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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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for use of the Commission only (as permitted by Rule 14a-6(e)(2))
GERBER CHILDRENSWEAR, INC.
- --------------------------------------------------------------------------------
(Names of Registrant As Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[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:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(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):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] 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:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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[GERBER LOGO]
[GERBER LETTRHEAD]
April 16, 2001
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders (the
"Annual Meeting") to be held at The Chase Manhattan Bank, 270 Park Avenue, 11th
Floor, Conference Room F, New York, New York, on Tuesday, May 15, 2001, at 9:00
a.m., local time. Information about the Annual Meeting, nominees for directors
and the proposals to be considered is presented in the Notice of Annual Meeting
and the Proxy Statement on the following pages. Additionally, a proxy card is
included.
At this year's Annual Meeting, you will be asked to (i) elect directors and
(ii) ratify and approve the appointment of Ernst & Young LLP as the Company's
independent auditors. Additionally, during the Annual Meeting, you will be asked
to vote on such other matters as may properly come before the Annual Meeting.
Your proxy is revocable, and in the event you find it convenient to attend
the Annual Meeting, you may, if you wish, withdraw your proxy and vote in
person.
Your participation in our Company's affairs is important regardless of the
number of shares you hold. To ensure your representation, even if you cannot
attend the Annual Meeting, please mark, sign, date and return the enclosed proxy
card promptly.
We look forward to seeing you at the Annual Meeting.
Sincerely,
/s/ Edward Kittredge
Edward Kittredge
Chairman, Chief Executive
Officer and President
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GERBER CHILDRENSWEAR, INC.
7005 PELHAM ROAD
GREENVILLE, SOUTH CAROLINA 29615
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD TUESDAY, MAY 15, 2001
------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of Gerber Childrenswear, Inc., a Delaware corporation (the "Company"),
will be held at The Chase Manhattan Bank, 270 Park Avenue, 11th Floor,
Conference Room F, New York, New York, on Tuesday, May 15, 2001, at 9:00 a.m.,
for the following purposes:
1. To elect seven (7) nominees to be directors of the Company, to
serve until the next annual meeting of stockholders of the Company and
until their successors have been duly elected and qualified;
2. To act upon a proposal to ratify the appointment of Ernst & Young
LLP as the Company's independent auditors for the year ending December 31,
2001; and
3. To transact such other business as may properly come before the
Annual Meeting or any postponements or adjournments thereof.
Holders of record of the Company's Common Stock at the close of business on
March 30, 2001 shall be entitled to notice of, and to vote at, the Annual
Meeting or any and all postponements or adjournments thereof. A complete list of
such stockholders, arranged in alphabetical order and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder, will be available at the Annual Meeting and will be available for
examination by any stockholder for any purpose germane to the Annual Meeting,
during ordinary business hours for a period of ten days prior to the Annual
Meeting at the offices of the Company, 7005 Pelham Road, Greenville, South
Carolina 29615.
By Order of the Board of Directors,
/s/ David E. Uren
David E. Uren
Secretary
April 16, 2001
Greenville, South Carolina
IMPORTANT:
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE REQUESTED TO FILL
IN AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ACCOMPANYING
SELF-ADDRESSED ENVELOPE FOR WHICH NO POSTAGE IS REQUIRED.
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GERBER CHILDRENSWEAR, INC.
7005 PELHAM ROAD
GREENVILLE, SOUTH CAROLINA 29615
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PROXY STATEMENT
------------------------
ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, MAY 15, 2001
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GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by
Gerber Childrenswear, Inc., a Delaware corporation (the "Company"), of proxies
to be voted at the Annual Meeting of Stockholders (the "Annual Meeting") to be
held at The Chase Manhattan Bank, 270 Park Avenue, 11th Floor, Conference Room
F, New York, New York, on Tuesday, May 15, 2001, at 9:00 a.m., or any and all
postponements or adjournments thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting. On or about April 16, 2001, this Proxy
Statement, the Notice of Annual Meeting and the accompanying proxy card are
being mailed to stockholders of record at the close of business on March 30,
2001.
Holders of record of Common Stock, par value $.01 per share, of the Company
(the "Common Stock") at the close of business on March 30, 2001, will be
entitled to notice of and to vote at the Annual Meeting and any and all
postponements or adjournments thereof. On that date, 8,236,936 shares of Common
Stock were issued and outstanding.
Each proxy granted may be revoked by the stockholder giving such proxy at
any time before it is exercised by filing with the Secretary of the Company, at
the address set forth above, a revoking instrument or a duly executed proxy
bearing a later date. The powers of any proxy holder will be suspended if the
person who executed the proxy held by such proxy holder attends the Annual
Meeting in person and so requests. Attendance at the Annual Meeting will not in
itself constitute revocation of the proxy.
If the accompanying proxy card is properly signed and returned to the
Company and not revoked, it will be voted in accordance with the instructions
contained therein. Unless contrary instructions are given, the persons
designated as proxy holders in the accompanying proxy card will vote (i) to
elect the seven (7) nominees for the Company's Board of Directors (the "Board of
Directors") to serve until the next Annual Meeting and until their successors
have been duly elected and qualified, (ii) to ratify the appointment of Ernst &
Young LLP as the Company's independent auditors for the year ending December 31,
2001 and (iii) to transact such other business as may properly come before the
Annual Meeting or any and all postponements or adjournments thereof as such
proxy holders shall determine in their judgment.
The presence, in person or by proxy, of a majority of the shares of Common
Stock of the Company issued and outstanding and entitled to vote at the Annual
Meeting constitutes a quorum for the transaction of business thereat. Each share
of Common Stock entitles a stockholder to one vote on all proposals except with
respect to the election of directors. The affirmative vote of a majority of the
shares of Common Stock represented at the Annual Meeting in person or by proxy
and entitled to vote thereat is required to ratify, approve or transact all
business at the Annual Meeting, other than the election of directors. In
electing directors, each share of Common Stock entitles a stockholder to a
number of votes equal to the number of directors to be elected. The seven (7)
nominees receiving the highest number of votes cast for the election of
directors at the Annual Meeting will be elected as directors.
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Assuming the presence of a quorum at the Annual Meeting, the following
items will be voted upon:
1. To elect seven (7) nominees to be directors of the Company;
2. To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the year ending December 31, 2001; and
3. To transact such other business as may properly come before the
Annual Meeting or any postponements or adjournments thereof.
With regard to the election of directors, votes may be cast in favor or
withheld, and votes withheld will have no effect on the outcome of the election.
With respect to any proposal, other than the election of directors, stockholders
may vote for, against or abstain. Abstentions will be included in the
determination of shares present for quorum purposes. Because abstentions
represent shares eligible to vote, the effect of an abstention will be the same
as a vote against a proposal. If shares are held in "street name" through a
broker or other nominee, the broker or nominee may not be permitted to execute
voting discretion with respect to certain matters to be acted upon. Shares
represented by such broker "non-votes" will only be counted for purposes of
determining the presence or absence of a quorum, and will not affect the outcome
of those matters.
The Board of Directors knows of no other business to come before the
meeting, but if other matters come before the meeting, the persons named in the
proxy will vote thereon in accordance with their best judgment.
The cost of soliciting proxies in the enclosed form will be borne by the
Company. The Company will, upon request, reimburse brokerage firms and others
for their reasonable expenses in forwarding solicitation material to the
beneficial owners of Common Stock.
The principal executive offices of the Company are located at 7005 Pelham
Road, Greenville, South Carolina 29615 (telephone 864-987-5200).
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PROPOSAL 1
ELECTION OF DIRECTORS
Directors will be elected according to the principle of cumulative voting.
Each stockholder may divide and distribute such stockholder's votes among one or
more nominees for the directorships to be filled. The seven nominees receiving
the highest number of votes cast will stand elected. An absolute majority of
votes cast is not a prerequisite to the election of any nominee.
The Board of Directors has selected the seven current directors listed
below as the nominees entitled to be elected by the holders of Common Stock at
the Annual Meeting. Proxies will be voted, unless authority is withheld, FOR
electing the nominees listed below as directors to serve until the next annual
meeting of stockholders and until their respective successors are elected and
qualified. The Board of Directors has no reason to believe that any of the
listed nominees will not serve if elected, but if any of them should become
unavailable to serve as a director or be withdrawn from nomination, and if the
Board of Directors designates a substitute nominee, the persons named as proxy
holders will vote for the substitute nominee.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE "FOR" EACH OF THE NOMINEES LISTED BELOW.
NOMINEES FOR ELECTION
The following table sets forth certain information with respect to the
nominees:
NAME AGE PRINCIPAL OCCUPATION AND OTHER INFORMATION
- ---- --- ------------------------------------------
Edward Kittredge.......... 62 Mr. Kittredge led a group of investors in the purchase of
the Company from Gerber Products Company ("GPC") in January
1996 and has served as Chairman, Chief Executive Officer
and President of the Company and a director since that
time. From 1990 to 1996 Mr. Kittredge was a consultant with
EKI Investments, Inc. Mr. Kittredge served as Chairman and
Chief Executive Officer of Denton Mills, manufacturer of
Dr. Denton children's pajamas, from 1984 to 1990. From 1980
to 1984, he was President of Royal Manufacturing Company, a
privately owned men's underwear and active sports-wear
company. Prior to that, he held a variety of senior sales
and marketing management positions at Union Underwear
Company (Fruit of the Loom), including national director of
all Branded and Private Label Sales and as head of its BVD
Division.
Richard L. Solar.......... 61 Mr. Solar has been Senior Vice President, Chief Financial
Officer and Assistant Secretary of the Company and a
director since January 1996. Prior to joining the Company,
Mr. Solar held various positions at Bankers Trust Company,
including managing director positions. From 1971 to 1975,
he served as Treasurer of Val D'Or Industries Inc., a
publicly held apparel company, and Diamondhead Corporation,
a publicly held real estate development company.
Richard M. Cashin, Jr..... 48 Mr. Cashin has been a director since January 1996.
Currently, Mr. Cashin is a partner in Cashin Capital
Partners, a private equity investment firm. From 1994 to
April 2000, he served as President of Citicorp Venture
Capital, Ltd., an affiliate of the Company ("CVC"). Prior
to that time, Mr. Cashin served as a managing director of
CVC. He is also a director of Delco Remy International,
Inc., Life Style Furnishings International Ltd., Fairchild
Semiconductor Corporation, FFC Holdings, Inc., Euramax
International, Plc., Titan Wheel International, Inc.,
Hoover Group Inc., JAC Holding Corporation, MSX
International and Flander AG.
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NAME AGE PRINCIPAL OCCUPATION AND OTHER INFORMATION
- ---- --- ------------------------------------------
Lawrence R. Glenn......... 62 Mr. Glenn has been a director since January 1996. He
retired as a senior corporate officer at Citicorp in 1995
after over 30 years of service. Currently Mr. Glenn is the
Chairman of J.W. Goddard and Company, a private investment
company. Mr. Glenn is also a director of Holborn
Corporation.
James P. Manning.......... 74 Mr. Manning has been a director since 1998. He was formerly
the Chairman, President and Chief Executive Officer of
Auburn Hosiery Mills, Inc., a subsidiary of the Company,
where he had been employed from 1965 to 1997.
Joseph Medalie............ 78 Mr. Medalie has been a director since February 1997. He
retired as Vice Chairman of Fruit of the Loom in December
1993, and was a director of Transfinancial Bank from 1994
until 1998. Mr. Medalie also served as a director of the
Commonwealth Health Corporation.
John D. Weber............. 37 Mr. Weber has been a director since January 1996. He has
been a Vice President of CVC since 1994, and worked at
Putnam Investments from 1992 through 1994. Mr. Weber is a
director of Advanced Cast Products, Inc., Anvil Knitwear,
Inc., Electrocal Designs, Inc., FFC Holding, Inc., Graphic
Design Technologies, Neenah Foundry Company, Plainwell
Paper Company, Sleepmaster, LLC, Smith Alarm, Lifestyle
Furnishings, Rhodes Inc. and Homelife.
BOARD COMMITTEES AND MEETINGS
The Board of Directors has an Audit Committee, a Compensation Committee and
a Nominating Committee.
Audit Committee. The Audit Committee is composed of Mr. Glenn (Chairman)
and Messrs. Manning and Medalie, each of whom is an independent director. The
duties of the Audit Committee include meeting with the independent auditors,
management and certain personnel of the Company to discuss, among other things,
the planned scope of their audits and the adequacy of internal controls and
financial reporting, reviewing and discussing the results of the annual audit of
the consolidated financial statements and periodic internal audit examinations,
reviewing the services and fees of the Company's independent auditors,
authorizing special investigations and studies, and performing any other duties
or functions deemed appropriate by the Board of Directors. The Audit Committee
met two times during 2000. See "Report of the Audit Committee of the Board of
Directors."
Compensation Committee. The Compensation Committee is composed of Mr.
Manning (Chairman) and Messrs. Glenn and Medalie. The Compensation Committee has
overall responsibility for compensation actions affecting the Company's
executive and senior officers. The Compensation Committee's responsibilities
include approving base salaries, setting incentive targets and administering and
granting awards to executive and senior officers under all executive
compensation plans. The Compensation Committee met two times during 2000. See
"Report of the Compensation Committee of the Board of Directors."
Nominating Committee. The Nominating Committee is composed of Messrs.
Glenn, Kittredge and Weber. The Nominating Committee recommends to the Board of
Directors the individuals to be elected as directors to fill any vacancies or
additional directorships which may arise from time to time on the Board of
Directors. The Nominating Committee considers nominations made in accordance
with the procedures provided in the Delaware General Corporate Law and in the
Company's Certificate of Incorporation and Bylaws, a copy of which may be
obtained from the Secretary of the Company. The Nominating Committee did not
meet during 2000.
During 2000, the Board of Directors met four times. In 2000, each incumbent
director served on the Board of Directors and attended at least 75% of the total
number of Board of Directors meetings and the total
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number of meetings held by all committees of the Board of Directors on which
each served during such period, except that Mr. Cashin attended only one board
meeting.
DIRECTOR COMPENSATION
Messrs. Glenn, Manning and Medalie are the only members of the Board of
Directors who currently receive compensation for their services as directors.
During 2000, Messrs. Glenn, Manning and Medalie each received $20,000 for
attendance at meetings of the Board of Directors and reimbursement for their
reasonable out-of-pocket expenses incurred in connection with board meetings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In 2000, Mr. Manning (Chairman) and Messrs. Glenn and Medalie served as
members of the Compensation Committee of the Board of Directors. In addition,
Messrs. Manning, Glenn and Medalie owned shares of the Company in 2000. Other
than compensation received by Messrs. Manning, Glenn and Medalie for serving as
directors and attending board meetings, they received no additional compensation
from the Company in 2000. See "Principal Stockholders and Share Ownership by
Management."
EXECUTIVE OFFICERS
The name and business experience of each of the executive officers of the
Company as of April 16, 2001 is set forth below to the extent not provided
above.
David E. Uren
Vice President of Finance, Secretary and Treasurer
Age: 57
Mr. Uren has been Vice President of Finance of the Company and its
predecessor since 1987. He has been Secretary and Treasurer of the Company since
1990. Prior to joining the Company, he was Chief Financial Officer of Borg
Textile Corporation and also held various senior financial positions at Buster
Brown Apparel, Inc. between 1972 and 1987. Mr. Uren worked at Ernst & Young LLP
from 1967 to 1971, including as a certified public accountant from 1969 to 1971.
Bobby J. Prochaska
President and Chief Operating Officer, Apparel Division
Age: 60
Mr. Prochaska has been President and Chief Operating Officer of the
Company's Apparel Division since June 2000. From January 2000 to May 2000, he
had been the General Manager and Senior Vice President of Operations of the
Company's Apparel Division. Prior to joining the Company, he was President of
the management consulting firm of Santa Rosa Resources, Inc. from June 1996 to
December 1999 and also held various senior management positions with
Kayser -- Roth Corporation between 1989 and 1996. During his earlier
professional career, Mr. Prochaska served over 15 years with Milliken & Company
in various management positions.
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EXECUTIVE COMPENSATION
The following table summarizes the compensation of the Company's Chief
Executive Officer (who also serves as Chairman and President), and four other
executive officers as of December 31, 2000 for services rendered in all
capacities to the Company during 2000, 1999 and 1998, as applicable. The
foregoing five individuals are referred to herein as the "Named Executive
Officers."
LONG-TERM COMPENSATION
--------------------------------------------
ANNUAL COMPENSATION AWARDS
-------------------------------------- ----------------------------------
NAME AND YEAR SALARY BONUS OTHER VESTED SECURITIES
PRINCIPAL POSITION ---- ($) ($) ANNUAL RESTRICTED UNDERLYING PAYOUTS ALL
- ------------------ ------- ------ COMPENSATION STOCK OPTIONS/SAR(s) LTIP OTHER
($)(a) AWARDS -------------- PAYOUTS COMPENSATION
------------ ($)(b) ($)(c) ($)
----------------- ------- ------------
Edward Kittredge........... 2000 400,000 0 54,452 0 0 0 17,733(d)
Chairman, CEO and 1999 400,000 0 36,212 0 0 0 23,988
President 1998 373,000 0 18,436 0 0 286,000 26,589
Richard L. Solar........... 2000 225,000 0 3,021 0 0 0 8,078(d)
Senior Vice President 1999 225,000 0 2,519 0 0 0 7,745
and CFO 1998 225,000 0 1,577 0 0 182,000 7,250
David E. Uren.............. 2000 150,450 6,000 10,636 0 0 0 6,411(d)
Vice President of Finance, 1999 150,450 12,000 9,764 0 0 0 6,116
Secretary and Treasurer 1998 150,450 25,000 8,873 0 0 52,000 6,210
J. Milton Hickman,
Jr.(e).................... 2000 185,000 0 0 0 0 0 10,958(f)
Senior Vice President of 1999 27,394 0 0 0 15,000(g) 0 119
Sales and Marketing,
Apparel Division
Bobby J. Prochaska(h)...... 2000 253,092 53,800 0 0 25,000(i) 0 44,243(j)
President and Chief
Operating Officer, Apparel
Division
- ---------------
(a) For each Named Executive Officer, this column consists of interest earned by
the officer on compensation voluntarily deferred pursuant to the Executive
Deferral Plan. See "Executive Compensation -- Executive Deferral Plan."
Additionally, Mr. Uren's amounts include car allowances in 1998, 1999 and
2000.
(b) Represents the value of certain of the shares of Messrs. Kittredge, Solar
and Uren which vested in each of 1998, 1999 and 2000, net of the
consideration paid by such Named Executive Officers for the shares. In 1996,
they purchased these shares at book value. See "Certain Relationships and
Related Transactions -- Transactions with Management and Directors." As of
December 31, 2000, Messrs. Kittredge, Solar and Uren had 3,221, 2,818 and
2,013 unvested shares of Common Stock, respectively, which had a fair market
value of $14,696, $12,857 and $9,184, respectively as of December 31, 2000.
As of December 31, 1999, Messrs. Kittredge, Solar and Uren had 65,268,
57,109 and 40,792 unvested shares of Common Stock, respectively, which had a
fair market value equal to $326,340, $285,545 and $203,960, respectively, as
of December 31, 1999. As of December 31, 1998, Messrs. Kittredge, Solar and
Uren had 127,144, 111,251 and 79,465 unvested shares of Common Stock,
respectively, which had a fair market value of $1,104,571, $966,498 and
$690,357, respectively, as of December 31, 1998.
(c) Reflects Incentive Plan cash bonuses paid during 1998.
(d) Reflects life insurance premiums and 401(k) contributions paid on behalf of
the Named Executive Officer.
(e) Mr. Hickman ceased to be an employee of the Company on December 29, 2000.
(f) Reflects life insurance premiums and certain payments relating to moving
costs paid on behalf of the Named Executive Officer.
(g) Reflects options granted as part of Mr. Hickman's Incentive Plan
compensation which were subject to vesting over a five year period. These
options were cancelled when Mr. Hickman ceased to be an employee of the
Company.
(h) Mr. Prochaska commenced his employment with the Company in January, 2000.
(i) Reflects options granted as part of Mr. Prochaska's employment agreement,
which are subject to vesting over a five year period.
(j) Reflects life insurance premiums, 401(k) contributions and certain payments
relating to moving costs paid on behalf of the Named Executive Officer.
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OPTION GRANTS IN THE LAST FISCAL YEAR
The following table sets forth the grants of options on Common Stock to the
Named Executive Officers during 2000:
INDIVIDUAL GRANTS
- -------------------------------------------------------------------------------- POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
OPTIONS ANNUAL RATES OF STOCK
GRANTED TO PRICE APPRECIATION
EMPLOYEES EXERCISE OR FOR OPTION TERM
OPTIONS IN FISCAL BASE PRICE EXPIRATION ---------------------
NAME GRANTED YEAR PER SHARE DATE 5% 10%
- ---- ------- ---------- ----------- ---------- -------- ---------
Bobby J. Prochaska.......... 25,000 100.00% $4.4375 01/12/10 $69,768 $176,805
AGGREGATE OPTION EXERCISES IN 2000 AND DECEMBER 31, 2000 OPTION VALUES
The following table sets forth information with respect to the exercise of
options on Common Stock by the Named Executive Officers during 2000 and the
value of unexercised options on Common Stock held by the Named Executive
Officers as of December 31, 2000:
VALUE OF
SHARES OF COMMON UNEXERCISED IN-THE-
SHARES OF VALUE REALIZED ($) STOCK UNDERLYING MONEY OPTIONS AT
COMMON (MARKET PRICE AT OPTIONS AT 12/31/00 12/31/00 ($)
STOCK ACQUIRED EXERCISE LESS (#) EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) EXERCISE PRICE) UNEXERCISABLE UNEXERCISABLE
- ---- --------------- ------------------ ------------------- -------------------
Bobby J. Prochaska........... 0 0 0/25,000 $0/$3,125
EMPLOYMENT AGREEMENTS
In connection with the purchase of Gerber Childrenswear, Inc. from GPC in
January 1996, the Company entered into employment agreements with Messrs.
Kittredge, Solar and Uren (such agreements are collectively referred to herein
as the "Executive Agreements"). The Executive Agreements expired on January 22,
2001 and Messrs. Kittredge, Solar and Uren do not currently have employment
agreements with the Company. Messrs. Hickman and Prochaska agreed to the terms
of their employment when they joined the Company. Mr. Hickman left the Company
on December 29, 2000. Mr. Hickman received an annual base salary of $185,000.
Messrs. Kittredge, Solar, Uren and Prochaska currently receive an annual
base salary of $400,000, $225,000, $150,450 and $290,400, respectively. In each
case, these executive officers may receive annual incentive bonuses based upon
the achievement of pre-determined objectives tied to the performance of the
Company, including criteria related to growth and profitability. See "Executive
Compensation" and "Report of the Compensation Committee of the Board of
Directors."
The employment agreement with Mr. Prochaska provides that if he is
terminated without cause or his responsibility or reporting relationship
changes, he will receive either eighteen months severance compensation or the
balance of the term of the employment agreement, whichever is shorter. It also
provides that if Mr. Prochaska is terminated without cause in the event of a
change in control of ownership of the Company during such employment term, he
will receive eighteen months severance compensation.
Each of Messrs. Kittredge, Solar and Uren also hold shares of Common Stock
acquired pursuant to certain Executive Stock Purchase Agreements (these
agreements are collectively referred to as the "Stock Purchase Agreements"). See
"Certain Relationships and Related Transactions -- Transactions With Management
and Directors" and "Principal Stockholders and Share Ownership By Management."
LONG-TERM PERFORMANCE INCENTIVE PLAN
Participants in the Company's Long-Term Performance Incentive Plan may be
granted stock options, stock appreciation rights ("SARs"), restricted stock,
performance units, performance grants and other types of awards that the
Compensation Committee deems to be consistent with the purposes of the Incentive
Plan.
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See "Report of the Compensation Committee of the Board of Directors." An
aggregate of 750,000 shares of Common Stock have been reserved for issuance
under the Incentive Plan. No more than 25,000 shares may be issued to any single
participant in any calendar year. In 1998, the Company granted options to
purchase 34,000 shares of Common Stock under the Incentive Plan. In 1999, the
Company granted options to purchase 48,600 shares of Common Stock under the
Incentive Plan. In 2000, the Company granted options to purchase 25,000 shares
of Common Stock under the Incentive Plan.
The Compensation Committee may select participants, determine the type,
size and terms of each award, modify the terms of awards, determine when awards
will be granted and paid and make all other determinations which it deems
necessary or desirable in the interpretation and administration of the Incentive
Plan. The Incentive Plan is scheduled to terminate in June 2008, unless it is
extended for up to an additional five years by action of the Board of Directors.
Rights to contingent compensation granted under the Incentive Plan will vest in
equal amounts on each anniversary of the initial grant date over a five year
period.
EXECUTIVE DEFERRAL PLAN
The Executive Deferral Plan is an unfunded, nonqualified deferred
compensation plan that provides deferred compensation to selected members of
management and certain other highly-compensated employees. The Executive
Deferral Plan allows employees to voluntarily defer from 5% to 50% of their
salary and/or bonus compensation until termination, retirement or the occurrence
of certain specific future events. Compensation which is deferred under this
plan bears interest at a rate specified in the Executive Deferral Plan.
LONG-TERM BONUS PLAN
Pursuant to the Long-Term Bonus Plan, the Compensation Committee may accrue
amounts to be paid as bonuses during future years for past service. In 1998,
Messrs. Kittredge, Solar and Uren were awarded $520,000, in the aggregate, under
this plan for bonuses set aside in 1996, principally to reward their efforts
with respect to the Company's initial public offering. See "Executive
Compensation." During 1997 and 1998, the Company accrued $515,000 and $500,000,
respectively, for future payment to senior executives for past service, with
final allocation to be determined later by the Compensation Committee. Under the
terms of the Long-Term Bonus Plan, these amounts accrue interest until they are
paid. Interest only was accrued under this Plan in 1999 and 2000.
PENSION PLAN
The Retirement Plan for Gerber Childrenswear, Inc. is a defined benefit
pension plan qualified pursuant to Section 401(a) of the Internal Revenue Code.
The Retirement Plan covers all salaried employees of the Company in its apparel
division and some other officers in its other divisions and its full-time hourly
employees in its apparel division.
The following table indicates monthly estimated amounts to be paid to
eligible salaried employees for the Retirement Plan, based upon years of service
and final average pay (as determined under the Retirement Plan):
YEARS OF SERVICE
-------------------------------------------------------------
FINAL AVERAGE PAY 15 20 25 30 35
- ----------------- --------- --------- --------- --------- ---------
$125,000.......................... $2,096.70 $2,795.60 $3,494.50 $4,193.40 $4,892.30
150,000.......................... 2,565.45 3,420.60 4,275.75 5,130.90 5,986.05
175,000.......................... 3,034.20 4,045.60 5,057.00 6,068.40 7,079.80
200,000.......................... 3,502.95 4,670.60 5,838.25 7,005.90 8,173.55
225,000.......................... 3,502.95 4,670.60 5,838.25 7,005.90 8,173.55
250,000.......................... 3,502.95 4,670.60 5,838.25 7,005.90 8,173.55
275,000 or more.................. 3,502.95 4,670.60 5,838.25 7,005.90 8,173.55
8
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Generally, an eligible salaried employee in the Retirement Plan is eligible
to receive benefits upon "Normal Retirement Age", which is the later of the
Social Security retirement age or the fifth anniversary of the date that
employee commenced participation in the Retirement Plan. An eligible salaried
employee may elect an early retirement benefit at "Early Retirement Age", which
is the later of ten years prior to the eligible salaried employee's Social
Security retirement age and the fifth anniversary of the date the eligible
salaried employee commenced participation in the Retirement Plan. Early
retirement benefits are reduced for those eligible salaried employees who retire
more than three years prior to their Normal Retirement Age according to a
formula established in the Retirement Plan. If a vested eligible salaried
employee terminates his or her employment, the employee is entitled to a
deferred, unreduced benefit if requested within three years of such employee's
Normal Retirement Age, or a reduced benefit if requested earlier.
The amount of an eligible salaried employee's benefit under the Retirement
Plan is based upon the employee's final average pay and years of participation
in the Retirement Plan. Payments to eligible salaried employees under the
Retirement Plan are made in equal monthly installments for the remainder of the
employee's life, although married eligible salaried employees may elect to
receive a 50% joint and survivor benefit providing a reduced monthly benefit to
the employee during his or her lifetime, with 50% of that benefit to the
employee's spouse for his or her lifetime following the employee's death. Other
optional forms of payment include a 100% survivorship annuity, a 50%
survivorship annuity and a life and period certain annuity option. An eligible
salaried employee's benefits may be offset by the amount of any workers'
compensation or similar benefits payable because of an employment related injury
or illness.
The Retirement Plan is funded entirely by voluntary Company contributions
that are held in trust for the benefit of the participants. Although the Company
intends to continue the Retirement Plan indefinitely, it can terminate the plan
at any time, upon which all eligible salaried employees will become 100% vested
in any benefit accrued to the extent funds are available in trust.
The years of accredited service for each of the named executive officers
under the Retirement Plan as of December 31, 2000 are: Mr. Kittredge, 5 years;
Mr. Solar, 5 years; Mr. Uren, 14 years; and Mr. Prochaska, one year.
REPORT OF THE COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS
OVERVIEW
During 2000, the Compensation Committee consisted of Mr. Manning (Chairman)
and Messrs. Glenn and Medalie, each of whom is an independent director of the
Company. This Compensation Committee is guided by the following objectives: to
provide to the Company's executives competitive levels of compensation, to
integrate management pay with the achievement of the Company's annual and
long-term performance goals, to reward above-average corporate performance, to
recognize individual initiative and achievement and to assist the Company in
attracting and maintaining qualified management. The Compensation Committee
views stock-based compensation as an important element in any compensation
package, as it has the effect of aligning the interests of the executives with
those of the stockholders and providing a balance between short-term and
long-term perspectives.
Management compensation is set at levels that the Compensation Committee
believes are consistent with those of other leading branded consumer apparel
companies. In determining competitive levels of compensation, the Committee
reviews salary and bonus levels, as well as long-term compensation elements, of
other publicly-traded apparel companies which it considers comparable to the
Company. The Compensation Committee retained the services of an independent
compensation consultant to aid it in its work.
ANNUAL COMPENSATION
Executive Salaries. The Committee reviews and approves base salaries
annually for the Company's executive officers, considering the responsibilities
of their positions, their individual performances and their
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competitive positions relative to comparable companies. The 2000 salaries of
Messrs. Kittredge, Solar and Uren were established by the Executive Agreements
and modified by the Compensation Committee. Mr. Prochaska's compensation was
established when he joined the Company in 2000 based on the compensation levels
set at other companies for similar positions.
Annual Cash Incentive Bonuses. No bonuses were paid to Messrs. Kittredge
and Solar in 2000. Mr. Uren received a discretionary bonus of $6,000 and Mr.
Prochaska received a bonus of $53,800 under the terms of his employment
agreement.
The Compensation Committee, has not finalized a bonus plan for 2001. The
Compensation Committee expects to define performance goals for each executive
related to areas of responsibility, with amounts available for payout predicated
upon Company and individual performance. Target award levels are expected to be
established for each executive and incentive awards for 2001 will be granted
based upon Company performance and the achievements of the executive against
agreed-upon criteria.
Long-Term Bonus Plan. Interest only was accrued under this Plan in 1999
and 2000.
LONG-TERM COMPENSATION
The Compensation Committee administers the Incentive Plan. These
compensation awards directly relate the amounts earned by the executives to the
amount of appreciation realized by the Company's stockholders over comparable
periods. Stock options also provide executives with the opportunity to acquire
and build a meaningful ownership interest in the Company. While the Company
encourages stock ownership by executives, it has not established any target
levels for executive stock holdings. The Compensation Committee seeks to make
awards at a level competitive with other similar companies. See "Executive
Compensation -- Long-Term Performance Incentive Plan."
The Compensation Committee considers stock option awards on an annual basis
or on such other basis as it deems appropriate. In determining the amount of
options awarded, the Compensation Committee establishes a level of award based
on the position held by the individual and his or her level of responsibility,
both of which reflect the executive's ability to influence the Company's
long-term performance. The number of options previously awarded to and held by
executives will also be reviewed but will not be an important factor in
determining the size of a current award. The number of options actually awarded
in any year is based on an evaluation of the individual's performance. In 2000,
the Company granted options to purchase 25,000 shares of Common Stock under the
Incentive Plan to Mr. Prochaska, which were negotiated with him at the time he
joined the Company. There were no other options issued in 2000.
OTHER BENEFIT PROGRAMS
The executive officers participate in various health, life and disability
insurance programs, a pension plan and a 401(k) plan that are generally made
available to all salaried employees. Executive officers also receive certain
perquisites that are customary for their positions. See "Executive
Compensation."
COMPANY POLICY ON QUALIFYING COMPENSATION
Section 162(m) of the Internal Revenue Code provides that publicly-held
companies may not deduct in any taxable year compensation in excess of
$1,000,000 paid to executive officers which is not "performance based" as
defined in Section 162(m). The Compensation Committee intends generally to
comply with the requirements of Section 162(m) so that compensation is
deductible, unless the Committee determines that it is not appropriate to do so.
Submitted by the Compensation
Committee
of the Board of Directors
James P. Manning, Chairman
Lawrence R. Glenn
Joseph Medalie
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REPORT OF THE AUDIT COMMITTEE OF
THE BOARD OF DIRECTORS
During 2000, the Audit Committee consisted of Mr. Glenn (Chairman) and
Messrs. Manning and Medalie, each of whom is an independent director. The Board
of Directors has adopted a written charter for the Audit Committee which is
attached to this Proxy Statement as Appendix A. The duties of the Audit
Committee include meeting with the independent auditors, management and certain
personnel of the Company to discuss, among other things, the planned scope of
their audits and the adequacy of internal controls and financial reporting,
reviewing and discussing the results of the annual audit of the consolidated
financial statements and periodic internal audit examinations, reviewing the
services and fees of the Company's independent auditors, authorizing special
investigations and studies, and performing any other duties or functions deemed
appropriate by the Board of Directors.
Consistent with its responsibilities, the Audit Committee has reviewed and
discussed with management the audited financial statements for 2000. The Audit
Committee has discussed with Ernst & Young LLP, the Company's independent
auditors, the matters required to be discussed by the AICPA Statement of
Auditing Standards No. 61 (Communication with Audit Committees), as amended. In
addition, the Audit Committee has discussed with Ernst & Young LLP its
independence from the Company and will receive by the Annual Meeting the written
disclosures and the letter from Ernst & Young LLP required by Independence
Standards Board Standard No. 1. Based on the foregoing review and discussions,
the Audit Committee has recommended to the Board of Directors that the Company's
audited financial statements be included in the Company's Annual Report on Form
10-K for 2000.
Submitted by the Audit Committee
of the Board of Directors
Lawrence R. Glenn, Chairman
James P. Manning
Joseph Medalie
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PERFORMANCE COMPARISON
STOCK PRICE PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total returns for the
Common Stock of the Company against the cumulative total returns of the Russell
2000 Index and the Dow Jones Clothing & Fabrics Index during the period
commencing on June 11, 1998, the date on which the Common Stock commenced
trading on the New York Stock Exchange, and ending on December 31, 2000. The
comparison assumes $100 was invested on June 11, 1998 in the Common Stock of the
Company, the Russell 2000 Index and the Dow Jones Clothing & Fabrics Index, and
assumes the reinvestment of all dividends, if any.
[LINE GRAPH]
-----------------------------------------------------
Cumulative Total Return
-----------------------------------------------------
6/11/1998 12/98 12/99 12/00
- ----------------------------------------------------------------------------------------------------------
GERBER CHILDRENSWEAR, INC. ........................ 100.00 59.91 34.48 31.47
RUSSELL 2000....................................... 100.00 94.21 114.24 99.86
DOW JONES CLOTHING/FABRICS......................... 100.00 70.83 58.00 64.79
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT AND DIRECTORS
Prior to the Company's initial public offering, Edward Kittredge, Richard
L. Solar and David E. Uren acquired shares of the Company as part of their
compensation and pursuant to purchases by them at book value on January 22,
1996. Some of these shares were subject to a vesting period (over five years),
and the rest were fully vested at the time of purchase. Additionally, as part of
their 1997 compensation, Messrs. Kittredge and Solar acquired, at below fair
market value, shares of the Company which were fully vested upon purchase.
On January 22, 2001, the remaining unvested shares held by Messrs.
Kittredge, Mr. Solar and Mr. Uren vested. As of April 1, 2001, Messrs.
Kittredge, Mr. Solar and Mr. Uren beneficially held 1,487,556 shares, 482,051
shares and 229,587 shares of Common Stock, respectively. For further information
concerning shares
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beneficially owned by these individuals, see "Executive Compensation" and
"Principal Stockholders and Share Ownership By Management."
TRANSACTIONS WITH CVC AND ITS AFFILIATES
Citicorp Mezzanine Partners ("CMP"), whose general partner is an affiliate
of CVC, holds a warrant exercisable for 2,958,503 shares of Class B Common Stock
at any time on or before January 22, 2006. The Company has been notified by CMP
of its intent to exercise its warrant in accordance with the terms of the
warrant agreement. For further information concerning the current beneficial
ownership of shares by CVC and its affiliates, see "Principal Stockholders and
Share Ownership By Management."
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PRINCIPAL STOCKHOLDERS AND SHARE OWNERSHIP BY MANAGEMENT
The table below sets forth certain information regarding beneficial
ownership of Common Stock and Class B Common Stock as of April 1, 2001 by (i)
each person or entity who owns of record or beneficially 5% or more of any class
of the Company's voting securities, (ii) each director, nominee and named
executive officer and (iii) all executive officers and directors as a group. The
Class B Common Stock is non-voting, but one share of Class B Common Stock is
convertible, at the option of the holder at any time, into one share of Common
Stock.
NAME AND ADDRESS OF NUMBER OF PERCENTAGE
BENEFICIAL OWNER SHARES OF OF
------------------- COMMON COMMON
STOCK(a) STOCK(b)
------------------- ---------------
5% HOLDERS
Citicorp Venture Capital, Ltd.(c)......................... 12,293,394 61.81
CCT III, L.P.(c).......................................... 12,293,394 61.81
Citicorp Mezzanine Partners, L.P.(c)...................... 12,293,394 61.81
Dimensional Fund Advisors Inc.(d)......................... 424,000 5.15
DIRECTORS, EXECUTIVE OFFICERS AND NOMINEES(e)
Edward Kittredge(f)....................................... 1,487,556 18.06
Richard L. Solar(g)....................................... 482,051 5.85
Richard M. Cashin, Jr..................................... 303,257 3.68
Lawrence R. Glenn......................................... 38,673 *
Bobby J. Prochaska........................................ 17,500 *
James P. Manning.......................................... 20,000 *
Joseph Medalie(h)......................................... 38,673 *
David E. Uren............................................. 229,587 2.79
John D. Weber(i).......................................... 12,293,394 61.81
Executive officers and directors as a group (10
persons)................................................ 14,910,691 74.97
- ---------------
* Less than one percent.
(a) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission (the "Commission"). As of April 1, 2001,
(a) 8,236,936 shares of Common Stock and 8,692,315 shares of Class B Common
Stock are issued and outstanding; and (b) a warrant to purchase 2,958,503
shares of Class B Common Stock is outstanding. Except as otherwise set forth
below, each named owner has the sole voting power and investment power of
the shares indicated.
(b) For purposes of computing the percentage of outstanding shares held by each
person or group of persons named above, shares of Common Stock that such
person or group of persons has the right to acquire within 60 days is deemed
to be outstanding with respect to that person or group of persons, but is
not deemed to be outstanding for purposes of computing the percentage
ownership of any other person or group of persons.
(c) The address of each of these entities is 399 Park Avenue, New York, New York
10022. Each entity's beneficial ownership consists of 385,966 shares of
Common Stock and 7,511,883 shares of Class B Common Stock held by CVC;
213,289 shares of Common Stock and 1,180,432 shares of Class B Common Stock
held by CCT III, L.P.; a warrant to purchase 2,958,503 shares of Class B
Common Stock held by CMP; and 43,321 shares of Common Stock held by John D.
Weber. See "Certain Relationships and Related Transactions -- Transactions
with CVC and its Affiliates."
(d) The address of Dimensional Fund Advisors Inc. is 1299 Ocean Avenue, 11th
Floor, Santa Monica, CA 90401
(e) The address of each of the directors and executive officers is c/o Gerber
Childrenswear, Inc., 7005 Pelham Road, Greenville, South Carolina 29615.
(f) 232,039 of Mr. Kittredge's shares of Common Stock are held in a family
trust. Mr. Kittredge disclaims beneficial ownership of these shares.
(g) 46,407 of Mr. Solar's shares of Common Stock are held by his immediate
family members. Mr. Solar disclaims beneficial ownership of these shares.
(h) All of Mr. Medalie's shares are held in a family trust.
(i) Consists of the ownership described in footnote (c) above.
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PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
In ratifying the appointment of Ernst & Young LLP, the affirmative vote of
a majority of the votes cast in person or by proxy at the Annual Meeting by the
holders of Common Stock is required. With regard to the ratification of the
appointment of Ernst & Young LLP, votes may be cast for or against or
abstentions may be specified.
The Board of Directors of the Company has appointed Ernst & Young LLP as
the Company's independent auditors for 2001, subject to ratification by the
stockholders of the Company. Ernst & Young LLP has served as the Company's
independent auditors since January 1996.
Representatives of Ernst & Young LLP will be present at the Annual Meeting
to respond to appropriate questions and to make such statements as they may
desire.
Audit Fees. The aggregate fees billed by Ernst & Young for professional
services rendered for the audit of the Company's annual financial statements for
2000 and for the reviews of the financial statements included in the Company's
Quarterly Reports on Form 10-Q for that fiscal year were approximately $300,000.
Financial Information Systems Design and Implementation Fees. There were no
fees billed by Ernst & Young LLP for 2000 for financial information systems
design and implementation.
All Other Fees. The aggregate fees billed by Ernst & Young LLP for all
other services rendered to the Company, other than services described above
under "Audit Fees" and "Financial Information Systems Design and Implementation
Fees", for the fiscal year ended December 31, 2000 were approximately $400,000.
These fees include services related to the Internal Revenue Service examination
of the Company's income tax returns for 1996 and 1997.
The Audit Committee of the Board of Directors has considered whether the
provision of non-audit services is compatible with maintaining Ernst & Young
LLP's independence as auditors of the Company's financial statements.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE YEAR ENDING DECEMBER 31, 2001.
OTHER BUSINESS
As of the date of this Proxy Statement, the Company knows of no business
that will be presented for consideration at the Annual Meeting other than that
which has been referred to above. As to other business, if any, that may come
before the Annual Meeting, it is intended that proxies in the enclosed form will
be voted in accordance with the judgment of the proxy holder.
STOCKHOLDER PROPOSALS
Any proposal of a stockholder intended to be presented at the Company's
2002 Annual Meeting of Stockholders and that the stockholders desire to have
included in the Company's proxy materials relating to such meeting must be
received by the Secretary of the Company by December 18, 2001 and must be in
compliance with applicable laws and regulations in order to be considered for
inclusion in the notice of meeting and proxy statement relating to the 2002
Annual Meeting.
The Commission rules also establish a different deadline for submission of
stockholder proposals that are not intended to be included in the Company's
proxy statement with respect to discretionary voting (the "Discretionary Vote
Deadline"). The Discretionary Vote Deadline for the Company's year 2002 Annual
Meeting is March 1, 2002 (45 calendar days prior to the anniversary of the
mailing date of this proxy statement). If a stockholder gives notice of such a
proposal after the Discretionary Vote Deadline, the
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Company's proxy holders will be allowed to use their discretionary voting
authority to vote against the stockholder proposal when and if the proposal is
raised at the Company's 2002 Annual Meeting.
The Company has not been notified by any stockholder of his or her intent
to present a stockholder proposal from the floor at this year's Annual Meeting.
The enclosed proxy card grants the proxy holders discretionary authority to vote
on any matter properly brought before the Annual Meeting.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of the Forms 3, 4, and 5 and any amendments
thereto furnished to the Company pursuant to Rule 16a-3(c) promulgated under the
Exchange Act, the Company is not aware of any failure of any officer, director
or beneficial owner of more than 10% of the Common Stock to timely file with the
Commission any Form 3, 4 or 5 in respect of the Company during 2000, except for
a Form 3 and a Form 4 for Bobby J. Prochaska and a Form 4 for James P. Manning
which were filed late.
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FORM 10-K
Financial statements of the Company, the Company's certified public
accountants' report thereon and management's discussion and analysis of the
Company's financial condition and results of operations are contained in the
Company's Annual Report on Form 10-K for 2000. A copy of the Company's Annual
Report on Form 10-K was filed electronically with the Commission and is
available at the Commission's website (http://www.sec.gov). A copy of the
Company's Annual Report on Form 10-K for 2000 (including the financial
statements and the financial statement schedules), as filed with the Commission,
will be provided without charge (except for exhibits) to any shareholder upon
request addressed to:
Richard L. Solar
Sr. Vice President and CFO
Gerber Childrenswear, Inc.
1333 Broadway
New York, NY 10018
By Order of the Board of Directors,
/s/ David E. Uren
David E. Uren
Secretary
Dated: April 16, 2001
Greenville, South Carolina
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APPENDIX A
AUDIT COMMITTEE CHARTER
ORGANIZATION
This charter governs the operations of the audit committee. The committee
shall review and reassess the charter at least annually and obtain the approval
of the board of directors. The committee shall be appointed by the board of
directors and shall be comprised of 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, or shall become financially literate
within a reasonable period of time after the appointment to the committee, 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 of directors 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 when
implemented, 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 PROCESS
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
"tone" for 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 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. Annually, the committee shall review and recommend to
the board the selection of the Company's independent auditors, subject to
shareholders' approval.
- The committee shall discuss with the independent auditors the overall
scope and plans for their audits, including the adequacy of staffing and
compensation for an internal audit function when implemented. 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 risks, 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
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of their examinations. The audit committee shall also be provided with
internal control memorandums as prepared and other company prepared
material as requested.
- The committee shall review the interim financial statements with
management and the independent auditors prior to the filing of the
Company's Quarterly Report 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 on
Form 10-K (or the annual report to shareholder 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 standards.
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[FRONT SIDE OF PROXY CARD]
GERBER CHILDRENSWEAR, INC.
BOARD OF DIRECTORS PROXY FOR ANNUAL MEETING
MAY 15, 2001
The undersigned hereby appoints Richard L. Solar and David E. Uren,
or either of them, attorneys and Proxies with full power of substitution in each
of them, in the name and stead of the undersigned to vote as Proxy all the stock
of the undersigned in Gerber Childrenswear, Inc. a Delaware corporation, at the
Annual Meeting of Stockholders scheduled to be held on May 15, 2001 and any
adjournment thereof.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
[REVERSE SIDE OF PROXY CARD]
[X] Please mark your votes as in this example.
1. Election of seven (7) FOR all nominees listed WITHHELD AUTHORITY
directors to serve until at right to vote for nominees
the 2002 Annual Meeting (except as marked to the listed at right
of Stockholders. contrary below) [ ]
[ ]
Nominees: Edward Kittredge
Richard L. Solar
Richard M. Cashin
Lawrence R. Glenn
James P. Manning
Joseph Medalie
John D. Weber
FOR, except vote withheld from the following nominee(s):
2. To ratify the appointment of Ernst & Young FOR AGAINST ABSTAIN
LLP as independent accountants for the year
2001. [ ] [ ] [ ]
3. Upon any and all other business which may properly come before the Annual
Meeting.
This Proxy, which is solicited on behalf of the Board of Directors, will be
voted FOR the matters described in paragraphs (1) and (2) unless the shareholder
specifies otherwise (in which case it will be voted as specified).
- ---------------------- -------------- ------------------------ ----------
Signature Dated Signature Dated
Note: Please sign exactly as name or names appear hereon. When signing as
attorney, executor, administrator, trustee or guardian, please give your
full title. If a corporation, please sign in full corporate name by
president or other authorized officer. If a partnership, please sign in
partnership name by authorized partner.