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 [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12
BURKE MILLS, INC.
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(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
N/A
2) Aggregate number of securities to which transaction applies:
N/A
3) 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):
N/A
4) Proposed maximum aggregate value of transaction:
N/A
5) Total fee paid:
N/A
[ ] Fee paid previously with preliminary materials.
[ ] 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:
1) Amount Previously Paid:
N/A
2) Form, Schedule or Registration Statement No.:
N/A
3) Filing Party:
N/A
4) Date Filed:
N/A
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BURKE MILLS, INC.
NOTICE OF SUBSTITUTE ANNUAL MEETING OF SHAREHOLDERS
2001
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The 2001 substitute annual meeting of the shareholders of Burke
Mills, Inc. ("the Company") will be held at the executive offices of the
Company, 191 Sterling Street N.W., Valdese, North Carolina, at 2:00 P.M. on
Tuesday, May 29, 2001, for the following purposes:
(1) To elect seven directors to serve until the next annual meeting of
the shareholders and until their successors shall be elected and shall
qualify.
(2) To transact such other business as may properly come before the
meeting or any adjournments thereof.
The close of business on April 19, 2001 has been fixed as the record
date for the determination of the shareholders entitled to notice of and to vote
at said meeting.
Management hopes all shareholders can attend this meeting. Whether or
not you expect to be present, you are requested to date and sign the enclosed
proxy and return it promptly in the enclosed envelope. The proxy will be
returned to any shareholder who attends the meeting and requests such return.
By order of the Board of Directors
Pender R. McElroy
Secretary of Burke Mills, Inc.
April 23, 2001
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PROXY STATEMENT
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Substitute Annual Meeting of the
Shareholders of Burke Mills, Inc.
to be held May 29, 2001
---------------------------------
SOLICITATION AND REVOCATION OF APPOINTMENT OF PROXY
- ---------------------------------------------------
The enclosed appointment of proxy is solicited by the Board of
Directors of Burke Mills, Inc. ("the Company"). It is revocable upon receipt of
written notice of revocation by the Secretary of the Company at any time before
it is exercised. If the enclosed appointment of proxy is signed and returned,
the shares covered by the appointment will be voted at the meeting (and all
adjourned sessions).
The cost of soliciting appointments of proxy will be borne by the
Company, and such costs are not expected to exceed an amount normally expended
for a solicitation for an election of directors in the absence of a contest and
costs represented by salaries and wages of regular employees and officers, who
will carry out any solicitations to be made, which amount is not expected to
exceed $5,000.00.
The mailing address of the principal executive offices of the Company
is:
Burke Mills, Inc.
Post Office Box 190
Valdese, North Carolina 28690
The approximate date on which the proxy statements and proxy cards are
first sent or given to shareholders is April 25, 2001.
VOTING RIGHTS
- -------------
The holders of stock of the Company on April 19, 2001 are the only
shareholders entitled to notice of and to vote at the substitute annual meeting
of shareholders on May 29, 2001 and at any adjournments thereof. On April 19,
2001 (the record date) there were 2,741,168 shares of stock outstanding and
entitled to vote. Each share of stock is entitled to one vote.
VOTING PROCEDURES
- -----------------
If a majority of the shares of the Company issued and outstanding are
present at the meeting in person or by proxy, a quorum will exist.
Each shareholder entitled to vote shall have the right to cast one vote
per share outstanding in the name of such shareholder (a) on the motion before
the body or (b) as to election of directors, for each nominee for each
directorship to be filled. For a motion to pass, the votes cast in favor of the
motion must exceed the votes cast against the motion. Directors are elected by a
plurality of the votes cast; the nominees with the largest number of votes will
be elected up to the maximum number of directors to be elected (which is seven).
Votes by proxy will be tabulated by First Union National Bank, the
stock transfer agent for the Company. The votes by proxy will be cast at the
meeting by the proxy holders. Any shareholder may vote in person at the meeting
if no appointment of proxy has been made or if the appointment is revoked. Votes
will be tabulated by the secretary of the Company.
Under North Carolina law and under the articles of incorporation and
bylaws of the Company, abstentions and broker non-votes have no effect since a
majority of the votes cast will carry a motion and directors are elected by a
plurality of the votes cast.
SUBSTANTIAL SHAREHOLDERS
- ------------------------
As of March 28, 2001 the following persons are the only persons known
to the Company to be the beneficial owners of more than five percent of the
common stock of the Company (the only voting securities of the Company):
Title of Name and Address of Amount and Nature of Percent
Class Beneficial Owner Beneficial Ownership of Class
- ---- ------------------- ---------------------- ---------
Common Naseus, Inc. 1,443,329 shares 52.7%
Stock Flat 72, Building 383 (Direct)
Road 1912
Manama Town 319, Bahrain
Common Humayun N. Shaikh 1,443,329 shares 52.7%
Stock Nafees Cotton Mills, Ltd. (Indirect)
Ismail Aiwan-i-Science
Shahrah-i-Jalaluddin Roomi
Lahore - 54600, Pakistan
Title of Name and Address of Amount and Nature of Percent
Class Beneficial Owner Beneficial Ownership of Class
- ----- ------------------- -------------------- ---------
Common Hickory Industries, Inc. 270,000 shares 9.85%
Stock Box 429 (Direct)
Hickory, NC 28603
Common Robert E. Bell, Jr. 270,000 shares 9.85%
Stock Hickory Industries, Inc. (Indirect)
Box 429
Hickory, NC 28603
The shares beneficially owned by Humayun N. Shaikh are shares owned of record by Naseus, Inc. Naseus, Inc., a
Panamanian corporation, holds 1,443,329 shares of the Company's stock. Naseus, Inc. is a holding company for business
interests and does not conduct any active operations. Mr. Humayun Shaikh is the owner of all the stock of Naseus, Inc.
Robert E. Bell, Jr. is the president, director and majority shareholder of Hickory Industries, Inc. Hickory
Industries, Inc. directly owns of record 270,000 shares of the stock of the Company.
The Company is informed and believes that as of March 28, 2001 Cede &
Co. held 1,092,000 shares of the Company (39.8%) as nominee for Depository Trust
Company, 55 Water Street, New York, New York 10004, that Cede & Co. and
Depository Trust Company both disclaim any beneficial ownership thereof, and
that such shares are held for the account of numerous other persons, no one of
whom is believed to beneficially own five percent or more of the common stock of
the Company, except for the stock owned by Hickory Industries, Inc.
ELECTION OF DIRECTORS
- ---------------------
Seven directors are to be elected at the substitute annual meeting of
shareholders to be held on May 29, 2001. Directors are to be elected to serve
until the next annual meeting of shareholders and until their successors shall
be elected and shall qualify.
The enclosed proxy will be voted in favor of the election of the following nominees as directors:
Amount (Shares)
and Nature of
Name Principal Beneficial Percent
(Age)(Year lst Elected) Occupation Ownership of Class
- ---------------------- ---------- ------------- --------
Humayun N. Shaikh Chairman of 1,443,329 52.07%
(58) (1978) the Company (Direct and Indirect)
Thomas I. Nail President of 7,000 0.26%
(53) (2000) the Company (Direct)
William T. Dunn Retired 7,000 0.26%
(67) (1996) (Direct)
Robert P. Huntley Chairman, 120,000 4.04%
(63) (1993) Secretary (Direct)
and Treasurer,
Timberidge Lumber Co.
Hickory, NC
Robert T. King Retired 0 0.0%
(74)
Richard F. Byers Executive Vice 6,000 0.22%
(62) President of the Company
Aehsun Shaikh Director, 0 0.00%
(28) (1999) Nafees Cotton Mills, Ltd. and
Legler- Nafees Denim Mills, Ltd.
Lahore, Pakistan
All nominees except for Mr. King and Mr. Byers are incumbents.
"Direct" ownership means ownership as record owner. "Indirect"
ownership means beneficial ownership other than as record owner.
Mr. Humayun Shaikh serves as a director of Nafees Cotton Mills, Ltd (engaged in synthetic yarn spinning) of
Lahore, Pakistan, and has so served for more than the past five years. Until 1994 he was a director of Colony Textile Mills, Ltd.
(engaged in spinning and weaving of yarn and dyeing and printing of fabric) and of National Security Insurance Co., Ltd.
(engaged in the writing of property and casualty insurance) both of Lahore, Pakistan, and so served for more than the five
years prior to 1994. Mr. Shaikh devotes approximately 75% of his time to the management of the Company. Mr. Shaikh served as
President of the Company from January 1981 until May 1992, when he became Chairman.
Mr. Nail was appointed on May 15, 2000 and now serves as President and Chief Operating Officer of the Company. Prior
to that time, Mr. Nail was Vice President-Finance of the Company, having assumed that office a second time in June 1997. From
March 1994 to June 1997, Mr. Nail was Chief Financial Officer, Secretary and Treasurer of Alba Waldensian, Inc., Valdese,
NC, a manufacturer of women's intimate apparel and health products. From September 1987 to March 1994, Mr. Nail
was Vice President-Finance of the Company. Prior to 1987, Mr. Nail held accounting and controller positions with several companies.
Mr. Huntley was Executive Vice President of Newton Transportation Company, Inc., Lenoir, NC, from 1986 until March
31, 1996. Newton Transportation Company, Inc. is a long haul new furniture carrier. Mr. Huntley serves as Chairman,
Secretary and Treasurer of Timberidge Lumber Company, Inc., a supplier of hardwood lumber to the furniture industry. He
also has business interests in other areas including real estate, fabric and furniture. Mr. Huntley is licensed as a certified
public accountant. Mr. Huntley is a member of the board of directors of Catawba Valley Bancshares, Inc., the holding company
of Catawba Valley Bank of Hickory, NC. Catawba Valley Bancshares, Inc. is a public company, having securities registered
pursuant to Section 12 of the Securities Exchange Act of 1934.
Mr. Dunn is retired. From 1978 to 1986 Mr. Dunn was Executive Vice President and a member of the Board of Directors of
E. F. Hutton and Company, having responsibility for trading, marketing, research and syndication of all fixed income
products to institutional clients. From 1986 to 1991 Mr. Dunn was Senior Managing Director with Bear Stearns and Company.
From 1991 until January 1995 Mr. Dunn was Managing Director of PaineWebber, Inc. In these latter two positions, Mr. Dunn had
responsibility for trading, marketing, research and syndication of fixed income products to institutional clients in the
international market.
Mr. King is retired. From 1952 to 1969 Mr. King was President and part owner of Collins Yarn Processing, Inc. in
Hickory, NC, a dye house. From 1969 to 1985, Mr. King was manager of the dye house division of the yarn division of Collins
& Aikman, Inc. in Hickory, NC. Mr. King serves as a member of the board of directors and vice chair of the board of Catawba
County Bancshares, Inc., a holding company of Catawba Valley Bank headquartered in Hickory, NC. Catawba Valley Bancshares,
Inc. is a public company, having a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934.
Mr. Byers is Executive Vice President of the Company, having been appointed to that position on May 15, 2000. Prior
to then Mr. Byers was Vice President-Sales of the Company, having assumed that office in December 1978. Mr. Byers served as
production control manager of the Company from 1968 to December 1978.
Mr. Aehsun Shaikh is a director (a management position) of Nafees Cotton Mills, Ltd. since 1993 and of Legler-Nafees
Denim Mills, Ltd. since 1999. Mr. Shaikh is the son of Humayun Shaikh, Chairman of the Board of the Company.
The Board of Directors of the Company met twice during the fiscal year ended December 30, 2000. Mr. Humayun Shaikh,
Mr. Huntley and Mr. Dunn attended both meetings. Mr. Aehsun Shaikh attended neither meeting. Mr. Nail, who was elected to the
Board on July 10, 2000, attended the meeting which occurred after his election to the Board.
BOARD COMMITTEES
- ----------------
The Board of Directors of the Company has two standing committees -
Audit and Compensation. The Board has no nominating committee. Mr. Huntley and
Mr. Dunn serve on the Audit Committee and the Compensation Committee. These
committees met once during the last fiscal year. Both members attended both
meetings. The duties of the Audit Committee are to review the work of the
Company's auditors and to confer with the auditors on matters concerning the
annual audit. The duties of the Compensation Committee are to review, and advise
the board on, the compensation of the Chairman and Chief Executive Officer of
the Company and the other executive officers of the Company.
The Audit Committee has reviewed and discussed with management the
audited financial statements of the Company for the fiscal year ended December
30, 2000.
The Audit Committee has discussed with the independent auditors of the
Company the matters required to be discussed by SAS 61 (Codification of
Statements on Auditing Standards, AV380), as may be modified or supplemented.
The Audit Committee has received the written disclosures and the letter
from the independent accountants required by Independence Standards Board
Standard No. 1 (Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees), as may be modified or supplemented, and has
discussed with the independent accountant the independent accountant's
independence.
The Audit Committee has discussed with the independent auditors of the
Company the three quarterly reports to the Securities and Exchange Commission on
Form 10-Q for the last fiscal year prior to the filing of these reports.
Based on the review and discussions specified above, the Audit
Committee recommended to the Board of Directors of the Company that the audited
financial statements be included in the Company's annual report on Form 10-K for
the fiscal year ended December 30, 2000.
Robert P. Huntley
William T. Dunn
Members-Audit Committee
The Board of Directors of the Company has adopted a written charter for
the Audit Committee, a copy of which is attached hereto.
Management believes that the members of the Audit Committee of the
Company are independent as defined by Rule 4200(a)(15) of the National
Association of Securities' Dealers listing standards.
STOCK OWNED BY OFFICERS
- -----------------------
As of March 28, 2001, the common stock of the Company (the only class
of equity securities of the Company) beneficially owned by the chief executive
officer, Humayun N. Shaikh, by the four most highly compensated executive
officers other than Mr. Shaikh, and by all officers and director nominees as a
group is as follows:
Amount (Shares)
and Nature of Percent
Name/Group Beneficial Ownership of Class
- --------- -------------------- ---------
Humayun N. Shaikh 1,443,329 52.07%
Chairman and CEO Indirect
Thomas I. Nail 7,000 0.26%
President and COO Direct
Richard F. Byers 6,000 0.22%
Executive Vice President Direct
William E. Singleton 0 ----
Vice President-Manufacturing
Michael B. Smith 100 ----
Assistant Secretary Direct
All officers and director 1,583,329 57.08%
nominees as a group (Direct and
(9 persons) Indirect)
EXECUTIVE OFFICERS OF THE COMPANY
- ---------------------------------
All executive officers of the Company are serving until the next annual
meeting of directors and until their successors have been duly elected and
qualified. The current officers of the Company, in addition to Humayun N.
Shaikh, Thomas I. Nail and Richard F. Byers, are as follows:
William E. Singleton (age 51) is Vice President-Manufacturing of the
Company. Mr. Singleton began employment with the Company on June 20, 2000
as Vice President-Manufacturing. Prior to that time, Mr. Singleton was a
superintendent with Grover Industries, Inc. in Grover, NC (a yarn manufacturer
and dyer) for three years, a general manager with Doran Textiles, Inc. in
Shelby, NC (a manufacturer of yarn, a weaver and a yarn dyer) for three
years. Prior to that time, Mr. Singleton was a superintendent of dyeing
at J. P. Stevens Co. in Greenville, South Carolina, and a technical manager
with M. Lowenstein and Co. in Lyman, South Carolina.
Pender R. McElroy (age 60) is Secretary of the Company, having assumed
that office in April 1981. Mr. McElroy is a member of the law firm of James,
McElroy & Diehl, P.A., Charlotte, NC, legal counsel for the Company.
Michael B. Smith (age 44) is Assistant Secretary of the Company,
having assumed that office in May 1985. Mr. Smith has been employed by the
Company as a cost accountant since 1978.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
- ------------------------------------------------
All plan and non-plan compensation awarded to, earned by, or paid to
the chief executive officer, Humayun N. Shaikh, Thomas I. Nail and Richard F.
Byers for the past three fiscal years is shown in the following table:
SUMMARY COMPENSATION TABLE
--------------------------
Annual Compensation
-------------------
Other Annual All Other
Name and Salary Bonus Compensation Compensation
Principal Position Year ($) ($) ($) ($)
- ---------------------------------------------------------------------------------------------------------------
Humayun N. Shaikh 1998 $210,000 0 $450 0
Chairman and CEO 1999 $210,000 0 $354 0
2000 $210,000 0 $258 0
Thomas I. Nail 1998 $103,000 0 $933 0
President and COO 1999 $103,000 0 $894 0
2000 $131,919 0 $783 0
Richard F. Byers 1998 $ 94,885 0 $666 0
Executive Vice President 1999 $ 95,000 0 $564 0
2000 $101,146 0 $600 0
>
There is no executive officer of the Company whose total annual salary
and bonus exceeded $100,000 for the last completed fiscal year, except for
Humayun N. Shaikh, Thomas I. Nail and Richard F. Byers.
The category of Other Annual Compensation for Mr. Shaikh, Mr. Nail
and Mr. Byers represents the annual premium on group life insurance for each
of them on the amount in excess of $50,000 of coverage and the nonbusiness
portion of use of a company owned automobile.
The Company has no long-term compensation arrangements with its
executive officers.
Directors who are employed by the Company are not compensated for
services as directors. Directors not employed by the Company receive $500 for
each Board meeting or committee meeting attended. Mr. Humayun Shaikh receives
reimbursement for actual travel expenses incurred while traveling for the
Company.
Robert P. Huntley and William T. Dunn served as members of the
Compensation Committee of the Board during 2000. Neither was or is an officer or
employee of the Company.
The policy of the Board of Directors for compensation of the Chief
Executive Officer and the other executive officers has been and is to compensate
those officers at a level as close to what the Board believes is competitive in
the industry for companies of comparable size and geographic location (the
piedmont area of North and South Carolina).
Robert P. Huntley
William T. Dunn
Members - Compensation Committee
TRANSACTIONS WITH RELATED PARTIES
- ---------------------------------
The Company pays Nafees Cotton Mills, Ltd. (Nafees) $24,000 annually
toward the expense of maintaining and operating an office for the Company in
Pakistan. The Company purchases yarn from Nafees. Such yarn purchases
totaled $739,000 in 2000. From December 31, 2000 to March 31, 2001, the
Company has not purchased yarn from Nafees. As of March 31, 2001, it is not
known whether the Company will purchase additional yarn from Nafees, although
such purchases could reasonably be anticipated. Mr. Humayun N.
Shaikh and Mr. Aehsun Shaikh are directors of Nafees Cotton Mills, Ltd., and
Mr. Humayun N. Shaikh and his family control a majority of the stock of Nafees.
COMPARATIVE SHAREHOLDER RETURN
- ------------------------------
The graph which follows compares the yearly percentage change in the
Company's cumulative shareholder return on its common stock with the cumulative
total return of (a) all United States companies traded on the NASDAQ stock
market and (b) 26 companies traded on the NASDAQ stock market which carry NASDAQ
Standard Industrial Classification (SIC) Code 22, being companies producing
textile mill products (which is an index published by the Center for Research in
Security Prices of the University of Chicago Graduate School of Business,
Chicago, Illinois.) A list of the 26 companies will be provided to any
shareholder upon written request.
[Explanation of graph for purposes of electronic filing with the Securities and
Exchange Commission. Original graph not filed electronically.]
The performance graph shows dollar figures from $0 through $500 along
the left side of the graph. Along the base of the graph, the starting point is
December 29, 1995, and the graph is divided into five main segments, each
representing the years from 1996 through 2000, and each of the five segments is
divided into 12 sections representing the twelve months of the year. There are
four lines on the graph:
(1) One line is a level undeviated line over the five-year period which
begins and ends at the $100 level.
(2) There is a solid line showing the total returns index for
Burke Mills, Inc.
(3) A broken line showing the total returns index for all the U.S.
companies on the NASDAQ stock market.
(4) Another broken line showing the total returns index for 26
NASDAQ stocks carrying the NASDAQ standard industrial
classification code 22.
The legend on the graph indicates as follows:
Legend
CRSP Total Returns
Index for: 12/27/96 1/2/98 12/31/98 12/31/99 12/29/00
- ------------------------- -------- ------ -------- -------- --------
Burke Mills, Inc. 100.0 93.0 88.0 57.5 14.0
NASDAQ Stock Market (U.S.
Companies) 123.2 151.7 212.5 394.8 237.4
NASDAQ Stocks
(SIC 2200-2299 U.S.
Companies)
Textile mill products 134.3 194.2 179.8 161.6 190.0
Notes:
A. The lines represent monthly index levels derived from compounded daily returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading day, the preceding trading day is used.
D. The index level for all series was set to $100.00 on 12/27/96.
E. Each date represents the last trading day closest to the end of the fiscal year of the company
(the Saturday nearest December 31).
STOCK OPTIONS
- -------------
No officer or director of the Company was granted, exercised or
realized any stock appreciation rights, options, or warrants during the fiscal
year ended December 30, 2000.
DISCRETIONARY AUTHORITY
- -----------------------
The proxy being solicited confers, and the holders of each proxy shall
have, discretionary authority to vote with respect to any of the following
matters:
(1) Matters which the persons making the solicitation do not know, a
reasonable time before the solicitation, are to be presented at the meeting.
(2) Approval of the minutes of the prior meeting but such approval
shall not amount to ratification of the action taken at that prior meeting.
(3) The election of any person to any office for which a bona fide
nominee is named in the proxy statement and such nominee is unable to serve or
for good cause will not serve.
(4) Any proposal omitted from the proxy statement and form of proxy
pursuant to Rule 14a-8 or Rule 14a-9 of the Rules of the Securities and Exchange
Commission.
(5) Matters incident to the conduct of the meeting.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
- ------------------------------------------------
It has been the custom of the Company for the Board of Directors to
select the independent public accounting firm for the Company each year at its
annual meeting following the annual meeting of shareholders. Therefore, no
accounting firm is being recommended to or selected at this annual meeting of
shareholders. Cole, Samsel & Bernstein LLC, New York, New York, and Lodi, New
Jersey, is the independent public accounting firm for the Company. Cole, Samsel
& Bernstein LLC was the independent public accounting firm for the Company for
the fiscal year ended December 30, 2000. It is expected that a representative
from Cole, Samsel & Bernstein LLC will be present at the substitute annual
shareholders meeting. That representative will have the opportunity to make a
statement if he desires to do so and is expected to be available to respond to
appropriate questions.
AUDIT FEES
- ----------
The aggregate fees billed by Cole, Samsel & Bernstein, LLC for
professional services rendered for the audit of the Company's annual financial
statements for the most recent fiscal year and the reviews of the financial
statements included in the Company's quarterly reports to the Securities and
Exchange Commission on Form 10-Q for the most recent fiscal year are $61,500.00.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
- ------------------------------------------------------------
Cole, Samsel & Bernstein, LLC did not bill any fees for professional
services, and no professional services have been rendered, during the most
recent fiscal year for operating or supervising the operation of the Company's
information system, managing the Company's local area network, designing or
implementing a hardware or software system aggregating source data underlying
the financial system or generating information that is significant to the
Company's financial statements taken as a whole.
ALL OTHER FEES
- --------------
During the most recent fiscal year of the Company, Cole, Samsel &
Bernstein, LLC has billed no fee for services other than the fees specified
under the section above entitled "Audit Fees."
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
- -------------------------------------------------------
To the knowledge of the Company, all directors, officers and beneficial
owners of more than ten percent of the common stock of the Company and other
persons required to so file did file on a timely basis the reports required by
Section 16(a) of the Securities Exchange Act of 1934.
PROPOSALS OF SHAREHOLDERS
- -------------------------
Any proposals of shareholders intended to be presented at the 2002
annual meeting of the shareholders, now scheduled for May 21, 2002, must be
received by the Company for inclusion in the Company's proxy statement and form
of proxy relating to that meeting not later than December 31, 2001. Any such
proposal must be received at the principal executive offices of the Company.
FORM 10-K
- ---------
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON SOLICITED,
UPON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF
THE COMPANY'S ANNUAL REPORT ON FORM 1O-K, INCLUDING THE FINANCIAL STATEMENTS
AND THE SCHEDULES THERETO, FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION FOR THE FISCAL YEAR ENDED DECEMBER 30, 2000. SUCH
REQUEST SHOULD BE DIRECTED TO THOMAS I. NAIL, BURKE
MILLS, INC., P. O. BOX 190, VALDESE, NORTH CAROLINA 28690.
[Specimen of proxy card for purposes of electronic filing
with the Securities and Exchange Commission]
BURKE MILLS, INC.
APPOINTMENT OF PROXY
Substitute Annual Meeting of Shareholders, May 29, 2001
The undersigned shareholder hereby appoints Humayun N. Shaikh, Chairman
of the Board of the Company, Thomas I. Nail, President of the Company, and
Richard F. Byers, Executive Vice President of the Company, with full power of
substitution, the lawful attorneys, agents and proxies of the undersigned to
vote all shares of Burke Mills, Inc. held by the undersigned, cumulatively or
not cumulatively, with respect to the election of directors, at the Substitute
Annual Meeting of its shareholders to be held at 2:00 P.M. on May 29, 2001, at
the executive offices of the Company in Valdese, North Carolina, and all
adjourned sessions thereof, with all the powers the undersigned would possess if
personally present at such meeting, and upon the following matters:
1. The election of the following persons who will be nominated to
serve as directors:
Humayun N. Shaikh William T. Dunn Richard F. Byers
Thomas I. Nail Robert T. King Aehsun Shaikh
Robert P. Huntley
INSTRUCTIONS: You May Withhold Authority To Vote For Any Nominee By
Lining Through Or Otherwise Striking Out The Name Of Any Nominee. If You Execute
This Proxy In Such A Manner As Not To Withhold Authority To Vote For The
Election Of Any Nominee, This Proxy Shall Be Deemed To Grant Such Authority.
2. Such other business and matters as may be brought before the meeting
or any adjournments thereof, including any matters which are not known or
anticipated a reasonable time before the solicitation.
The shares represented by this proxy will be voted as directed by the
shareholder. If the person solicited specifies that authority to vote for a
nominee for director be withheld, the shares will be voted in accordance with
such specification. If no direction is given, the shares will be voted FOR all
nominees for director. To be voted, the proxy must be received prior to the
meeting.
This Appointment of Proxy Confers Upon the Holders Discretionary
Authority To Vote On The Matters Specified In The Proxy Statement Under The
Heading "Discretionary Authority."
This Appointment of Proxy is Solicited By The Board of Directors Of
The Company.
Dated: , 2001
--------------------------------------
Signature of Shareholder
(Please Sign exactly as name appears on this proxy.
Executors, Trustees, etc. should give full title).
CHARTER
OF THE AUDIT COMMITTEE
OF BURKE MILLS, INC.
ORGANIZATION
This charter governs the operations of the Audit Committee of the Board of
Directors ("the Board") of Burke Mills, Inc. ("the Company"). The committee
shall review and reassess the charter at least annually and obtain approval of
the Board for any changes. The committee shall be appointed by the Board and
shall comprise at least three directors, each of whom are independent of
management and the Company. Members of the committee shall be considered
independent if they have no relationship that may interfere with the exercise of
their independence from management and the Company. All committee members shall
be financially literate, and at least one member shall have accounting or
related financial management expertise.
STATEMENT OF POLICY
The Audit Committee shall provide assistance to the Board in fulfilling their
oversight responsibility to the shareholders, potential shareholders, the
investment community, and others relating to the Company's financial statements
and the financial reporting process, the systems of internal accounting and
financial controls, the internal audit function, the annual independent audit of
the Company's financial statements, and the legal compliance and ethics programs
as established by management and the board. In so doing, it is the
responsibility of the committee to maintain free and open communication between
the committee, independent auditors, the internal auditors and management of the
Company. In discharging its oversight role, the committee is empowered to
investigate any matter brought to its attention with full access to all books,
records, facilities, and personnel of the Company and the power to retain
outside counsel, or other experts for this purpose.
RESPONSIBILITIES AND PROCESSES
The primary responsibility of the Audit Committee is to oversee the Company's
financial reporting process on behalf of the Board and report the results of
their activities to the Board. Management is responsible for preparing the
Company's financial statements, and the independent auditors are responsible for
auditing those financial statements. The committee in carrying out its
responsibilities believes its policies and procedures should remain flexible, in
order to best react to changing conditions and circumstances. The committee
should take the appropriate actions to set the overall corporate approach to
quality financial reporting, sound business risk practices and ethical behavior.
The following shall be the principal recurring processes of the Audit Committee
in carrying out its oversight responsibilities. The processes are set forth as a
guide with the understanding that the committee may supplement them as
appropriate.
The committee shall have a clear understanding with management and the
independent auditors that the independent auditors are ultimately accountable to
the Board and the Audit Committee, as representatives of the Company's
shareholders. The committee shall have authority and responsibility to evaluate
and, where appropriate, recommend to the Board replacement of the independent
auditors. The committee shall discuss with the auditors their independence from
management and the Company and the matters included in the written disclosures
required by the Independence Standards Board of the AICPA. Annually, the
committee shall review and recommend to the Board the selection of the Company's
independent auditors.
The committee shall discuss with management and the independent auditors the
overall scope and plans for their respective audits including the adequacy of
staffing and compensation. Also, the committee shall discuss with management and
the independent auditors the adequacy and effectiveness of the accounting and
financial controls, including the Company's system to monitor and manage
business risk, and legal and ethical compliance programs. Further, the committee
shall meet separately with the independent auditors, with and without management
present, to discuss the results of their examinations.
The committee shall review the interim financial statements with management and
the independent auditors prior to the filing of the Company's Quarterly Report
to the Securities and Exchange Commission on Form 10-Q. Also, the committee
shall discuss the results of the quarterly review and any other matters required
to be communicated to the committee by the independent auditors under generally
accepted auditing standards. The chair of the committee may represent the entire
committee for the purposes of this review.
The committee shall review with management and the independent auditors the
financial statements to be included in the Company's Annual Report to the
Securities and Exchange Commission on Form 10-K (or the annual report to
shareholders if distributed prior to the filing of Form 10-K), including their
judgment about the quality, not just acceptability, of accounting principles,
the reasonableness of significant judgments, and the clarity of the disclosures
in the financial statements. Also, the committee shall discuss the results of
the annual audit and any other matters required to be communicated to the
committee by the independent auditors under generally accepted auditing
standards.
The committee shall keep the Board informed of all material and significant
issues being considered and decided by the committee including, without
limitation, any issues related to the annual audit, the independent auditors,
the annual report, all reports to the Securities and Exchange Commission and all
issues and matters related to the financial and accounting operations and
systems of the Company.
Approved and adopted by the
Audit Committee of Burke Mills, Inc.
effective June 14, 2000
s/ Robert P. Huntley
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Robert P. Huntley
Member, Audit Committee
s/ William T. Dunn
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William T. Dunn
Member, Audit Committee
Telephone (828) 874-6341 Fax (828) 879-7184
FRANK GADDY YARN DIVISION
POST OFFICE BOX 190, VALDESE, NORTH CAROLINA 28690
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THE YEAR IN REVIEW
During fiscal year 2000, sales for Burke Mills, Inc. were $39.5 million compared
to $42.8 million in 1999. Burke experienced a loss in 2000 of $850,000 or ($.31)
per share compared to a loss of $202,000 or ($.07) in 1999. Although the Company
experienced a loss for the year, its balance sheet actually improved.
In 2000, Burke Mills experienced increased costs for polyester yarns, its major
raw material, and natural gas. Price increases for polyester yarns, which began
in the second half of 1999, continued through the first quarter of 2000. Natural
gas costs increased approximately 64%. Because Burke supplies a very competitive
market, very little of the cost increases could be passed on in its sale prices.
During the second quarter as the textile economy weakened, Burke began to
experience a decline in orders that continued through the fourth quarter. The
weakened economy has also caused very competitive pricing, as companies competed
for less available business.
Burke made major management changes in May, replacing its President and Vice
President of Manufacturing. During the next six months, management and staff
adjustments were made to improve Burke's technical abilities and sewing thread
marketing.
During the second half of 2000 Burke worked diligently to reduce costs as orders
declined. Payroll was reduced 15% compared to 1999 with most of the reductions
occurring in the last half of the year.
As Burke worked to reduce costs, there were major costs associated with the
changes made in personnel and the declining economy. These cost aggregated
approximately $865,000 for severance, bad debts, recruiting fees, and inventory
markdowns.
Outlook
Burke sees 2001 as a challenging year. The markets that Burke serves are
expected to remain weak through at least the first half of 2001. Although the
market will be weak, some major suppliers of polyester fibers have announced
price increases beginning in the first quarter of 2001.
With a weak market and increasing raw material prices, the challenge to Burke is
to become as efficient and cost competitive as possible.
HUMAYUN N. SHAIKH
CHAIRMAN & CEO
BURKE MILLS, INC.
Corporate Data
Directors___________________________________________
Humayun N. Shaikh Robert P. Huntley Aehsun Shaikh
Chairman and CEO Chairman Textile Executive
of the Company Timber Ridge Lumber Co. Mr. Shaikh is Director of
A supplier of hardwood lumber Nafees Cotton Mills, Ltd.,
to the furniture industry. and Legler-Nafees
Denim Mills, Ltd.
Thomas I. Nail William T. Dunn
President and COO Retired
of the Company Mr. Dunn was an executive
with Bear Stearns and Paine
Webber companies.
Officers__________________________________________________
Humayun N. Shaikh Bill Singleton Michael B. Smith
Chairman and CEO Vice President - Assistant Secretary
Manufacturing
Thomas I. Nail
President and COO Pender R. McElroy
Secretary
Richard F. Byers James, McElroy & Diehl
Executive Vice President Attorneys At Law
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SEC Form 10-K Listing of Securities Registrar/Transfer Agent
A copy of Burke Mills OTC Bulletin Board First Union National Bank of N.C.
Form 10-K filed with the System Symbol: BMLS Shareholders Service Group
Securities and Exchange 1525 West W.T. Harris Blvd.
Commission for 2000 Legal Counsel Charlotte, NC 28288-1153
is available without charge. James, McElroy & Diehl (800) 829-8432
Please write or call the Attorneys at Law
Company at P.O. Box 190 Charlotte, NC Offices
Valdese, NC 28690 Burke Mills, Inc.
(828) 874-6341 Independent Auditors 191 Sterling Street, N.W.
Cole, Samsel & Bernstein LLC P.O. Box 190
Lodi, NJ Valdese, NC 28690
(828) 874-6341
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