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DESIGNS, INC.
(Name of Registrant as Specified in its Charter)
JEWELCOR MANAGEMENT, INC.
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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FOR IMMEDIATE RELEASE
Contact:James R. Verano (570) 822-6277 ext. 15
Jewelcor Management: Prominent Proxy Advisory Service Is Highly
Critical of Designs, Inc.'s Management
Wilkes-Barre, Pennsylvania, September 29, 1999...Jewelcor Management, Inc.
("JMI"), released the following:
Jewelcor Management, Inc. ("JMI"), a 9.9% shareholder of Designs, Inc.
(Nasdaq: DESI) ("Designs"), said today that it was gratified to see many of
the statements made by Institutional Shareholder Services ("ISS") criticizing
the performance of Designs' management. JMI wholeheartedly concurs with ISS's
statement that, "From a governance perspective, the Board has performed as
badly as the management it oversees."
The ultimate voting recommendation by ISS with respect to the pending Designs'
Annual Meeting of Stockholders was to support JMI's proposal to rescind
Designs' poison pill, and to vote against JMI's nominees. James R. Verano, CFO
of JMI, stated, "It is almost inconceivable that the Board of Directors did not
make any changes in senior management after what we believe was their
inexcusable, atrocious performance."
ISS further stated, "One thing that is clear, however, is the company's dismal
performance since Mr. Reichman was handed the corporate reins." (Joel Reichman
is the president and chief executive officer of Designs, Inc.) ..."The
company's sales have slid every year for the last three years. For the year
ended Jan. 28, 1995, the company's net income was $16.9 million, and it has
decreased every year over the next three years, culminating in a $29 million
loss in fiscal 1997 and a $18.5 million loss for fiscal 1998."..."How have
shareholders fared? Since Dec. 31, 1994, the company's stock price has
decreased by over 80 percent, shrinking the company's market capitalization to
approximately to [sic] $22 million from $110.3 million."
Joel Reichman's proclaimed one month turn around miracle could just as well
have been proclaimed in the first few months of this year when Designs had a
positive sales trend, except that it was very short lived. Verano said, "In
our opinion, shareholders should look at the long term trend in reviewing the
Company's financial performance. We believe that management has a lot of
latitude as to a single month's profitability."
As a further concern to Joel Reichman's one month miraculous "turn around",
shareholders should be reminded of the fourth quarter of last year when the
Company reported a $2.9 million income. Designs then stated that this income
was due to an over accrual of reserves for store closings. Was that a turn
around? JMI is obviously greatly concerned that the Company may not have
disclosed recent adjustments to that reserve account.
ISS also criticizes the Board for borrowing $2.3 million (amounting to $.15 per
share or about 10% of the Company's capitalization) to fund a trust for the
benefit of Joel Reichman and other members of senior management.
Joel Reichman would like shareholders to believe that paying interest on the
$2.3 million borrowed to fund the trust is a non-event. The Board stated that
they needed to create the trust in order to retain management. Verano said,
"My only reply is nonsense! Our question is, who needs to retain management
that has this dismal record? We believe that this was a clear opportunity for
the Board to get out of management's onerous `golden parachutes'. In our
opinion, this was a missed opportunity to replace management without cost."
Although management has continued to use scare tactics to create a concern
about Designs' relationship with Levi Strauss & Co., even ISS recognizes that,
"Levi's did not say that it would terminate the agreement if the dissident
nominees were elected."
Verano said, "We believe that Designs has spent between $500,000-$1,000,000 in
their proxy efforts to discourage shareholders from voting for JMI's
distinguished, independent slates of directors. The company has had
postponements, has set three different dates for the Annual Meeting, and to
date, has had five proxy mailings to shareholders. Should the company's slate
of directors be defeated at the meeting on October 4th, it wouldn't surprise me
if additional delays occur and costly dilatory tactics are employed."
JMI hopes that shareholders will note the criticisms expressed by ISS regarding
Designs' management and not let themselves be distracted from the serious
issues facing the Company by the efforts of management's single strategy of
scare tactics.
JMI also hopes that shareholders will agree with ISS that "poison pills amount
to major de facto shifts of voting rights away from shareholders" and
"shareholders should be asked whether they want to relinquish such power before
poison pills are implemented."
"In light of the Company's poor corporate governance and the fact that the
poison pill was never submitted to a shareholder vote", ISS has recommended a
vote for JMI's proposal to rescind the Designs' poison pill. Shareholders
should ask themselves why the Company never submitted the poison pill to a
shareholder vote.
In summary, Mr. Verano stated, "I hope that the Board of Directors of Designs
acts responsibly so this matter can be brought to closure without wasting
anymore of the shareholders' money."