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CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY
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
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement
( ) Confidential, for use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
( ) Definitive Proxy Statement
( ) Definitive Additional Materials
(X) Soliciting Material Pursuant to Rule 14a-11 (c) or Rule 14a-12
DESIGNS, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
TALKING POINTS FOR SHAREHOLDER SOLICITATION:
(1) We filed our definitive consent revocation statement on Wednesday,
December 23.
(2) This statement is the Board of Director's response to Jewelcor's
definitive consent solicitation filed December 21, 1998.
(3) In addition, the Board of Directors hired Shields & Company to advise
the Special Committee of the Board of Directors with respect to
strategic alternatives, including the possible sale of the Company,
which will maximize shareholder value in the short term.
(4) Shields & Company, Inc. is a Boston-based investment banking firm
founded in 1991 to assist public and private companies with
independent, professional financial advice in corporate finance
matters. The firm has steadily grown, and its range of services has
expanded and been applied to numerous companies in the New England
area. Shields and Company has maintained a working relationship with
Designs, Inc. since 1993.
THOMAS J. SHIELDS, MANAGING DIRECTOR
AB HARVARD COLLEGE
MBA HARVARD BUSINESS SCHOOL
Prior to co-founding Shields & Company, Inc. in 1991, Mr. Shields was
a Managing Director of Bear Stearns & Co. As manager of its Boston
Corporate Finance Department, he directed the firm's corporate finance
services to both public and private companies. Mr. Shields has
extensive experience in all areas of corporate finance, mergers and
acquisitions, valuations, capital raising for private and public
companies, and financial advisory services. Mr. Shields serves on the
Board of Directors of eleven public and private companies, including
BJ's Wholesale, Versar Inc., Seaboard Corporation and Leejay Bed &
Bath. He is a past president of the Harvard Business School
Association of Boston and former chairman of the Newton-Wellesley
Hospital.
JEFFREY C. BLOOMBERG, MANAGING DIRECTOR
AB DARTMOUTH COLLEGE
MBA HARVARD BUSINESS SCHOOL
Prior to joining Shields & Company, Inc., Mr. Bloomberg was a Senior
Managing Director in the Corporate Finance Department of Bear Stearns
& Co., specializing in (i) retailing and consumer goods companies, as
co-head of the firm's merchandising group, and (ii) mergers and
acquisitions. In addition, Mr. Bloomberg was vice chairman of the
firm's valuation committee, which reviewed all fairness opinions
issued by the firm.
(5) I am calling to encourage you not to execute a consent for Jewelcor or
to revoke any prior Jewelcor consents for the following reasons:
- There is currently a process in place with excellent investment
bankers to maximize shareholder value possibly through the sale
of the business.
- The process is being managed by an independent committee of the
Board of Directors led by Jim Groninger. Jim is a former
managing director of Paine Webber's Boston office, he took the
Company public in 1986, and he has extensive insight into the
Company's business strategy and relationship with Levi Strauss &
Co.
- Pete Thigpen is the former president of the Levi's(R) brand and
has maintained excellent relationships with the people at Levi
Strauss & Co.
- Bernard Manuel is the CEO of Cygne Design and has significant
experience in both the retail and manufacturing arenas. He has a
broad base of contact both domestic and abroad.
(6) Obviously, because our existing operating strategy is focused largely
on the success of the Levi's(R) and Dockers(R) Outlets, the Trademark
License Agreement with Levi Strauss & Co. is critical to the future
viability of the Company. We believe that having Pete Thigpen on the
Committee together with the experience the Company and senior
management has had with Levi Strauss & Co. will be very useful to our
investment bankers in this process. Levi Strauss & Co. has the right,
if there is a transfer of control, to terminate the license agreement.
We believe that it is unlikely that a sale of the Company can be
completed without Levi Strauss & Co's support.
(7) Jewelcor's proposal mirrors our existing strategy which consists of
the following initiatives:
- Focus predominantly on the Levi's(R) and Dockers(R) Outlets.
- Closure of unprofitable stores where economically feasible taking
into consideration the current performance of the stores and the
contingent lease liabilities.
- Consistent reduction of overhead levels to support a largely
outlet-based operation. Essentially we have been "right-sizing"
the business over the past two years to support our shift in
strategy.
- Abandoning the BTC private label strategy we did this in fiscal
1997.
(8) Our primary focus at this time is to continue business in our stores
as usual in order to maintain the value of the business for the
stockholders any disruption of the management of the Company or
interference with our store operations would have an adverse impact on
the business.
(9) We filed our 10Q with the Securities and Exchange Commission on
December 15, 1998. This document gives a detailed accounting of the
performance of our various business segments and should provide you
with substantial insight into the progress we have made and continue
to make in executing our business strategies.
(10) In Conclusion, I would like to ask you to let the process unfold. The
Board of Directors has established a very short time table for the
Special Committee and the Company's financial advisors to explore the
various strategic alternatives available to the Company. There are a
number of candidates available who might be willing to purchase the
Company, and we believe the existing team is best suited to accomplish
this initiative.
Designs, Inc. ("Designs") and certain other persons named below may be
deemed to be participants in the solicitation of consents (the
"Solicitation") in opposition to the consent solicitation by Seymour H.
Holtzman and certain companies controlled by him for the purpose of, among
other things, removing five of the six current members of the Board of
Directors of Designs and electing five new directors. The participants in
this Solicitation may include the following directors of Designs: Stanley
I. Berger, Joel H. Reichman, James G. Groninger, Bernard M. Manuel, Melvin
I. Shapiro and Peter L. Thigpen; the following executive officers of
Designs: Joel H. Reichman, Scott N. Semel and Carolyn R. Faulkner; and
the following officer of Designs: Anthony E. Hubbard, the Company's Vice
President and Deputy General Counsel (collectively, the "Designs
Participants"). As of the date of this communication, Stanley I. Berger,
Joel H. Reichman, Scott N. Semel, Carolyn R. Faulkner, James G. Groninger,
Melvin I. Shapiro, Bernard M. Manuel, Peter L. Thigpen and Anthony E.
Hubbard beneficially owned 1,198,403, 349,121, 267,203, 55,333, 50,901,
57,326, 63,003, 29,601, and 9,900 shares of Designs common stock,
respectively (including shares subject to stock options exercisable within
60 days).
Designs has retained Shields & Company, Inc. (the "Financial Advisor")
to act as its financial advisor in connection with the Solicitation for
which it may receive substantial fees, as well as reimbursement of
reasonable out-of-pocket expenses. In addition, Designs has agreed to
indemnify the Financial Advisor and certain persons related to it against
certain liabilities arising out of their engagement. The Financial Advisor
is an investment banking and advisory firm that provides a range of
financial services for institutional and individual clients. The Financial
Advisor does not admit that it or any of its directors, officers or
employees is a "participant" as defined in Schedule 14A promulgated under
the Securities Exchange Act of 1934, as amended, in the Solicitation, or
that Schedule 14A requires the disclosure of certain information concerning
the Financial Advisor. In connection with the Financial Advisor's role as
financial advisor to Designs, the Financial Advisor and the following
investment banking employees of the Financial Advisor may communicate in
person, by telephone or otherwise with a limited number of institutions,
brokers or other persons who are stockholders of Designs: Thomas J.
Shields and Jeffrey C. Bloomberg. None of the Financial Advisor, Thomas J.
Shields or Jeffrey C. Bloomberg beneficially own any of Designs'
outstanding equity securities.