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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
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[ ] 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 to Section 240.14a-12
GENERAL DATACOM INDUSTRIES
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
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previously. Identify the previous filing by registration statement number,
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GENERAL DATACOMM INDUSTRIES, INC.
MIDDLEBURY, CONNECTICUT 06762-1299
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 1, 2001
------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders of
GENERAL DATACOMM INDUSTRIES, INC. (the "Corporation") will be held at the
Princeton Club of New York, 15 West 43rd Street, Room 608, New York, New York,
on Thursday, March 1, 2001 at 4:00 P.M. for the following purposes:
1. To elect two directors to serve for a term of three years and
until their successors are elected.
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The close of business on January 2, 2001 has been fixed as the record date
for the determination of the stockholders entitled to receive notice of and to
vote at the meeting.
By Order of the Board of Directors
HOWARD S. MODLIN,
Secretary
Dated: January 12, 2001
IMPORTANT: THE MANAGEMENT INVITES YOU TO ATTEND THE MEETING IN PERSON, BUT IF
YOU ARE UNABLE TO BE PRESENT, PLEASE DATE, SIGN AND RETURN THE ENCLOSED PROXY AS
PROMPTLY AS POSSIBLE. NO POSTAGE IS REQUIRED IF THE PROXY IS RETURNED IN THE
ENCLOSED ENVELOPE AND IS MAILED WITHIN THE UNITED STATES.
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GENERAL DATACOMM INDUSTRIES, INC.
MIDDLEBURY, CONNECTICUT 06762-1299
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PROXY STATEMENT
This statement is furnished in connection with the solicitation by the
Board of Directors of General DataComm Industries, Inc. (the "Corporation") of
proxies in the accompanying form to be used at the Annual Meeting of the
Stockholders of the Corporation to be held on Thursday, March 1, 2001, and at
all adjournments thereof, for the purposes set forth in the accompanying notice
of the meeting. It is intended that this statement and the proxies solicited
hereby be mailed to stockholders on or before January 31, 2001. A stockholder
who shall sign and return a proxy in the form enclosed with this statement has
the power to revoke it any time before it is exercised by giving written notice
to the Corporation, Attention: Secretary, to such effect. A stockholder
attending the meeting in person may make his or her own nomination from the
floor when the election of directors is considered. Proxies properly executed
and received in time for the meeting will be voted.
The close of business on January 2, 2001 has been fixed as the record date
for the determination of the stockholders entitled to receive notice of and to
vote at the meeting. There were outstanding as of the close of business on
January 2, 2001, and entitled to be voted at the meeting, 27,516,096 shares of
Common Stock and 2,057,103 shares of Class B Stock. All of said shares are
entitled to one (l) vote on all matters voted on at the Annual Meeting, voting
as a single class. The holders of Class B Stock are entitled to ten (10) votes
per share in any election of directors if more than 15% of the shares of Common
Stock outstanding on the record date are owned beneficially by a person or a
group of persons acting in concert, or if a nomination for the Board of
Directors is made by a person or group of persons acting in concert (other than
the Board) provided such nomination is not made by one (l) or more holders of
Class B Stock, acting in concert with each other, who beneficially own more than
15% of the shares of Class B Stock outstanding on such record date. The Board of
Directors is not presently aware of any circumstance that would give holders of
Class B Stock the right to ten (10) votes per share for the election of
directors at the Annual Meeting.
The affirmative vote, in person or by proxy, of a majority of the shares of
Common Stock and Class B Stock voted, together as a single class, is required to
elect two (2) directors.
The proxies in the accompanying form will be voted "FOR" the election of
two (2) directors as set forth in the Notice of Annual Meeting. If any other
specification is made by a stockholder in the proxy, it will be voted as
specified. In the discretion of the proxy-holders, the proxies will also be
voted for or against such other matters as may properly come before the meeting.
The Board of Directors is not aware that any other matters are to be presented
for action at the meeting.
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PRINCIPAL STOCKHOLDERS
The following table sets forth information as of January 2, 2001 with
respect to the beneficial ownership of the Corporation's Class B Stock and
Common Stock by all persons known by the Corporation to own more than 5% of the
Corporation's outstanding Class B Stock or Common Stock who are deemed to be
such beneficial owners of the Corporation's Class B Stock or Common Stock under
Rule 13d-3. The Percent of Class and Percent of All Classes presented are based
upon shares outstanding at January 2, 2001. Class B Stock is convertible into
Common Stock at any time on a share-for-share basis.
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT OF PERCENT OF
TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP CLASS ALL CLASSES
- -------------- ------------------- ---------- ---------- -----------
Class B Stock Charles P. Johnson 1,513,677* 73.6% 7.2%
$.10 par value General DataComm Industries, Inc.
Middlebury, CT
06762-1299
James R. Arcara 351,420** 17.1% 2.4%
General DataComm Industries, Inc.
Middlebury, CT
06762-1299
Common Stock State of Wisconsin Investment Board 5,307,500*** 19.3% 17.9%
$.10 par value 121 East Wilson Street
Madison, WI 53702
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* The amount and percent of Class B Stock and percent of all classes do not
include 8,643 shares of Class B Stock or 10,857 shares of Common Stock owned
by trusts or in custody for the benefit of Mr. Johnson's daughter or 7,381
shares of Common Stock owned by his wife, as well as 8,293 shares of Common
Stock held by his wife in the Corporation's 401(k) Stock Fund, the
beneficial ownership of which he disclaims. In addition, the percent of all
classes includes 92,151 shares of Common Stock, 19,240 shares of Common
Stock held in the Corporation's 401(k) Stock Fund, 515,425 shares of Common
Stock which Mr. Johnson could acquire by the exercise of stock options
within sixty (60) days, and 36,630 shares of Common Stock issuable upon
conversion of the Corporation's 9% Convertible Exchangeable Preferred Stock
("Preferred Stock").
** The amount and percent of Class B Stock includes 100,419 shares owned
directly by Mr. Arcara and 251,001 shares held by Mr. Arcara as trustee
under various trusts for the benefit of the family of Mr. Johnson (238,801
shares) and as trustee under an insurance trust for the benefit of Mr.
Johnson (l2,200 shares). Mr. Arcara has the sole power to vote and/or
dispose of the shares held as trustee. He disclaims beneficial ownership of
these 251,001 shares. In addition, the percent of all classes includes
102,933 shares of Common Stock owned directly by Mr. Arcara with his wife,
34,270 shares of Common Stock held in the Corporation's 401(k) Stock Fund,
137,143 shares of Common Stock held by Mr. Arcara as trustee under various
trusts for the benefit of Mr. Johnson's children for which he disclaims
beneficial ownership and 87,650 shares of Common Stock which Mr. Arcara
could acquire by the exercise of stock options within sixty (60) days.
*** Based on Form 13G/A dated October 10, 2000. The State of Wisconsin
Investment Board is a state agency which invests assets on behalf of state
employees.
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ITEM 1. ELECTION OF DIRECTORS
The nominees, Messrs. Charles P. Johnson and Howard S. Modlin, were elected
directors of the Corporation at the 1998 meeting of stockholders for a three (3)
year term. Set forth opposite the name of the nominees and each director whose
term continues past the meeting is his principal occupation for the past five
(5) years, the name and principal business of any corporation or other
organization in which such employment is carried on, other business
directorships held, his age and the year in which the term of office for which
he is a nominee or the term of such office will expire.
Management has no reason to believe that the nominees are not available or
will not serve if elected, but if any nominee should become unavailable to serve
as a director, full discretion is reserved to the persons named as proxies to
vote for such other person(s) as may be nominated. Proxies will be voted "FOR"
the nominees unless the stockholder specifies otherwise.
POSITION WITH THE CORPORATION, BECAME A TERM
NAME PRINCIPAL OCCUPATION AND AGE DIRECTOR EXPIRES
- ---- ------------------------------ -------- -------
Charles P. Johnson............. Chairman of the Board of Directors and Chief 1969 2004
Executive Officer; 73
Howard S. Modlin............... Secretary of the Corporation and Member of the 1969 2004
law firm of Weisman Celler Spett & Modlin,
P.C.; Director of Fedders Corporation and
Trans-Lux Corporation; 69
Frederick R. Cronin............ Vice President, Corporate Technology; 69 1981 2002
Lee M. Paschall................ Consultant; former Chairman and President of 1981 2003
American Satellite Company, 1981 to 1985;
Telecommunications Consultant between August
1978 and August 1981. Previous thereto, he was
a Lieutenant General, United States Air Force;
Director of Radiation Systems, Inc.; 78
John L. Segall................. Consultant; Vice Chairman of GTE 1991-1994; 1994 2003
Vice Chairman of Contel Corp. 1989-1991; 74
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SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS
Each nominee, each director whose term continues past the meeting and each
executive officer listed in the Summary Compensation Table (on page 6) have
advised the Corporation that, as of January 2, 2001, he owned beneficially,
directly or indirectly, securities of the Corporation in the amounts set forth
opposite his name.
SHARES OF PERCENT
SHARES OF COMMON PERCENT CLASS B STOCK PERCENT OF ALL
NAME STOCK OWNED OF CLASS OWNED(1) OF CLASS CLASSES
- ---- ---------------- -------- ------------- -------- -------
Charles P. Johnson................ 663,446(2) 2.4% 1,513,677(2) 73.6% 7.2%
Howard S. Modlin.................. 100,535(3) 0.4% 6,750(3) 0.3% 0.4%
Frederick R. Cronin............... 161,363(4) 0.6% -- -- 0.5%
Lee M. Paschall................... 16,000(5) 0.1% 5,770 0.3% 0.1%
John L. Segall.................... 11,000(6) -- -- -- --
Ross A. Belson.................... 288,801(7) 1.0% -- -- 1.0%
P. John Woods..................... 37,519(8) 0.1% -- -- 0.1%
Keith A. Mumford.................. 50,020(9) 0.2% -- -- 0.2%
William G. Henry.................. 105,875(10) 0.4% -- -- 0.4%
Directors and Officers as a group
(13 individuals including the
above).......................... 2,047,103(11) 7.1% 1,899,617(11) 92.3% 12.7%
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(1) The Class B Stock is convertible into Common Stock at any time on a
share-for-share basis.
(2) Includes 515,425 shares of Common Stock which Mr. Johnson could acquire by
the exercise of stock options within sixty (60) days, 19,240 shares of
Common Stock held in the Corporation's 401(k) Stock Fund and 36,630 shares
of Common Stock issuable upon conversion of the Preferred Stock shares held
by him. Does not include 8,643 shares of Class B Stock or 10,857 shares of
Common Stock owned by trusts or in custody for the benefit of his daughter,
7,381 shares of Common Stock owned by his wife as well as 8,293 shares of
Common Stock held by his wife in the Corporation's 401(k) Stock Fund, the
beneficial ownership of which he disclaims.
(3) Includes 10,000 shares of Common Stock which Mr. Modlin could acquire by
the exercise of stock options within sixty (60) days and 90,535 shares held
by the law firm of which he is a member. Does not include 31,400 shares of
Class B Stock nor 112,000 shares of Common Stock owned directly by members
of his immediate family, the beneficial ownership of which Mr. Modlin
disclaims.
(4) Includes 137,918 shares of Common Stock which Mr. Cronin could acquire by
the exercise of stock options within sixty (60) days and 2,363 shares of
Common Stock held in the Corporation's 401(k) Stock Fund. Does not include
15,900 shares of Common Stock owned directly by members of his immediate
family, the beneficial ownership of which he disclaims.
(5) Includes 10,000 shares of Common Stock which Mr. Paschall could acquire by
the exercise of stock options within sixty (60) days.
(6) Includes 10,000 shares of Common Stock which Mr. Segall could acquire by
the exercise of stock options within sixty (60) days.
(7) Includes 19,618 shares of Common Stock held via trust and 269,183 shares of
Common Stock which Mr. Belson could acquire by the exercise of stock
options within sixty (60) days.
(8) Includes 37,100 shares of Common Stock which Mr. Woods could acquire by the
exercise of stock options within sixty (60) days and 419 shares of Common
Stock held in the Corporation's 401(k) Stock Fund.
(9) Includes 47,750 shares of Common Stock which Mr. Mumford could acquire by
the exercise of stock options within sixty (60) days.
(10) Includes 82,950 shares which Mr. Henry could acquire by the exercise of
stock options within sixty (60) days and 525 shares of Common Stock held in
the Corporation's 401(k) Stock Fund. Does not
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include 500 shares of Common Stock owned directly by members of his
immediate family, the beneficial ownership of which he disclaims.
(11) Includes 1,367,460 shares of Common Stock which persons in the group have
the right to acquire by the exercise of stock options within sixty (60)
days, 71,889 shares of Common Stock held in the Corporation's 401(k) Stock
Fund, 19,618 shares of Common Stock held under trust by Mr. Ross A. Belson,
137,143 shares of Common Stock and 238,801 shares of Class B Stock held by
Mr. James R. Arcara, Vice President, Corporate Operations, as trustee under
various trusts for the benefit of Mr. Johnson's family, 12,200 shares of
Class B Stock held by Mr. Arcara as trustee under an insurance trust for
the benefit of Mr. Johnson, 36,630 shares of Common Stock issuable upon
conversion of the Preferred Stock owned by Mr. Johnson and 90,535 shares of
Common Stock held by the law firm of which Mr. Modlin is a member. Does not
include 44,767 shares of Class B Stock and 154,931 shares of Common Stock
owned directly by members of the directors' and officers' immediate
families or related trusts, the beneficial ownership of which they
disclaim.
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EXECUTIVE COMPENSATION AND OTHER TRANSACTIONS
WITH MANAGEMENT
The following Summary Compensation Table sets forth the compensation paid
or awarded for the fiscal years ended September 30, 2000, 1999 and 1998 to the
Corporation's Chief Executive Officer and the four (4) next most highly
compensated executive officers whose compensation for the fiscal year ended
September 30, 2000 exceeded $100,000:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION(1)
#
FISCAL OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS GRANTED OTHER COMPENSATION(2)
- --------------------------- ------ -------- -------- ------- --------- ---------------
Charles P. Johnson........ 2000 $534,139 -- 250,000 $20,341 $62,396
Chairman of the Board of 1999 498,657 $100,000 95,000 14,671 59,470
Directors and Chief 1998 498,657 100,000 150,000 21,937 59,470
Executive Officer
Ross A. Belson............ 2000 289,126 -- 79,000 9,514 3,200
President and Chief 1999 264,289 75,000 32,927 7,205 3,200
Operating Officer 1998 264,289 75,000 84,500 10,238 3,200
P. John Woods(3).......... 2000 166,667 14,963 37,000 6,894 --
President, Vital Network 1999 155,485 44,560 52,500 7,610 9,819
Services, L.L.C 1998 144,610 18,120 5,100 6,146 33,411
Keith A. Mumford(4)....... 2000 181,626 -- 40,000 7,140 22,348
Vice President and 1999 156,387 46,313 54,500 14 8,977
General Manager,
Broadband Systems
Division
William G. Henry(5)....... 2000 155,255 15,000 18,050 6,335 3,119
Vice President, Finance 1999 138,857 25,995 36,950 7,188 2,955
and Chief Financial 1998 125,682 13,057 27,500 6,613 2,890
Officer
- ---------------
(1) There are no restricted stock awards, stock appreciation rights or deferred
long-term incentive payouts. Amounts realized on the exercise of stock
options are set forth in the second table on page 8.
(2) The Corporation is paying the annual premium on a $1,000,000 life insurance
policy on Mr. Johnson's life at an approximate annual cost of $59,196 in
fiscal 2000 and $56,270 in fiscal 1999 and 1998, included in All Other
Compensation, so long as Mr. Johnson is an employee of the Corporation. Mr.
Johnson's designee is the owner of said policy. The balance of Mr. Johnson's
All Other Compensation and amounts reported for the other executives
(excluding the relocation cost reimbursement referenced below) reflects the
Corporation's contributions under its 401(k) plan.
(3) All Other Compensation reflects relocation expense reimbursements of $9,402
and $30,299 for the fiscal years ended September 30, 1999 and 1998,
respectively.
(4) Mr. Mumford became an executive officer on October 28, 1998 (fiscal 1999)
and resigned on January 12, 2001. All Other Compensation reflects relocation
expense of $22,348 and $8,977 for the fiscal years ended September 30, 2000
and 1999, respectively.
(5) Mr. Henry became Vice President, Finance and Chief Financial Officer in
fiscal 1999 and was formerly Vice President and Corporate Controller.
During the fiscal year ended September 30, 2000, $620,000 in fees, an
amount which the Corporation believes is fair, were paid to the law firm of
which Howard S. Modlin is a member.
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BOARD COMPENSATION COMMITTEE REPORT
All matters concerning executive compensation for the Chief Executive
Officer and other executive officers are considered by the Corporation's entire
Board of Directors since there is no separate Compensation Committee. The salary
levels are intended to be consistent with competitive practice and level of
performance. In determining the total compensation to be paid to the Chief
Executive Officer and all other executive officers, the Board considers
management's recommendation based upon past salary levels, industry surveys,
experience, capability, normal salary increase levels in past years and the
Corporation's and respective individual's performances during the last fiscal
year. The Chief Executive Officer's compensation and bonus are based upon the
above factors and include an annual bonus of three-quarters of one-percent ( 3/4
of l%) of the Corporation's pretax earnings, but in no event shall the Chief
Executive Officer's annual bonus be less than $100,000. Mr. Johnson has waived
this annual bonus for the year ended September 30, 2000.
AUDIT COMMITTEE REPORT
The Audit Committee is comprised of two directors who are not officers or
employees of the Corporation (Lee M. Paschall and John L. Segall) and intends to
add a third member during 2001. During the fiscal year ended September 30, 2000,
the Audit Committee adopted a formal written charter. Such Audit Committee
Charter is included in the back of this Proxy Statement.
The Audit Committee has reviewed and discussed the audited financial
statements for the fiscal year ended September 30, 2000 ("Fiscal Year") with
management of the Corporation; the Audit Committee has also discussed with the
Corporation's independent accountants, PricewaterhouseCoopers LLP the matters
required to be discussed by SAS 61 (Codification of Standards on Auditing
Standards, AU sec.380) as may be amended or supplemented. In addition, the Audit
Committee has reviewed the written disclosures and the letter from the
Corporation's independent accountants required by Independence Standards Board
Standard No. 1 (Independence Standards Board Standard No. I, Independence
Discussions with Audit Committees), as may be modified or supplemented from
time-to-time and has discussed with the independent accountants of the
Corporation the independent accountant's independence.
Based upon the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements for the Fiscal Year be included in the Corporation's Annual Report on
Form 10-K for the Fiscal Year for filing with the Securities and Exchange
Commission.
This Audit Committee Report has been respectively submitted by Audit
Committee members Lee M. Paschall and John L. Segall.
CHANGE IN CONTROL
Under a benefit arrangement for senior executive officers and other senior
key employees designated by the Board who are 55 or over and have been employed
by the Corporation for more than 20 years, in addition to certain medical and
long term care benefits, Mr. Johnson (and each other designee) are entitled to
continuation of their then minimum compensation level for two years and have all
options vest which are outstanding for at least one year if they retire within
90 days following a change-in-control. If such event occurred as of January 2,
2001 and Mr. Johnson retired, he would currently be entitled to a minimum annual
compensation of $650,000, or a total of $1,300,000 for two (2) years. The
benefit arrangement was not established in response to any threatened
change-in-control and is part of an overall plan to reward long-term senior
executives and employees.
STOCK OPTION PLANS
Under the terms of the Corporation's Stock Option Plans, the Corporation
has reserved a total of 5,125,435 shares of Common Stock as of January 2, 2001.
Officers and key employees selected by the Chairman of the Board or the Stock
Option Committee, as the case may be, may be granted incentive stock options at
an exercise price equal to or greater than the fair market value per share on
the date of grant and non-incentive stock options at an exercise price equal to
or greater than the fair market value per
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share on the date of grant. While individual options can be issued under various
provisions, options cannot be exercised during the first year, generally vest in
increments of 25% per year over a four-year period and expire within ten (10)
years. The Chairman or the Stock Option Committee, as the case may be,
determines the number of stock options to be granted to any person, subject to
the limitations on incentive stock options in Section 422A of the Internal
Revenue Code of 1986, as amended ("Code").
STOCK OPTIONS GRANTED IN LAST FISCAL YEAR
The following table is a summary of all stock options granted pursuant to
the Corporation's Stock Option Plans during the period October 1, 1999 through
September 30, 2000 for the persons named in the Summary Compensation Table.
There are no stock appreciation rights under the Plans. In addition, the table
shows the potential gain that could be realized if the fair market value of the
Corporation's Common Stock were to appreciate at a 5% or 10% annual rate over
the ten (10) year period of the option term.
POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
OPTIONS ANNUAL RATES OF STOCK
GRANTED TO EXERCISE APPRECIATION FOR
# EMPLOYEES OR BASE OPTION TERM
OPTIONS IN LAST PRICE PER EXPIRATION ----------------------
NAME GRANTED FISCAL YEAR SHARE DATE 5% 10%
- ---- ------- ------------ --------- ---------- --------- ---------
Charles P. Johnson....... 37,209 2.4% $2.6875 10-20-09 $ 62,867 $159,305
75,000 4.9% 4.4063 8-03-10 207,760 526,464
137,791 8.9% 2.6875 10-20-09 232,807 589,933
Ross A. Belson........... 79,000 5.1% 2.6875 10-20-09 133,476 338,228
P. John Woods............ 37,000 2.4% 2.6875 10-20-09 62,514 158,410
Keith A. Mumford......... 40,000 2.6% 2.6875 10-20-09 67,583 171,255
William G. Henry......... 18,050 1.2% 2.6875 10-20-09 30,497 77,279
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth the number of shares acquired on exercise
during the fiscal year ended September 30, 2000, the value realized on exercise,
the number of unexercised options outstanding at September 30, 2000 and the
value of unexercised in-the-money options at September 30, 2000 for the persons
named in the Summary Compensation Table.
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
NUMBER OF SEPTEMBER 30, 2000 SEPTEMBER 30, 2000
SHARES --------------------- --------------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
- ---- ----------- -------- --------------------- --------------------
Charles P. Johnson.............. None -- 417,925/347,500 $380,153/648,510
Ross A. Belson.................. None -- 252,719/120,708 314,924/268,676
P. John Woods................... 19,100 $65,396 12,100/ 79,000 0/183,061
Keith A. Mumford................ 1,750 $11,539 26,250/ 85,000 36,617/200,093
William G. Henry................ 3,750 $16,172 69,000/ 65,000 88,070/150,905
EMPLOYEE RETIREMENT SAVINGS AND DEFERRED PROFIT SHARING PLAN
Under the retirement savings provisions of the Corporation's Employee
Retirement Savings and Deferred Profit Sharing Plan (the "Plan"), established
under Section 401(k) of the Code in fiscal 1987, U.S. employees are generally
eligible to contribute to the Plan after three (3) months of continuous service
in amounts determined by the Plan. The Corporation contributes an additional 50%
of the employee contribution up to certain limits, not to exceed 2% of total
eligible compensation. Employees become fully vested in the
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Corporation's contributions after three (3) years of continuous service, death,
disability or upon reaching age 65. The Plan year for the Retirement Savings
401(k) portion of the Plan coincides with the calendar year, and the
Corporation's contribution is paid in the following calendar year if the
participant was employed on December 31 of the Plan year.
The deferred profit sharing provisions of the Plan include retirement and
other related benefits for substantially all of the Corporation's full-time
employees. Contributions under the Plan are funded annually and are based, at a
minimum, upon a formula measuring profitability in relation to revenues.
Additional amounts may be contributed at the discretion of the Corporation.
Contributions to the Plan are allocated to each participant based upon
individual earnings in proportion to the earnings of all participants. There
were no contributions made for deferred profit sharing for fiscal 2000.
The Corporation's calendar contributions to the Retirement Savings 40l(k)
portion of the Plan for calendar 1999, paid in 2000, amounted to $830,574 for
all participants, including $3,200 on behalf of each of the named officers in
the Summary Compensation Table, with the exception of John Woods and Keith
Mumford who received $0, respectively.
EMPLOYEE STOCK PURCHASE PLAN
The Corporation's 1979 Employee Stock Purchase Plan (the "Purchase Plan")
was adopted by the Board of Directors in May 1979 and approved by the
stockholders in February 1980. The Purchase Plan currently expires on October
31, 2001.
The Purchase Plan is implemented by having one offering during each
six-month period ("Payment Period"). Such Payment Period currently commences on
March 1 and September 1 of each year and is administered by a committee
appointed by the Chairman of the Corporation. Employees who have completed 91
consecutive days of employment are eligible to participate if they are
customarily employed by the Corporation for more than twenty (20) hours per week
and more than five (5) months per year. The Purchase Plan permits eligible
employees to purchase Common Stock through payroll deductions (in an amount not
less than 2% nor more than 10% of the employee's regular base pay, bonuses and
commissions) at the lower of 85% of the average market price of the Common Stock
at the beginning or the end of each six-month offering period, provided, however
(i) if 85% of the average market price per share of the Common Stock is less
than book value per share at the beginning of a Payment Period, the Purchase
Plan is suspended; (ii) if 85% of the average market price per share at the end
of a Payment Period is less than the book value, the payroll deductions are
refunded; and (iii) if 85% of the average market price per share at the
beginning of a Payment Period is less than the book value per share at the end
thereof, the purchase price is the book value per share. The Board can reinstate
the Purchase Plan at any time if 85% of the average market price per share
exceeds the book value per share, and the Payment Period starting and ending
dates would be adjusted accordingly. Employees may end their participation in an
offering at any time during such offering Payment Period prior to two (2)
business days from the end of the Payment Period. Participation ends
automatically upon termination of employment with the Corporation. As of January
2, 2001 346,289 shares remained available for future issuance under the Purchase
Plan.
The following table sets forth certain information as to all executive
officers as a group and all other employees who participated in the Purchase
Plan between October 1, 1999 and September 30, 2000:
NUMBER OF AGGREGATE AVERAGE
SHARES PURCHASE PRICE PER
NAME OF INDIVIDUAL OR IDENTITY OF GROUP PURCHASED PRICE SHARE
- --------------------------------------- --------- --------- ---------
All executive officers (2 persons in the Purchase Plan)..... 11,572 $ 33,914 $2.931
All other employees (154 persons)........................... 220,675 $649,728 $2.944
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FIVE YEAR CORPORATE PERFORMANCE GRAPH
The following graph compares the Corporation's total stockholder return
over the five (5) fiscal years ended September 30, 2000 with the total return on
the Standard & Poors 500 Index ("Standard & Poors 500") and an industry peer
group based upon the Value Line Computers & Peripherals Industry ("Computer
Peripherals"). The stockholder return shown on the graph is not intended to be
indicative of future performance of the Corporation's Common Stock.
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN*
(PERFORMANCE RESULTS THROUGH 9/30/00)
[COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS PERFORMANCE GRAPH]
GENERAL DATACOMM
INDUSTRIES, INC. STANDARD & POORS 500 COMPUTER & PERIPHERALS
---------------- -------------------- ----------------------
1995 100.00 100.00 100.00
1996 76.27 120.39 142.60
1997 40.68 169.35 264.25
1998 20.34 184.33 260.97
1999 19.07 234.81 648.67
2000 35.17 262.96 767.45
* Assumes $100 invested at the close of trading on September 30, 1995 in General
DataComm Industries, Inc. Common Stock, Standard & Poors 500 and the
Computer-Peripherals peer group. Cumulative total return assumes reinvestment
of dividends.
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SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
PricewaterhouseCoopers LLP was selected by the Board of Directors as
auditors for the Corporation's fiscal year ended September 30, 2000. A
representative of such auditors is expected to be at the Annual Meeting of
Stockholders and will be permitted to make a statement to the stockholders if
they desire and to respond to any appropriate questions addressed by
stockholders to such auditors. It is anticipated such firm will be selected as
the Corporation's auditors for the fiscal year 2001.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF L934
The Corporation's executive officers and directors are required under
Section l6(a) of the Securities Exchange Act of l934 to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and New York Stock Exchange. Copies of those reports must also be furnished to
the Corporation.
Based solely on a review of the copies of reports furnished to the
Corporation and the Corporation's monthly reporting compliance program, the
Corporation believes that during the preceding year all filing requirements
applicable to executive officers and directors were met.
MEETINGS OF THE BOARD OF DIRECTORS
During fiscal 2000, the Board of Directors had ten (10) formal meetings.
All of the Directors attended 100% of such meetings. Non-employee directors
currently receive a fee of $1,200 for each meeting which they attend and an
annual fee of $8,000. Under a plan adopted by the Board of Directors in 1982,
non-employee directors have the opportunity to elect to defer receipt of all or
a portion of their fees plus interest thereon. On October l0, l995, March 5,
1998 and October 21, 1999 the non-employee directors were each granted non-
statutory stock options to purchase 5,000, 4,500 and 6,000 shares of the
Corporation's Common Stock at $l2.3l per share, $3.75 per share and $2.69 per
share, respectively, the fair market values on such dates. All such options
become exercisable in three equal annual installments on the first, second and
third anniversaries of date of grant.
The Corporation has an Audit Committee consisting of Messrs. Lee Paschall
and John L. Segall. Members of the Audit Committee receive an annual fee of
$2,250. As part of its responsibilities, the Audit Committee reviews the audit
function with the Corporation's independent auditors. During fiscal 2000, the
Audit Committee had four (4) meetings. The Corporation does not have a
nominating or compensation committee. The Board of Directors has adopted a
written charter for the Audit Committee, which is appended to this proxy
statement.
The Corporation has a Stock Option Committee consisting of Messrs. Lee
Paschall and Howard S. Modlin. Such Committee, which had two (2) telephone
meetings during fiscal 2000, followed up by written action, determines which
executive officers of the Corporation shall be granted stock options under its
stock option plans.
STOCKHOLDER PROPOSALS -- 2002 ANNUAL MEETING
If any stockholder desires to submit a proposal for action at next year's
annual meeting, it must be received by the Corporation, Middlebury, Connecticut
06762-1299, on or before September 13, 2001.
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COST OF SOLICITATION
The cost of preparing and mailing material in connection with the
solicitation of proxies is to be borne by the Corporation. To the extent
necessary in order to assure sufficient representation at the meeting, such
solicitation will be made by the Corporation's regular employees in the total
approximate number of three (3). Solicitation will be made by mail, telegram,
telephone and in person.
By Order of the Board of Directors
HOWARD S. MODLIN,
Secretary
Dated: Middlebury, Connecticut
January 12, 2001
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AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
OF GENERAL DATACOMM INDUSTRIES, INC.
CHARTER
I. PURPOSE
The Audit Committee shall provide assistance to the corporate directors in
fulfilling their responsibility relating to corporate accounting, reporting
practices of the Corporation, and the quality and integrity of the financial
reports of the Corporation. The Audit Committee's primary duties and
responsibilities are to:
- Oversee that management has maintained the reliability and integrity of
the accounting policies and financial reporting and disclosure practices
of the Corporation.
- Oversee that management has established and maintained processes to
assure that an adequate system of internal control of the Corporation's
accounting records and systems is functioning.
- Oversee that management has established and maintained processes to
assure compliance by the Corporation with all applicable laws,
regulations and corporate policy.
The Audit Committee will fulfill these responsibilities primarily by carrying
out the activities enumerated in Section IV of this Charter.
II. COMPOSITION
The Audit Committee shall be comprised of three (3) or more directors as
determined by the Board, each of whom shall be independent directors, and free
from any relationship that, in the opinion of the Board, would interfere with
the exercise of his or her independent judgment as a member of the Audit
Committee. All members of the Audit Committee shall have a working familiarity
with basic finance and accounting practices and at least one member of the Audit
Committee shall have accounting or related financial management expertise.
The members of the Audit Committee shall be elected by the Board at the
annual organizational meeting of the Board or until their successors shall be
duly elected and qualified. Unless a Chairperson is elected by the full Board,
the members of the Audit Committee may designate a Chairperson by majority vote
of the full Audit Committee membership.
III. MEETINGS
The Audit Committee shall meet at least two (2) times annually, or more
frequently as circumstances dictate. As part of its job to foster open
communication, the Audit Committee should meet at least annually with management
and the independent accountants separately, to discuss any matters that the
Audit Committee or either of these groups believe should be discussed privately.
In addition, the Audit Committee or at least its Chairperson should meet with
the independent accountants and management quarterly to review the Corporation's
financial statements.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
Documents/Reports Review
1. Review and reassess, at least annually, the adequacy of this
Charter and make recommendations to the Board, as conditions dictate, to
update this Charter.
2. Review with management and the independent accountants the
Corporation's annual financial statements, including a discussion with the
independent accountants of the matters required to be discussed by
Statement of Auditing Standards No. 61 ("SAS No. 61"), as amended or
updated.
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3. Review with management and the independent accountants the Form
10-Q prior to its filing or prior to the release of earnings, including a
discussion with the independent accountants of the matters required to be
discussed by SAS No. 61. The Chairperson of the Audit Committee may
represent the entire Audit Committee for purposes of this review.
Independent Accountants
4. Review the performance of the independent accountants and make
recommendations to the Board regarding the appointment, replacement or
termination of the independent accountants. The Audit Committee and the
Board have the ultimate authority and responsibility to select, evaluate,
and where appropriate, replace such outside auditor. The independent
accountants are ultimately accountable to the Audit Committee and the
entire Board for such accountant's review of the financial statements and
controls of the Corporation.
5. Oversee independence of the accountants by:
- receiving from the accountants, on a periodic basis, a formal written
statement delineating all relationships between the accountants and
the Corporation consistent with Independence Standards Board Standard
1 ("ISB No. 1"); as amended or updated.
- reviewing, and actively discussing with the Board, if necessary, and
the accountants, on a periodic basis, any disclosed relationship or
services between the accountants and the Corporation or any other
disclosed relationship or services that may impact on the objectivity
and independence of the accountants; and
- recommending, if necessary, that the Board take certain action to
satisfy itself of the auditor's independence.
Financial Reporting Process
6. In consultation with the independent accountants and management,
review the integrity of the Corporation's financial reporting processes.
7. Consider and approve, if appropriate, major changes to the
Corporation's auditing and accounting principles and practices as suggested
by the independent accountants or management.
8. Establish regular systems of reporting to the Audit Committee by
each of management and the independent accountants regarding any
significant judgments made in management's preparation of the financial
statements and any significant difficulties encountered during the course
of the review or audit, including any restrictions on the scope of work or
access to required information.
9. Review any significant disagreement among management and the
independent accountants in connection with the preparation of the financial
statements.
Legal Compliance/General
10. Review, with the Corporation's counsel, any legal matter that
could have a significant impact on the Corporation's financial statements.
11. Report through its Chairperson to the Board following meetings of
the Audit Committee.
12. Maintain minutes or other records of meetings and activities of
the Audit Committee.
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GENERAL DATACOMM INDUSTRIES, INC.
PROXY - Annual Meeting of Stockholders -
March 1, 2001
(SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS)
KNOW ALL MEN BY THESE PRESENTS, that the undersigned stockholder of
General DataComm Industries, Inc., hereby constitutes and appoints CHARLES P.
JOHNSON, HOWARD S. MODLIN and GERALD GORDON, and each and any of them, the
attorneys and proxies of the undersigned with full power of substitution to vote
for and in the name, place and stead of the undersigned, at the Annual Meeting
of the Stockholders of said Corporation, to be held at Princeton Club of New
York, 15 West 43rd Street, Room 608, New York, New York, on March 1, 2001 at
4:00 P.M., and at any adjournments thereof, the number of votes the undersigned
would be entitled to cast if present:
_______________________
(1) FOR [ ] NOT FOR [ ] the election of Charles P. Johnson and Howard S.
Modlin to the Board of Directors for a term of three (3) years and until their
successors are elected.
Authority is withheld as to the following __________________________________.
(2) In their discretion, upon such other matters as may properly come before the
meeting or any adjournments thereof. FOR [ ] AGAINST [ ] ABSTAIN [ ]
Unless you specify otherwise, this Proxy will be voted "FOR" the
election of the nominees as directors.
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A majority of said attorneys and proxies, or their substitute at said
meeting, or any adjournments thereof (or if only one (l), that one (l)) may
exercise all of the powers hereby given. Any proxy to vote any of the shares,
with respect to which the undersigned is or would be entitled to vote,
heretofore given to any person or persons other than the persons named above is
hereby revoked.
IN WITNESS WHEREOF, the undersigned has signed and sealed this
proxy and hereby acknowledges receipt of a copy of the notice of said meeting
and proxy statement in reference thereto both dated January 12, 2001.
Dated: __________________ 2001
___________________________(L.S.)
(Stockholder(s) Signature)
___________________________(L.S.)
NOTE: This Proxy, properly completed, dated and signed, should be returned
immediately in the enclosed postage-paid envelope to GENERAL DATACOMM
INDUSTRIES, INC.