth, Georgia, on November 10, 2005
at 10:00 A.M., and any adjournment or adjournments thereof, and the undersigned instructs said
attorneys to vote:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
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Election of Directors: |
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FOR all nominees listed below
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WITHHOLD AUTHORITY
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(except as marked to the contrary below)
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to vote for all nominees listed below |
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Messrs. D. S. Fraser, W. F. Garrett, R. W. Humphreys, M. Lennon, E. E. Maddrey II, P. Mazzilli, B. A. Mickel, D. Peterson
(INSTRUCTION: To withhold authority to vote for an individual nominee write that nominees name in the space provided below.)
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Proposal to ratify selection of Ernst & Young LLP as independent auditors of Delta Apparel, Inc. for fiscal year 2006. |
o FOR o AGAINST o ABSTAIN
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At their discretion upon such other matters as may properly come before the meeting and any adjournment. |
A majority of said attorneys and proxies who shall be present and acting as such at the meeting or
any adjournment or adjournments thereof (or, if only one such attorney and proxy may be present and
acting, then that one) shall have and may exercise all the powers hereby conferred.
(over)
6 FOLD AND DETACH HERE 6
This proxy is solicited on behalf of the board of directors of Delta Apparel, Inc. and will be
voted in accordance with the specifications made by the undersigned on the reverse side of this
proxy. If not otherwise specified, this proxy will be deemed to grant authority to vote, and will
be voted, for election of the directors listed on the reverse side of this proxy and for the approval of proposal 2.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of Shareholders dated
October 3, 2005 and the Proxy Statement furnished therewith.
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Dated this
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day of
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, 2005. |
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NOTE: Signature should agree with name on stock
certificate as printed thereon. Executors,
administrators, trustees and other fiduciaries should so
indicate when signing.
PLEASE DATE, SIGN AND RETURN THIS PROXY. THANK YOU.