SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [ X ]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential for Use of the Commission Only (as permitted by Rule 14a-6(e)
(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12
BURKE MILLS, INC.
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
N/A
2) Aggregate number of securities to which transaction applies:
N/A
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
N/A
4) Proposed maximum aggregate value of transaction:
N/A
5) Total fee paid:
N/A
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing:
1) Amount Previously Paid:
N/A
2) Form, Schedule or Registration Statement No.:
N/A
3) Filing Party:
N/A
4) Date Filed:
N/A
- -------------------------------------------------------------------------------
BURKE MILLS, INC.
- -------------------------------------------------------------------------------
Notice of 2004 Annual Meeting
and
Proxy Statement
- -------------------------------------------------------------------------------
BURKE MILLS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
2004
===============================================================================
The 2004 annual meeting of the shareholders of Burke Mills, Inc.
("the Company") will be held at the executive offices of the Company, 191
Sterling Street N.W., Valdese, North Carolina, at 2:00 P.M. on Tuesday, May 18,
2004, for the following purposes:
(1) To elect seven directors to serve until the next annual meeting of
the shareholders and until their successors shall be elected and shall
qualify.
(2) To transact such other business as may properly come before the
meeting or any adjournments thereof.
The close of business on March 31, 2004 has been fixed as the record
date for the determination of the shareholders entitled to notice of and to vote
at said meeting.
Management hopes all shareholders can attend this meeting. Whether or
not you expect to be present, you are requested to date and sign the enclosed
proxy and return it promptly in the enclosed envelope. The proxy will be
returned to any shareholder who attends the meeting and requests such return.
By order of the Board of Directors
Pender R. McElroy
Secretary of Burke Mills, Inc.
April 12, 2004
======================
PROXY STATEMENT
======================
Annual Meeting of the
Shareholders of Burke Mills, Inc.
to be held May 18, 2004
------------------------
SOLICITATION AND REVOCATION OF APPOINTMENT OF PROXY
- ---------------------------------------------------
The enclosed appointment of proxy is solicited by the Board of
Directors of Burke Mills, Inc. ("the Company"). It is revocable upon receipt of
written notice of revocation by the Secretary of the Company at any time before
it is exercised. If the enclosed appointment of proxy is signed and returned,
the shares covered by the appointment will be voted at the meeting (and all
adjourned sessions).
The cost of soliciting appointments of proxy will be borne by the
Company, and such costs are not expected to exceed an amount normally expended
for a solicitation for an election of directors in the absence of a contest and
costs represented by salaries and wages of regular employees and officers, who
will carry out any solicitations to be made, which amount is not expected to
exceed $5,000.00.
The mailing address of the principal executive offices of the Company
is:
Burke Mills, Inc.
Post Office Box 190
Valdese, North Carolina 28690
The approximate date on which the proxy statements and proxy cards are
first sent or given to shareholders is April 16, 2004.
VOTING RIGHTS
- -------------
The holders of stock of the Company on March 31, 2004 are the only
shareholders entitled to notice of and to vote at the annual meeting of
shareholders on May 18, 2004 and at any adjournments thereof. On March 31, 2004
(the record date) there were 2,741,168 shares of stock outstanding and entitled
to vote. Each share of stock is entitled to one vote.
VOTING PROCEDURES
- -----------------
If a majority of the shares of the Company issued and outstanding are
present at the meeting in person or by proxy, a quorum will exist.
Each shareholder entitled to vote shall have the right to cast one vote
per share outstanding in the name of such shareholder (a) on the motion before
the body or (b) as to election of directors, for each nominee for each
directorship to be filled. For a motion to pass, the votes cast in favor of the
motion must exceed the votes cast against the motion. Directors are elected by a
plurality of the votes cast; the nominees with the largest number of votes will
be elected up to the maximum number of directors to be elected (which is seven).
Votes by proxy will be tabulated by Wachovia Bank, National
Association, the stock transfer agent for the Company. The votes by proxy will
be cast at the meeting by the proxy holders. Any shareholder may vote in person
at the meeting if no appointment of proxy has been made or if the appointment is
revoked. Votes will be tabulated by the secretary of the Company.
Under North Carolina law and under the articles of incorporation and
bylaws of the Company, abstentions and broker non-votes have no effect since a
majority of the votes cast will carry a motion and directors are elected by a
plurality of the votes cast.
SUBSTANTIAL SHAREHOLDERS
- ------------------------
As of March 31, 2004 the following persons are the only persons known
to the Company to be the beneficial owners of more than five percent of the
common stock of the Company (the only voting securities of the Company):
Title of Name and Address of Amount and Nature of Percent
Class Beneficial Owner Beneficial Ownership of Class
- -------- -------------------- --------------------- ----------
Common Naseus, Inc. 1,443,329 shares 52.7%
Stock Flat 72, Building 383 (Direct)
Road 1912
Manama Town 319, Bahrain
Common Humayun N. Shaikh 1,443,329 shares 52.7%
Stock Nafees Cotton Mills, Ltd. (Indirect)
Ismail Aiwan-i-Science
Shahrah-i-Jalaluddin Roomi
Lahore - 54600, Pakistan
2
Title of Name and Address of Amount and Nature of Percent
Class Beneficial Owner Beneficial Ownership of Class
- -------- -------------------- --------------------- ---------
Common Robert E. Bell, III, 232,200 shares 8.47%
Stock Administrator CTA of (Indirect)
the Estates of
Robert E. Bell, Jr.
and Andrea G. Bell
P.O. Box 3007
Hickory, NC 28603
The shares beneficially owned by Humayun N. Shaikh are shares owned
of record by Naseus, Inc. Naseus, Inc., a Panamanian corporation, holds
1,443,329 shares of the Company's stock. Naseus, Inc. is a holding company
for business interests and does not conduct any active operations. Mr. Humayun
Shaikh is the owner of all the stock of Naseus, Inc.
The Company is informed and believes that Robert E. Bell, Jr. and
Andrea G. Bell, husband and wife, owned 232,200 shares of the Company's
common stock as joint tenants with the right of survivorship. On August
31, 2003, Mr. and Mrs. Bell died simultaneously in a plane crash. The
Company is informed and believes that 116,100 shares of said stock are now
held by Robert E. Bell, III, Administrator CTA of the Estate of Robert E. Bell,
Jr., and 116,100 shares are held by Robert E. Bell, III, Administrator CTA of
the Estate of Andrea G. Bell.
The Company is informed and believes that as of March 1, 2004 Cede &
Co. held 1,104,071 shares of the Company (40.3%) as nominee for Depository Trust
Company, 55 Water Street, New York, New York 10004, that Cede & Co. and
Depository Trust Company both disclaim any beneficial ownership thereof, and
that such shares are held for the account of numerous other persons, no one of
whom is believed to beneficially own five percent or more of the common stock of
the Company, except for the stock owned by the Administrator, CTA of the Estates
of Robert E. Bell and Andrea G. Bell.
ELECTION OF DIRECTORS
- ---------------------
Seven directors are to be elected at the annual meeting of shareholders
to be held on May 18, 2004. Directors are to be elected to serve until the next
annual meeting of shareholders and until their successors shall be elected and
shall qualify.
The enclosed proxy will be voted in favor of the election of the
following nominees as directors:
3
Amount (Shares)
and Nature of
Name Principal Beneficial Percent
(Age)(Year lst Elected) Occupation Ownership of Class
- ----------------------- ----------- ------------------- ----------
Humayun N. Shaikh Chairman of 1,443,329 52.7%
(61) (1978) the Company (Direct and Indirect)
Thomas I. Nail President of 7,000 0.26%
(56) (2000) the Company (Direct)
William T. Dunn Retired 7,000 0.26%
(70) (1996) (Direct)
Robert P. Huntley Chairman, 120,000 4.4%
(66) (1993) Secretary (Direct)
and Treasurer,
Timber Ridge Lumber Co.
Hickory, NC
Robert T. King Retired 0 0.0%
(77) (2001)
Richard F. Byers Executive Vice 6,000 0.22%
(65) (2001) President of the Company
Aehsun Shaikh Director, 0 0.0%
(31) (1999) Nafees Cotton Mills, Ltd. and
Legler- Nafees Denim Mills, Ltd.
Lahore, Pakistan
All nominees are incumbents.
"Direct" ownership means ownership as record owner. "Indirect"
ownership means beneficial ownership other than as record owner.
Mr. Humayun Shaikh serves as a director of Nafees Cotton Mills, Ltd
(engaged in synthetic yarn spinning) of Lahore, Pakistan, and has so served for
more than the past five years. Until 1994 he was a director of Colony Textile
Mills, Ltd. (engaged in spinning and weaving of yarn and dyeing and printing of
fabric) and of National Security Insurance Co., Ltd. (engaged in the writing of
property and casualty insurance) both of Lahore, Pakistan, and so served for
more than the five years prior to 1994. Mr. Shaikh devotes approximately 75% of
his time to the management of the Company. Mr. Shaikh served as President of the
Company from January 1981 until May 1992, when he became Chairman.
4
Mr. Nail was appointed on May 15, 2000 as, and now serves as, President
and Chief Operating Officer of the Company. Prior to that time, Mr. Nail was
Vice President-Finance of the Company, having assumed that office a second time
in June 1997. From March 1994 to June 1997, Mr. Nail was Chief Financial
Officer, Secretary and Treasurer of Alba Waldensian, Inc., Valdese, NC, a
manufacturer of women's intimate apparel and health products. From September
1987 to March 1994, Mr. Nail was Vice President-Finance of the Company. Prior to
1987, Mr. Nail held accounting and controller positions with several companies.
Mr. Huntley serves as Chairman, Secretary and Treasurer of Timber Ridge
Lumber Company, Inc., a supplier of hardwood lumber to the furniture industry.
Mr. Huntley has served in this capacity since 1996. He also has business
interests in other areas including real estate. Mr. Huntley is licensed as a
certified public accountant. Mr. Huntley is a member of the board of directors
of United Community Bancorp, a public company having securities registered
pursuant to Section 12 of the Securities Exchange Act of 1934.
Mr. Dunn is retired. From 1978 to 1986 Mr. Dunn was Executive Vice
President and a member of the Board of Directors of E. F. Hutton and Company,
having responsibility for trading, marketing, research and syndication of all
fixed income products to institutional clients. From 1986 to 1991 Mr. Dunn was
Senior Managing Director with Bear Stearns and Company. From 1991 until January
1995 Mr. Dunn was Managing Director of PaineWebber, Inc. In these latter two
positions, Mr. Dunn had responsibility for trading, marketing, research and
syndication of fixed income products to institutional clients in the
international market.
Mr. King is retired. From 1952 to 1969 Mr. King was President and part
owner of Collins Yarn Processing, Inc. in Hickory, NC, a dye house. From 1969 to
1985, Mr. King was manager of the dye house division of the yarn division of
Collins & Aikman, Inc. in Hickory, NC.
Mr. Byers is Executive Vice President of the Company, having been
appointed to that position on May 15, 2000. Prior to then Mr. Byers was Vice
President-Sales of the Company, having assumed that office in December 1978. Mr.
Byers served as production control manager of the Company from 1968 to December
1978.
Mr. Aehsun Shaikh is a director (a management position) of Nafees
Cotton Mills, Ltd. since 1993 and of Legler-Nafees Denim Mills, Ltd. since 1999.
Mr. Shaikh is the son of Humayun Shaikh, Chairman of the Board of the Company.
The Board of Directors of the Company met three times during the fiscal
year ended January 3, 2004. Mr. Aehsun Shaikh attended none of those meetings.
Mr. Shaikh attended two of those meetings.
BOARD COMMITTEES
- ----------------
The Board of Directors of the Company has two standing committees -
Audit and Compensation.
5
The Audit Committee is established in accordance with Title 15, U.S.
Code, Section 78(c)(58)(A). Mr. Huntley, Mr. Dunn and Mr. King serve on the
Audit Committee. The Audit Committee met twice during the last fiscal year. The
duties of the Audit Committee are to review the work of the Company's auditors
and to confer with the auditors on matters concerning the annual audit. The
Board of Directors of the Company has adopted a written charter for the Audit
Committee. A current copy of the charter is available to security holders on the
Company's web site at www.burkemills.com. A copy of the charter was included as
an appendix to the Company's proxy statement for the annual meeting held in May
2001. Management believes that the members of the Audit Committee of the Company
are independent as defined by Rule 4200(a)(14) of the Marketplace Rules of the
National Association of Securities Dealers.
Mr. Huntley, Mr. Dunn and Mr. Shaikh serve on the Compensation
Committee. The Compensation Committee did not meet during the last fiscal year.
The duties of the Compensation Committee are to review, and advise the board on,
the compensation of the Chairman and Chief Executive Officer of the Company and
the other executive officers of the Company.
AUDIT COMMITTEE FINANCIAL EXPERT
- --------------------------------
The Board of Directors of the Company has determined that the
Board's Audit Committee has at least one Audit Committee financial expert
serving on the Committee. The name of that expert is Robert P. Huntley. Mr.
Huntley is independent as said term is defined in Rule 4200(a)(14) of The
Marketplace Rules of the National Association of Securities Dealers.
AUDIT COMMITTEE REPORT
- ----------------------
The Audit Committee has reviewed and discussed with management the
audited financial statements of the Company for the fiscal year ended January 3,
2004.
The Audit Committee has discussed with the independent auditors of the
Company the matters required to be discussed by SAS 61 (Codification of
Statements on Auditing Standards, AU ss. 380), as it may be modified or
supplemented.
The Audit Committee has received the written disclosures and the letter
from the independent accountants required by Independence Standards Board
Standard No. 1 (Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees), as it may be modified or supplemented, and
has discussed with the independent accountant the independent accountant's
independence.
Based on the review and discussions specified above, the Audit
Committee recommended to the Board of Directors of the Company that the audited
financial statements be included in the Company's annual report on Form 10-K for
the fiscal year ended January 3, 2004.
6
The members of the Audit Committee are:
Robert P. Huntley
William T. Dunn
Robert T. King
NOMINATING COMMITTEE
- --------------------
The Board of Directors does not have a standing Nominating Committee.
The Board is of the view that it is appropriate for the Company not to have such
a committee in view of the fact that the size of the Board of Directors (seven
members) is relatively small, there has historically been relatively little
turnover on membership of the Board of Directors, and if and when a new member
of the Board of Directors becomes necessary, all board members will have input
into the nomination decision.
COMMUNICATIONS TO THE BOARD
- ---------------------------
The Company's Board of Directors has not formally adopted a process for
security holders to send communications to members of the board. The board has
not adopted a process for such communications since, to the knowledge of the
members of the Board of Directors, it was not thought that such a process was
necessary. Any communication addressed to a member of the board and sent to the
office of the Company will be promptly and directly sent to such board member or
members by management of the Company. Management of the Company anticipates
bringing to the board at its next meeting consideration of a formal process for
security holders to send communications to the board.
ATTENDANCE OF BOARD MEMBERS AT ANNUAL MEETINGS
- ----------------------------------------------
The Company does not have a policy with regard to attendance by board
members at annual meetings. Mr. Humayun N. Shaikh and Mr. Aehsun Shaikh
were absent from the annual meeting of shareholders held on May 20, 2003.
Mr. Humayun N. Shaikh had been present on the premises of the Company just
prior to the beginning of the board meeting but had to make an emergency
visit to a physician, and such emergency visit was the cause of his absence from
the meeting.
STOCK OWNED BY OFFICERS
- -----------------------
As of March 31, 2004, the common stock of the Company (the only class
of equity securities of the Company) beneficially owned by the chief executive
officer, Humayun N. Shaikh, by the three most highly compensated executive
officers other than Mr. Shaikh, and by all officers and director nominees as a
group is as follows:
7
Amount (Shares)
and Nature of Percent
Name/Group Beneficial Ownership of Class
- ----------------- ------------------------ -----------
Humayun N. Shaikh 1,443,329 52.7%
Chairman and CEO Indirect
Thomas I. Nail 7,000 0.26%
President and COO Direct
Richard F. Byers 6,000 0.22%
Executive Vice President Direct
William E. Singleton 0 ---
Vice President-Manufacturing
All officers and director 1,583,429 57.8%
nominees as a group (Direct and
(9 persons) Indirect)
EXECUTIVE OFFICERS OF THE COMPANY
- ---------------------------------
All executive officers of the Company are serving until the next annual
meeting of directors and until their successors have been duly elected and
qualified. The current officers of the Company, in addition to Humayun N.
Shaikh, Thomas I. Nail and Richard F. Byers, are as follows:
William E. Singleton (age 54) is Vice President-Manufacturing of the
Company. Mr. Singleton began employment with the Company on June 20, 2000 as
Vice President-Manufacturing. Prior to that time, Mr. Singleton was a
superintendent with Grover Industries, Inc. in Grover, NC (a yarn manufacturer
and dyer) for three years, a general manager with Doran Textiles, Inc. in
Shelby, NC (a manufacturer of yarn, a weaver and a yarn dyer) for three years.
Prior to that time, Mr. Singleton was a superintendent of dyeing at J. P.
Stevens Co. in Greenville, South Carolina, and a technical manager with M.
Lowenstein and Co. in Lyman, South Carolina.
Pender R. McElroy (age 63) is Secretary of the Company, having assumed
that office in April 1981. Mr. McElroy is a member of the law firm of James,
McElroy & Diehl, P.A., Charlotte, NC, legal counsel for the Company.
Michael B. Smith (age 46) is Assistant Secretary of the Company, having
assumed that office in May 1985. Mr. Smith has been employed by the Company as a
cost accountant since 1978.
8
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
- ------------------------------------------------
All plan and non-plan compensation awarded to, earned by, or paid to
the chief executive officer, Humayun N. Shaikh, Thomas I. Nail and Richard F.
Byers for the past three fiscal years is shown in the following table:
SUMMARY COMPENSATION TABLE
Annual Compensation
-------------------
Name and Other Annual All Other
Principal Position Year Salary Bonus Compensation Compensation
- -------------------------------------------------------------------------------
Humayun N. Shaikh 2001 $210,000 0 $258 0
Chairman and CEO 2002 $210,000 0 $258 0
2003 $210,000 0 $396 0
Thomas I. Nail 2001 $149,858 $45,000 $786 0
President and COO 2002 $150,000 0 $912 0
2003 $150,000 0 $900 0
Richard F. Byers 2001 $104,592 $31,500 $600 0
Executive Vice 2002 $104,988 0 $615 0
President 2003 $104,988 0 $609 0
There is no executive officer of the Company other than those named
above whose total annual salary and bonus exceeded $100,000 for the last
completed fiscal year.
The category of Other Annual Compensation for Mr. Shaikh, Mr. Nail
and Mr. Byers represents the annual premium on group life insurance for each
of them on the amount in excess of $50,000 of coverage and the nonbusiness
portion of use of a company owned automobile by Mr. Nail and Mr. Byers.
The Company has no long-term compensation arrangements with its
executive officers. The Company maintains no defined benefit or actuarial plan.
The Company maintains a 401(k) Plan of which all eligible employees are
participants.
Directors who are employed by the Company are not compensated for
services as directors. Directors not employed by the Company receive
compensation for board service of $2,000 per quarter, payable at the end of the
quarter, and $1,000 for each board meeting and each committee meeting (if such
committee meeting is not combined with or occurs on a day when there is no board
meeting). Mr. Humayun
9
Shaikh receives reimbursement for actual travel expenses incurred while
traveling for the Company.
Robert P. Huntley, William T. Dunn and Robert T. King served as members
of the Compensation Committee of the Board during 2003. None was or is an
officer or employee of the Company.
The policy of the Board of Directors for compensation of the Chief
Executive Officer and the other executive officers has been and is to compensate
those officers at a level as close to what the Board believes is competitive in
the textile industry for companies of comparable size and geographic location
(the piedmont area of North and South Carolina).
The members of the Compensation Committee of the Company are:
Robert P. Huntley
William T. Dunn
Humayun N. Shaikh
TRANSACTIONS WITH RELATED PARTIES
- ---------------------------------
The Company pays Nafees Cotton Mills, Ltd. (Nafees) $24,000
annually toward the expense of maintaining and operating an office for the
Company in Pakistan. The Company may from time to time purchase yarn from
Nafees. During the fiscal year ended January 3, 2004, the Company has not
purchased yarn from Nafees. As of March 15, 2004, it is not known whether
the Company will purchase additional yarn from Nafees, although such purchases
could reasonably be anticipated. Mr. Humayun N. Shaikh and Mr. Aehsun Shaikh
are directors of Nafees Cotton Mills, Ltd., and Mr. Humayun N. Shaikh and
his family control a majority of the stock of Nafees.
COMPARATIVE SHAREHOLDER RETURN
- ------------------------------
The graph which follows compares the yearly percentage change in the
Company's cumulative shareholder return on its common stock with the cumulative
total return of (a) all United States companies traded on the NASDAQ stock
market and (b) 15 companies traded on the NASDAQ stock market which carry NASDAQ
Standard Industrial Classification (SIC) Code 22, being companies producing
textile mill products (which is an index published by the Center for Research in
Security Prices of the University of Chicago Graduate School of Business,
Chicago, Illinois.) A list of the 15 companies will be provided to any
shareholder upon written request.
10
[Explanation of graph for purposes of electronic filing with the Securities and
Exchange Commission. Original graph not filed electronically.]
The performance graph shows dollar figures from $0 through $300 along
the left side of the graph. Along the base of the graph, the starting point is
December 31, 1998, and the graph is divided into five main segments, each
representing the Company's fiscal years from 1999 through 2003, and each of the
five segments is divided into 12 sections representing the twelve months of the
year. There are four lines on the graph:
(1) One line is a level undeviated line over the five-year period which
begins and ends at the $100 level.
(2) There is a solid line showing the total returns index for Burke Mills,
Inc.
(3) A broken line showing the total returns index for all the U.S.
companies on the NASDAQ stock market.
(4) Another broken line showing the total returns index for 15
NASDAQ stocks carrying the NASDAQ standard industrial
classification code 22.
The legend on the graph indicates as follows:
Legend
CRSP Total
Returns 12/31/98 12/31/99 12/29/00 12/28/01 12/29/02 1/2/04
Index for: -------- -------- -------- -------- -------- ------
- ----------
Burke Mills, Inc. 100.0 65.9 15.9 16.0 25.5 38.2
NASDAQ Stock
Market (U.S.
Companies) 100.0 185.4 111.8 90.4 61.9 91.9
NASDAQ Stock
(SIC 2200-2299
U.S. Companies)
Textile mill
products 100.0 89.9 105.7 107.3 80.4 129.4
Notes:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading day,
the preceding trading day is used.
D. The index level for all series was set to $100.00 on December 31, 1998.
11
STOCK OPTIONS
- -------------
No officer or director of the Company was granted, exercised or
realized any stock appreciation rights, options or warrants during the fiscal
year ended January 3, 2004.
DISCRETIONARY AUTHORITY
- -----------------------
The proxy being solicited confers, and the holders of each proxy shall
have, discretionary authority to vote with respect to any of the following
matters:
(1) Matters of which the Company did not have notice by March 16, 2004.
(2) In the case in which the Company has received timely notice in
connection with an annual meeting of shareholders, if the Company includes in
the proxy statement advice on the nature of the matter and how the Company's
proxy holders intend to exercise their discretion to vote on each matter. There
are certain stipulations on the right to discretionary voting authority on such
matters spelled out in Rule 14A-4I(2) of the Rules of the Securities and
Exchange Commission.
(3) Approval of the minutes of the prior meeting but such approval
shall not amount to ratification of the action taken at that prior meeting.
(4) The election of any person to any office for which a bona fide
nominee is named in the proxy statement and such nominee is unable to serve or
for good cause will not serve.
(5) Any proposal omitted from the proxy statement and form of proxy
pursuant to Rule 14a-8 or Rule 14a-9 of the Rules of the Securities and Exchange
Commission.
(6) Matters incident to the conduct of the meeting.
INDEPENDENT PUBLIC ACCOUNTANTS
- ------------------------------
It has been the custom of the Company for the Board of Directors to
select the independent public accounting firm for the Company each year at its
annual meeting following the annual meeting of shareholders. Therefore, no
accounting firm is being recommended to or selected at this annual meeting of
shareholders. BDO Seidman, LLP is the independent public accounting firm for the
Company and has audited the books of the Company for the fiscal year ended
January 3, 2004. It is expected that a representative from BDO Seidman, LLP will
be present at the annual shareholders meeting. That representative will have the
opportunity to make a statement if he desires to do so and is expected to be
available to respond to appropriate questions.
12
CHANGES IN INDEPENDENT PUBLIC ACCOUNTANTS
- -----------------------------------------
In late September 2003, Cole, Samsel & Bernstein LLC of Lodi, New
Jersey, the independent public accountants engaged for many years by the Company
as the principal accountant to audit the Company's financial statements gave
notice to the Company that the firm would be resigning as the independent public
accountants for the Company. The reason stated for the impending resignation was
that Cole, Samsel & Bernstein LLC is declining to serve as the independent
public accountants for companies with securities registered with the Securities
and Exchange Commission. The Audit Committee and management of the Company
engaged BDO Seidman, LLP as the new independent public accountants for the
Company on January 15, 2004.
The report of Cole, Samsel & Bernstein LLC on the financial statements
of the Company for either of the past two fiscal years did not contain an
adverse opinion nor a disclaimer of opinion, nor was the report qualified or
modified as to uncertainty, audit scope or accounting principles. During the
Company's two most recent fiscal years and during the subsequent interim periods
preceding the resignation of the accounting firm, there were not any
disagreements with the former accounting firm on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure.
Neither the Audit Committee of the Board of Directors nor the Board of
Directors of the Company recommended any change in the accounting firm for the
Company.
During the Company's two most recent fiscal years and the subsequent
interim periods preceding the resignation of the accounting firm, the accounting
firm did not advise the Company that the internal controls necessary for the
Company to develop reliable financial statements do not exist; the accounting
firm did not advise the Company that any information had come to the attention
of the accounting firm that lead it to no longer be able to rely on management's
representations or that made it unwilling to be associated with the financial
statements prepared by management; the accounting firm has not advised the
Company of the need to expand significantly the scope of its audit nor that
information has come to the attention of the accounting firm during the stated
time period that, if further investigated, might (a) materially impact the
fairness or reliability of either: a previously issued audit report or the
underlying financial statements, or the financial statements issued or to be
issued covering the fiscal periods subsequent to the date of the most recent
financial statements covered by an audit report (including information that may
prevent it from rendering an unqualified audit report on those financial
statements), or (b) cause it to be unwilling to rely on management's
representations or be associated with the Company's financial statements, and
there was no connection between the resignation of the accounting firm and the
scope of the audit or further investigation of the accounting firm; the
accounting firm has not advised the Company that any information has come to the
attention of the accounting firm that it has concluded materially impacts the
fairness or reliability of either (a) a previously issued audit report or the
underlying financial statements or (b) the financial statements issued or to be
issued covering the fiscal periods subsequent to the date of the most recent
financial statements covered by an audit report (including information that,
unless resolved to the satisfaction of the accounting firm, would prevent it
from rendering an
13
unqualified audit report on those financial statements), and there was no issue
to be resolved to the satisfaction of the accounting firm prior to its
resignation.
Attached to this proxy statement is a letter addressed to the
Securities and Exchange Commission from Cole, Samsel & Bernstein, LLC, provided
to the Company, stating that Cole, Samsel & Bernstein, LLC agrees with the
statements made by the Company in this proxy statement.
AUDIT FEES
- ----------
The aggregate fees billed for the fiscal year ended December 28, 2002
by Cole, Samsel & Bernstein, LLC, the independent public accounting firm then
retained by the Company, for the audit of the Company's annual financial
statements and review of financial statements included in the Company's Form
10-Q or services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for that fiscal year were
$51,450.00.
During the fiscal year ended January 3, 2004, the aggregate fees billed
during that fiscal year by Cole, Samsel & Bernstein, LLC, the independent public
accounting firm then retained by the Company, for review of the Company's Forms
10-Q filed for the first, second and third quarters of said fiscal year were
$19,000.00.
For the fiscal year ended January 3, 2004, BDO Seidman, LLP is the
independent public accounting firm retained by the Company to audit the
Company's annual financial statements for that fiscal year. The anticipated fees
to be billed for such services by BDO Seidman, LLP are $45,000.00.
AUDIT RELATED FEES
- ------------------
No fees were billed in either of the last two fiscal years for
assurance and related services by the principal accountant that were reasonably
related to the performance of the audit or review of the Company's financial
statements which are not reported in the section above entitled "Audit Fees."
TAX FEES
- --------
No fees were billed in either of the last two fiscal years for
professional services rendered by the principal accountant of the Company for
tax compliance, tax advice or tax planning.
ALL OTHER FEES
- --------------
In the fiscal year ended December 28, 2002, Cole, Samsel & Bernstein,
LLC, then the principal accountant for the Company, billed the Company
$18,000.00 for products and services provided by Cole, Samsel & Bernstein, LLC
other than the services
14
reported under the section above entitled "Audit Fees." Those services
consisted of auditing and report preparation with respect to the Company's
Savings and Retirement Plan and Trust (401(k) Plan), preparation of state and
federal corporate tax returns for the Company and miscellaneous services.
In the fiscal year ended January 3, 2004, Cole, Samsel & Bernstein,
LLC, then the principal accountant for the Company, billed the Company
$18,000.00 for products and services provided by Cole, Samsel & Bernstein, LLC
other than the services reported under the section above entitled "Audit Fees."
Those services consisted of auditing and report preparation with respect to the
Company's Savings and Retirement Plan and Trust (401(k) Plan), preparation of
state and federal corporate tax returns for the Company and miscellaneous
services.
BDO Seidman, LLP has not yet billed the Company for other services
rendered with respect to the fiscal year ended January 3, 2004.
The Company was billed $23,900.00 by PricewaterhouseCoopers, LLP for
conversion to United States Generally Accepted Accounting Principles of the
audit financial statements of Fytek, S.A.de C.V. ("Fytek"), a Mexican
corporation in which the Company owns 49.8% of the stock and 50% of the voting
control, attributable to the fiscal year of Fytek ended December 31, 2003. The
fees billed by PricewaterhouseCoopers, LLP, for such services for the fiscal
year ended December 28, 2002 were $21,850.00. The financial statements of Fytek
are filed as a part of the Company's annual report to the Securities and
Exchange Commission on Form 10-K.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
- -------------------------------------------------------
To the knowledge of the Company, all directors, officers and beneficial
owners of more than ten percent of the common stock of the Company and other
persons required to so file did file on a timely basis the reports required by
Section 16(a) of the Securities Exchange Act of 1934.
PROPOSALS OF SHAREHOLDERS
- -------------------------
Any proposals of shareholders intended to be presented at the 2005
annual meeting of the shareholders, now scheduled for May 17, 2005, must be
received by the Company for inclusion in the Company's proxy statement and form
of proxy relating to that meeting not later than January 1, 2005. Any matter
submitted as a shareholder proposal will be considered untimely if presented
after January 1, 2005. Any such proposal must be received at the principal
executive offices of the Company.
15
FORM 10-K
- ---------
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON SOLICITED,
UPON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 1O-K, INCLUDING THE FINANCIAL STATEMENTS AND THE SCHEDULES
THERETO, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE FISCAL YEAR
ENDED JANUARY 3, 2004. SUCH REQUEST SHOULD BE DIRECTED TO THOMAS I. NAIL,
BURKE MILLS, INC., P. O. BOX 190, VALDESE, NORTH CAROLINA 28690.
16
COLE, SAMSEL & BERNSTEIN LLC
Certified Public Accountants
March 24, 2004
Securities and Exchange Commission
Washington, DC 20549
Re: Burke Mills, Inc.
Dear Sir/Madam:
Please be advised that our firm has reviewed the section from the proxy
statement of Burke Mills, Inc., entitled "Changes in Independent Public
Accountants," which proxy statement is to be filed with the SEC in connection
with the annual meeting of shareholders of Burke Mills, Inc. on May 18, 2004. We
are in agreement in all respects with the disclosures as contained in said
section.
Sincerely yours,
s/Howard Bernstein
By: Howard Bernstein
Cole, Samsel & Bernstein LLC
HB/ay
Enc.
72 Essex Street o Lodi o NJ 07644 o (201)368-9300 o FAX:(201)368-9069 o
www.csbcpas.com
[Specimen of proxy card for purposes of electronic filing
with the Securities and Exchange Commission]
BURKE MILLS, INC.
APPOINTMENT OF PROXY
Annual Meeting of Shareholders, May 18, 2004
The undersigned shareholder hereby appoints Humayun N. Shaikh, Chairman
of the Board of the Company, Thomas I. Nail, President of the Company, and
Richard F. Byers, Executive Vice President of the Company, with full power of
substitution, the lawful attorneys, agents and proxies of the undersigned to
vote all shares of Burke Mills, Inc. held by the undersigned with respect to the
election of directors, at the Annual Meeting of its shareholders to be held at
2:00 P.M. on May 18, 2004, at the executive offices of the Company in Valdese,
North Carolina, and all adjourned sessions thereof, with all the powers the
undersigned would possess if personally present at such meeting, and upon the
following matters:
1. The election of the following persons who will be nominated to serve
as directors:
Humayun N. Shaikh Robert P. Huntley Richard F. Byers
Thomas I. Nail William T. Dunn Aehsun Shaikh
Robert T. King
INSTRUCTIONS: You May Withhold Authority To Vote For Any Nominee By
Lining Through Or Otherwise Striking Out The Name Of Any Nominee. If You Execute
This Proxy In Such A Manner As Not To Withhold Authority To Vote For The
Election Of Any Nominee, This Proxy Shall Be Deemed To Grant Such Authority.
2. Such other business and matters as may be brought before the meeting
or any adjournments thereof, including any matters which are not known or
anticipated a reasonable time before the solicitation.
The shares represented by this proxy will be voted as directed by the
shareholder. If the person solicited specifies that authority to vote for a
nominee for director be withheld, the shares will be voted in accordance with
such specification. If no direction is given, the shares will be voted FOR all
nominees for director. To be voted, the proxy must be received prior to the
meeting.
This Appointment of Proxy Confers Upon the Holders Discretionary
Authority To Vote On The Matters Specified In The Proxy Statement Under The
Heading "Discretionary Authority."
This Appointment of Proxy is Solicited By The Board of Directors Of
The Company.
Dated:_________________________, 2004
--------------------------------------
Signature of Shareholder
(Please Sign exactly as name appears on this proxy.
Executors, Trustees, etc. should give full title).