GUILFORD MILLS, INC.
4925 WEST MARKET STREET
GREENSBORO, NORTH CAROLINA 27407
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 3, 2000
The Annual Meeting of Stockholders of Guilford Mills, Inc., a Delaware
corporation (the "Company"), will be held at the O. Henry Hotel, 624 Green
Valley Road, Greensboro, North Carolina, on Thursday, February 3, 2000 at 10:00
a.m. for the following purposes:
1. To elect five directors for three-year terms;
2. To ratify the selection of Arthur Andersen LLP as independent auditors
for the fiscal year ending October 1, 2000; and
3. To transact such other business as properly may come before the
meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on December 17, 1999
as the date for the determination of stockholders entitled to notice of and to
vote at the meeting and at any adjournment or adjournments thereof.
Whether or not you plan to attend the meeting, please sign, date and return
the enclosed proxy which is being solicited by and on behalf of the Board of
Directors.
By Order of the Board of Directors
/s/Robert A. Emken, Jr.
Robert A. Emken, Jr.
GENERAL COUNSEL AND SECRETARY
Greensboro, North Carolina
December 22, 1999
<PAGE>
GUILFORD MILLS, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 3, 2000
This Proxy Statement is furnished to the stockholders of Guilford
Mills, Inc. (the "Company") in connection with the solicitation of proxies by
the Board of Directors (the "Board") of the Company to be voted at the Annual
Meeting of Stockholders of the Company to be held at the O. Henry Hotel, 624
Green Valley Road, Greensboro, North Carolina, on Thursday, February 3, 2000 at
10:00 a.m. (the "Annual Meeting"). Stockholders of record at the close of
business on December 17, 1999 will be entitled to notice of and to vote at the
Annual Meeting and at all adjournments thereof.
The entire cost of soliciting proxies for the Annual Meeting will be
borne by the Company. In addition to solicitation by mail, proxies may be
solicited through personal calls upon, or telephone or facsimile communications
with, stockholders or their representatives by officers and other employees of
the Company, who will receive no additional compensation therefor.
Any stockholder giving a proxy has the power to revoke it at any time
before it is voted by giving written notice of such revocation to the Secretary
of the Company, by attending the Annual Meeting and voting in person or by
submitting a subsequently dated proxy. When a proxy is received, properly
executed, prior to the Annual Meeting, the shares represented thereby will be
voted at the Annual Meeting. If the accompanying form of proxy is signed but no
specification is made thereon, the shares represented thereby will be voted for
the nominees for director designated by the Board and the ratification of the
selection of Arthur Andersen LLP as independent auditors for the fiscal year
ending October 1, 2000. If a specification has been made on the form of proxy,
the shares will be voted in accordance with the specification. The election of
directors requires a plurality of the votes cast, and the ratification of the
selection of Arthur Andersen LLP requires the affirmative vote of a majority of
the shares present at the Annual Meeting in person or by proxy and entitled to
be cast. Abstentions and broker non-votes are not included in the tabulation of
the voting results on the election of directors. For issues requiring approval
of a majority of the shares present and entitled to be cast, abstentions have
the effect of votes in opposition and broker non-votes are not included in the
tabulation of the voting results. A broker non-vote typically occurs when a
nominee holding shares for a beneficial owner does not vote on a particular
proposal because the nominee does not have discretionary voting power with
respect to that item and has not received instructions from the beneficial
owner. Shares as to which a stockholder abstains or broker non-votes are
included for purposes of determining whether a quorum of shares is present at
the Annual Meeting.
The complete mailing address of the Company's principal executive
offices is P.O. Box 26969, Greensboro, North Carolina 27419-6969. The
approximate date on which this Proxy Statement and the form of proxy were first
sent or given to the stockholders of the Company was December 22, 1999. The
Annual Report of the Company for the fiscal year ended October 3, 1999,
including audited financial statements, has been sent to each stockholder.
<PAGE>
VOTING SECURITIES
On December 17, 1999, there were outstanding and entitled to vote 19,194,295
shares of the Company's common stock, par value $.02 per share (the "Common
Stock"), which constitutes the only class of capital stock outstanding.
Stockholders are entitled to one vote, exercisable in person or by proxy, for
each share of Common Stock owned on the record date of December 17, 1999. The
holders of a majority of the outstanding shares of the Common Stock represented
at the Annual Meeting will constitute a quorum.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Under the proxy rules, a beneficial owner of a security includes any person
who directly or indirectly has or shares voting power and/or investment power
with respect to such security or has the right to obtain such voting power
and/or investment power within 60 days. Except as otherwise noted, each
designated beneficial owner in this Proxy Statement has sole voting power and
investment power with respect to the shares beneficially owned by such person.
The following table sets forth information as of (except as set forth below)
December 17, 1999 with respect to each person who is known by the management of
the Company to be the beneficial owner of more than 5% of the Common Stock:
<TABLE>
<CAPTION>
Name and Address Amount and Nature of
of Beneficial Owner Beneficial Ownership Percent of Class
------------------- -------------------- ----------------
<S> <C> <C> <C>
Dimensional Fund Advisors Inc. 1,674,917 (1) 8.73
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
Charles A. Hayes 1,369,526 (2) (3) 7.12
c/o Guilford Mills, Inc.
4925 West Market Street
Greensboro, NC 27407
</TABLE>
(1) Dimensional Fund Advisors Inc. ("Dimensional"), an investment
advisor registered under Section 203 of the Investment Advisors Act of 1940,
furnishes investment advice to four investment companies registered under the
Investment Company Act of 1940, and serves as investment manager to certain
other investment vehicles, including commingled group trusts (such investment
companies and investment vehicles, the "Portfolios"). In its role as investment
advisor and investment manager, Dimensional possesses both voting and investment
power (in some cases sole, and in other cases shared, voting and investment
power) over 1,674,917 shares of Common Stock as of September 30, 1999.
Dimensional has advised the Company that the Portfolios own all such shares of
Common Stock and that Dimensional disclaims beneficial ownership of such shares.
(2) Mr. Hayes and George Greenberg, a director of the Company, have
entered into certain agreements relating to the disposition of their shares of
Common Stock. See "Stockholders' Agreements" below.
(3) Includes (i) 46,250 shares of Common Stock subject to options
granted to Mr. Hayes under the Company's 1991 Stock Option Plan, as amended (the
"Option Plan") (11,250 options granted pursuant to such plan's formula provision
and 35,000 options granted pursuant to the discretionary provisions of such
plan) (see "Election of Directors - Additional Information" below), (ii) 85,864
shares of restricted Common Stock awarded to Mr. Hayes under the Company's 1989
Restricted Stock Plan, as amended (the "Restricted Plan"), as to which Mr. Hayes
has sole voting power (see "Executive Compensation - Summary Compensation Table"
below) and (iii) 700,000 shares of Common Stock held by a family limited
partnership (the "FLP"). Mr. Hayes has a membership interest in a limited
liability company, whose other members are all relatives of Mr. Hayes, which
serves as the sole general partner of the FLP. Mr. Hayes has shared voting and
investment power with respect to the shares of Common Stock held by the FLP.
2
<PAGE>
The following table sets forth certain information, as of December 17, 1999,
with respect to Common Stock beneficially owned by each director of the Company,
each person nominated to become a director, each of the executive officers named
in the Summary Compensation Table under the heading "Executive Compensation"
below and all directors and executive officers as a group:
<TABLE>
<CAPTION>
Percent
Amount and Nature of of
Name of Beneficial Owner Beneficial Ownership Class
Directors and Director Nominees (1)(2) -------------------- --------
--------------------------------------
<S> <C> <C> <C>
Charles A. Hayes ............................ 1,369,526 (3) 7.12
George Greenberg............................. 808,938 (4) 4.21
Bruno Hofmann................................ 573,150 (5) 2.99
John A. Emrich............................... 192,353 1.00
Terrence E. Geremski......................... 131,453 (13)
Stephen C. Hassenfelt........................ 71,579 (6) (13)
Tomokazu Adachi.............................. 45,375 (13)
Dr. Jacobo Zaidenweber....................... 40,575 (13)
Sherry R. Jacobs............................. 37,293 (13)
Donald B. Dixon.............................. 32,250 (13)
Paul G. Gillease ............................ 26,250 (7) (13)
Stig A. Kry ................................. 26,250 (13)
Grant M. Wilson ............................. 17,500 (13)
Non-Director Executive Officers (8)(9)
--------------------------------------
Christopher J. Richard....................... 26,873 (13)
Byron J. McCutchen .......................... 20,805 (13)
All directors, director nominees and
executive officers as a group
(consisting of 23 persons) 3,484,806 (10)(11)(12) 17.83
- --------------
</TABLE>
(1) The amount of shares beneficially owned by Ms. Jacobs and Messrs.
Greenberg, Dixon, Adachi, Hassenfelt, Kry and Gillease includes 26,250 shares of
Common Stock, the amount of shares beneficially owned by Mr. Geremski includes
11,250 shares of Common Stock, and the amount of shares beneficially owned by
Mr. Wilson includes 7,500 shares of Common Stock, subject to options granted to
each such director under the Option Plan's formula provision. The amount of
shares beneficially owned by Messrs. Emrich, Geremski and Zaidenweber includes
33,000 shares, 25,000 shares and 16,875 shares of Common Stock, respectively,
subject to options granted pursuant to discretionary provisions of the Option
Plan.
(2) Includes 91,334 and 54,000 shares of restricted Common Stock awarded to
Messrs. Emrich and Geremski, respectively, under the Restricted Plan. Such
persons have sole voting power with respect to such shares. See "Executive
Compensation - Summary Compensation Table" below.
(3) See Footnotes 2 and 3 to previous table.
(4) Does not include 62,650 shares held by Mr. Greenberg's wife, as to
which beneficial ownership is disclaimed. See Footnote 2 to previous table.
(5) Includes 300,000 shares of restricted Common Stock paid to Mr. Hofmann
in connection with the sale of the capital stock of Hofmann Laces, Ltd., Raschel
Fashion Interknitting, Ltd. and Curtains and Fabrics, Inc. (collectively, the
"Hofmann Companies") to the Company. See "Certain Transactions" below. Mr.
Hofmann has sole voting power with respect to such shares.
(6) Does not include 637 shares held by Mr. Hassenfelt's wife, as to which
beneficial ownership is disclaimed.
(7) Does not include 135 shares held by Mr. Gillease's wife, as to which
beneficial ownership is disclaimed.
(8) The amount of shares beneficially owned by Messrs. Richard and
McCutchen includes 16,000 shares and 6,000 shares of Common Stock, respectively,
subject to options granted to such persons pursuant to the Option Plan.
3
<PAGE>
(9) Includes 8,400 shares and 12,000 shares of restricted Common Stock
awarded to Messrs. Richard and McCutchen, respectively, under the Restricted
Plan. Such persons have sole voting power with respect to such shares.
(10) Includes 353,756 shares of Common Stock subject to options granted
pursuant to the Option Plan.
(11) Excludes 63,422 shares owned by relatives of directors of the Company,
as to which beneficial ownership is disclaimed by such directors.
(12) Includes 251,598 shares of restricted Common Stock awarded to officers
under the Restricted Plan. Such persons have sole voting power with respect to
such shares.
(13) Less than one percent.
STOCKHOLDERS' AGREEMENTS
Messrs. Greenberg and Hayes have entered into a Stockholders' Agreement
dated as of June 22, 1990, as amended, relating to the disposition of their
shares of Common Stock (the "1990 Stockholders' Agreement"). Until June 22, 2001
(or its earlier termination as otherwise provided therein), neither Mr.
Greenberg nor Mr. Hayes may transfer or otherwise dispose of, except by gift,
any or all of the shares of Common Stock beneficially owned by any such
stockholder, until such shares are offered first to the Company at the same
price and upon the same terms and conditions as those offered by a bona fide
purchaser or purchasers. The terms and provisions of the 1990 Stockholders'
Agreement apply to any shares of Common Stock beneficially owned by the
stockholders on the date of the 1990 Stockholders' Agreement or acquired
thereafter and are binding upon the heirs, successors and assigns of the
stockholders.
Mr. Hayes has entered into a Stockholders' Agreement with the Company dated
as of April 30, 1991, as amended, relating to the acquisition by the Company of
certain of his shares of Common Stock. Until June 22, 2001 (or the earlier
termination of the 1991 Stockholders' Agreement as provided therein), the
Company will, upon the death of Mr. Hayes, purchase such number of shares of
Common Stock beneficially owned by him as equal $5,000,000. The purchase price
for each share of Common Stock will equal the average of the closing price for
such shares on the New York Stock Exchange for the 20 trading days preceding the
date of death.
ELECTION OF DIRECTORS
DIRECTORS AND NOMINEES
The Board is divided into three classes with staggered, three year terms, so
that the term of office of one class will expire each year.
The Board has nominated Ms. Jacobs and Messrs. Adachi, Emrich, Hofmann and
Kry for election as directors of the Company, each to serve for a three-year
term until the first annual meeting of stockholders held following the end of
the Company's 2002 fiscal year and until her or his successor is elected and
qualified. Under the terms of the Stock Purchase Agreement, dated January 12,
1996, between the Company and Bruno Hofmann, pursuant to which the Company
acquired 100% of the Hofmann Companies from Mr. Hofmann (the "Hofmann Purchase
Agreement"), the Company agreed to nominate Mr. Hofmann for election, at the
annual meeting of stockholders held on February 6, 1997, as a director in such
class. Pursuant to the Company's retirement policy for directors, Mr. Kry has
agreed to retire from the Board of Directors effective with the annual meeting
of stockholders held following the end of the Company's 2000 fiscal year. The
Board of Directors currently intends to reduce the size of the Board from 13 to
12 persons at the time of Mr. Kry's retirement. Unless a contrary specification
is indicated, it is intended that the accompanying form of proxy will be voted
for the election of Ms. Jacobs and Messrs. Adachi, Emrich, Hofmann and Kry. The
Board does not contemplate that any of such persons will be unable, or will
decline, to serve; however, if any of such persons is unable or declines to
serve, the persons named in the accompanying proxy may vote for another person,
or persons, in their discretion.
4
<PAGE>
The following table sets forth certain information with respect to each
director and each person nominated to become a director. Except as otherwise
indicated, each such person has held his or her present principal occupation for
the past five years and references to executive offices held are with the
Company:
<TABLE>
<CAPTION>
Name Age (1) Principal Occupation and Business Experience Director Since
- ---- --- -------------------------------------------- --------------
DIRECTOR NOMINEES
- -----------------
Nominees for a Three-Year Term
Expiring at Annual Meeting After
2002 Fiscal Year
- ----------------------------------
<S> <C> <C>
Tomokazu Adachi 58 President of Japan Tech, Inc., an importer 1990
of textile machinery and equipment
John A. Emrich 55 Chief Executive Officer (effective January 1995
1, 2000) and President and Chief Operating
Officer (since 1995); Senior Vice President
and President/Automotive Business Unit (from
1993 to 1995); Vice President/Planning and
Vice President/Operations for the Apparel
and Home Fashions Business Unit (from 1991
to 1993); Director of Operations with FAB
Industries (from 1990 to 1991)
Bruno Hofmann 60 General Manager of the Hofmann Companies 1997
(since 1998); President and Chief Executive
Officer of the Hofmann Companies and
predecessor companies (from 1976 to 1998)
Sherry R. Jacobs 56 Attorney and Advisor to educational 1983
organizations (since 1994); Secretary and
acting General Counsel (from 1994 to 1999);
Managing Director, Pencil, Inc., an
educational foundation (from 1995 to 1997);
Principal, Jonal, couturier (from 1989 to
1994)
Stig A. Kry 70 Chairman Emeritus, Kurt Salmon Associates, 1993
Inc., a management consulting firm; Director
of Oshkosh B'Gosh, Inc. and Media Metrix,
Inc.
CONTINUING DIRECTORS
- --------------------
Class of Directors Whose Term
Expires at Annual Meeting After
2001 Fiscal Year
- ----------------------------------
Paul G. Gillease 67 Consultant to the Company (from 1993 to 1993
1996); Vice President and General Manager,
DuPont Nylon, a division of E.I. du Pont de
Nemours and Company, Inc. (from 1992 to
1993); for more than five years prior
thereto, Vice President and General Manager
of DuPont Textiles, a division of E.I. du
Pont de Nemours and Company, Inc.; Director
of Pillowtex Corp. and Galey & Lord, Inc.
Stephen C. Hassenfelt 49 Chairman and Chief Executive Officer of U. 1989
S. Trust Company of North Carolina
(since 1999); for more than five
years prior thereto, Chairman and
Chief Executive Officer of North
Carolina Trust Company
Charles A. Hayes 64 Chairman of the Board (since 1976); Chief 1963
Executive Officer (from 1976 to December 31,
1999); President and Chief Operating Officer
(from 1991 to 1995)
5
(1) As of December 17, 1999.
<PAGE>
Name Age (1) Principal Occupation and Business Experience Director Since
- ---- --- -------------------------------------------- --------------
Class of Directors Whose Term
Expires at Annual Meeting After
2000 Fiscal Year
- ---------------------------------
Donald B. Dixon 71 Retired since 1984; for more than five years 1987
prior thereto, a partner at Arthur Andersen
LLP
1993
Terrence E. Geremski 52 Executive Vice President and Chief Financial
Officer (since 1997); Senior Vice President,
Chief Financial Officer and Treasurer (from
1996 to 1997); Vice President, Chief
Financial Officer and Treasurer (from 1992
to 1996); Vice President and Controller of
Varity Corporation (from 1989 to 1991); for
more than five years prior thereto, the
holder of various executive and
administrative positions with Dayton Walther
Corp.
George Greenberg 77 Vice Chairman of the Board (since 1989); 1968
retired since 1989; for more than five years
prior thereto, the President and Chief
Operating Officer; Director of Nautica
Enterprises, Inc.
Grant M. Wilson 58 Chairman of Cohasset Capital Corporation 1997
(since 1983), a financial and managerial
services firm
Dr. Jacobo Zaidenweber 70 Chairman of the Board of Grupo Ambar, S.A. 1995
de C.V. (since 1965), a subsidiary of the
Company; Chairman of the Board of Encajes
Mexicano, S.A. de C.V. (since 1992), a
textile manufacturer
- -----------------------
(1) As of December 17, 1999.
</TABLE>
ADDITIONAL INFORMATION
During the last fiscal year, the Board's Audit Committee, which consists of
Messrs. Hassenfelt, Dixon and Kry, held five meetings. The Audit Committee's
responsibilities include reviewing the Company's financial statements and the
accounting principles utilized by the Company, evaluating the services of the
Company's independent auditors and making recommendations with respect to the
retention of independent auditors, evaluating the adequacy of the Company's
system of internal controls and confirming the Company's full cooperation with
the independent auditors' annual examination of the Company's financial
statements.
In addition, during the last fiscal year, the Board's Compensation
Committee, which consists of Messrs. Gillease, Dixon and Wilson, held five
meetings. The functions of the Compensation Committee include making
recommendations to the Board regarding compensation for certain executive
officers of the Company and administering certain of the Company's benefit
plans. See "Executive Compensation - Report of the Compensation Committee of the
Board of Directors" below.
The Board's Nominating Committee, which is comprised of Ms. Jacobs and
Messrs. Hayes, Adachi and Gillease, did not hold any meetings during the last
fiscal year. The duties of the Nominating Committee include identifying and
interviewing candidates to serve on the Board, making recommendations to the
entire Board regarding whether a candidate should be nominated to the Board and
making recommendations to the entire Board concerning compensation and other
benefits to be paid to directors. (During the 1999 fiscal year, the entire
Board, rather than the Nominating Committee, addressed certain of the foregoing
issues.) The Company's By-Laws, as amended (the "By-Laws"), set forth procedures
regarding the nomination of persons for election to the Board.
See "Miscellaneous - Stockholder Proposals" below.
Non-employee directors receive a quarterly retainer of $6,250 and $1,000 for
each Board meeting attended (other than routine telephonic Board meetings). A
non-employee chairman and each other non-employee member of a committee are paid
$3,000 and $2,000, respectively, for each committee meeting attended. During the
last fiscal year, the Board had a total of nine meetings, four of which were
held in person and five of which were held by means of a telephonic conference
call. All directors then in office attended at least 75% of the total number of
meetings of the
6
<PAGE>
Board and the committees on which they served during the last fiscal year,
except Mr. Kry who attended approximately 73% of the total number of meetings of
the Board and the Audit Committee.
Ms. Jacobs served, on an interim basis, as acting General Counsel of the
Company until the Company's second fiscal quarter and as Secretary of the
Company until the Company's third fiscal quarter. Ms. Jacobs earned
approximately $6,700 during the 1999 fiscal year for such service. In connection
with the Company's acquisition of the Hofmann Companies in January, 1996, Mr.
Hofmann entered into a consulting agreement with the Company pursuant to which
he will provide certain consulting and advisory services to the Company during a
period ending on December 31, 2000. The Company pays Mr. Hofmann an annual
consulting fee of $100,000 for such services. Mr. Hofmann is also a party to an
employment agreement with the Hofmann Companies. See "Certain Transactions"
below. Mr. Kry earned approximately $18,000 during the 1999 fiscal year for
certain consulting services provided to the Company. Mr. Gillease, Chairman of
the Board's Compensation Committee, was paid (in addition to fees for committee
meetings he attended) $3,000 during the last fiscal year, or the equivalent of
one committee meeting fee, for services performed (outside of formal meetings)
in connection with work of such committee.
The Company affords each director the opportunity to defer his or her
quarterly retainer. Pursuant to such arrangement, the quarterly retainer a
director would otherwise receive is credited to a separate account which accrues
interest. Upon his or her termination of service on the Board, the director will
be entitled to receive the amounts credited to his or her deferred compensation
account, together with interest accrued thereon. Currently, Mr. Dixon is the
only director who participates in the retainer deferral arrangement.
The Option Plan provides for the automatic grant of options not meeting the
requirements of incentive stock options, within the meaning of Section 422 of
the Internal Revenue Code of 1986 (the "Code"), to non-employee directors.
Specifically, pursuant to Option Plan amendments adopted by the Board in
November, 1999, each non-employee director of the Company will automatically be
granted upon each annual meeting of the Company's stockholders (commencing with
the Annual Meeting) at which such director is elected, re-elected or after which
he remains on the Board of Directors, an option to purchase 4,000 shares of
Common Stock. (Prior to such amendments, non-employee directors would receive,
after having served on the Board two years, an option to purchase 11,250 shares
of Common Stock and thereafter would receive annually during their service on
the Board an option to purchase 5,625 shares of Common Stock.) The purchase
price of the shares of Common Stock covered by the options granted to directors
under the formula provision will be the fair market value of the shares as of
the date of grant. Options granted to directors under the formula provision
prior to the above-referenced amendments had a five-year term. As a result of
the amendments, options granted in the future under such provision will have a
ten-year term. The options are exercisable with respect to 33-1/3% of the
aggregate number of shares initially subject to the option during each of the
first, second and third years of the option. Any exercisable portion of an
option that is not exercised will be carried forward through the term of the
grant. Notwithstanding the foregoing, in the event of a "change in control" of
the Company, as such term is defined in the Option Plan, all then outstanding
options will immediately become exercisable. In addition to the automatic grant
of options to non-employee directors according to the above formula, the Option
Plan also provides for the award, in the discretion of the Compensation
Committee, of options, and stock appreciation rights, to salaried key employees,
including employee directors, of the Company.
Commencing with the Annual Meeting, each non-employee director will receive
upon each annual meeting of the Company's stockholders at which such director is
elected, re-elected or after which he remains on the Board such number of shares
of phantom Common Stock as equals $20,000. Dividend equivalents will be paid on
such shares of phantom stock at the same rate as dividends are paid on actual
shares of Common Stock. The dividend equivalents will be used to acquire
additional shares of phantom Common Stock for the account of each participant. A
non-employee director will not be entitled to receive any distribution from his
phantom stock account until after his termination of service on the Board.
Distribution of a director's phantom stock account will be made (at the
director's option, in a lump sum or in five equal annual installments) in actual
shares of Common Stock in an amount representing the initial number of shares
credited to the account plus any shares acquired with dividend equivalents.
There are no family relationships among any of the directors and officers of
the Company.
7
<PAGE>
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board administers the Company's
compensation program for executive officers. Specifically, the Committee serves
as the administrator of the Restricted Plan and the Option Plan. In addition,
the Committee makes recommendations to the entire Board regarding the
compensation package for each of the Chairman, President and Chief Financial
Officer. The Committee is also responsible for periodically reviewing, for
adequacy and continued appropriateness, the entire compensation package of other
executive officers and recommending to the Board any changes to such package.
Further, the Committee's approval is required for any proposed employment,
severance, consulting or retirement agreement with any executive officer.
In performing its duties, the Committee seeks to insure that the Company's
compensation program for executive officers attracts and retains qualified,
talented and highly motivated personnel, links executive compensation to
corporate performance and is administered in an equitable fashion. The Company's
executive officer compensation program consists of two major elements: (i) a
short-term component, consisting of base salary and a potential annual cash
bonus, intended to reward executives for current and past performance and (ii) a
long-term component, consisting of restricted stock and stock options, designed
to align further the interests of executives with those of stockholders in
general. In addition, in order to offer a competitive compensation program, the
Company maintains certain retirement plans such as the Salaried Associate
Retirement Profit-Sharing Plan (the "Profit-Sharing Plan") and an Employee Stock
Ownership Plan (the "ESOP") and offers other benefits such as a split-dollar
insurance program.
The Committee has considered the impact of Section 162(m) of the Code on the
Company's executive compensation program. Section 162(m) denies a public company
a deduction, except in limited circumstances, for compensation paid to "covered
employees," i.e., those employees named in the "Summary Compensation Table"
below, to the extent such compensation exceeds $1,000,000. The deduction
limitation contained in Section 162(m) does not apply to certain
performance-based compensation. Based on its review of the likely impact of
Section 162(m), the Committee may in the future recommend changes to the
Company's benefit plans in order to qualify compensation paid to covered
employees for such exception.
SHORT-TERM COMPONENT - BASE SALARY AND ANNUAL BONUS. The Committee evaluates
the base salary of each of the Chairman, President and Chief Financial Officer
on a biennial basis, or more frequently if appropriate, and recommends to the
entire Board any changes in such base salary levels. In making such evaluations
and recommendations, the Committee considers the historical pay practices of the
Company, the officer's leadership and advancement of the Company's long-term
strategic plans and objectives, and the salary levels of executives holding
similar positions in certain other textile companies. The Committee generally
recommends salaries for the Company's Chairman, President and Chief Financial
Officer at levels exceeding the average salary level of executives holding the
same positions in such other companies. The textile companies which the Company
considers for comparative compensation purposes are the same as the companies
included (for the 1999 fiscal year) in the peer group index described in the
"Performance Graph" below.
The Company maintains for its executive officers and other key employees a
Short-Term Incentive Compensation Plan, which allows participants to earn annual
cash bonuses. The Chairman has not received a cash bonus for the last two fiscal
years. The other officers named in the "Summary Compensation Table" below
received certain discretionary bonus awards for the 1999 fiscal year.
LONG-TERM COMPONENT - RESTRICTED STOCK AND STOCK OPTIONS. In addition to the
short-term elements of the Company's executive compensation program described
above, the Company has maintained certain equity based plans described below,
the benefits of which are linked to the Company's long-term performance. The
Committee believes that compensation in the form of Common Stock serves to align
further the interests of executives with the interests of stockholders.
Moreover, compensation which is "at risk," in that its amount is dependent upon
the Company's performance, provides a strong incentive for individuals to
achieve superior performance. Finally, long-term compensation helps balance the
Company's overall executive compensation program by encouraging executives to
focus on the Company's long term objectives and goals as well as the Company's
quarter to quarter results.
8
<PAGE>
The Restricted Plan expired in accordance with its terms during the 1999
fiscal year, though certain shares of stock granted thereunder prior to the
expiration date remain outstanding. The Committee remains as the administrator
of the Restricted Plan. As the administrator of the Option Plan, the Committee
determines, among other things, the employees who are to receive options, the
date of grant of options, and (subject to the terms of the Option Plan) the
purchase price of each share subject to such options. None of the officers named
in the "Summary Compensation Table" below received any grants of options or
shares of restricted stock during the 1999 fiscal year.
RETIREMENT PLANS AND OTHER BENEFITS. In addition to the foregoing components
of the executive compensation program, the Company maintains certain other plans
in which executives participate, including the Profit-Sharing Plan, the ESOP and
an excess benefit plan (which is designed to supplement certain of the Company's
other benefit plans). For the 1999 fiscal year, the Company contributed to the
Profit-Sharing Plan 6% of the aggregate compensation of all participants in such
plan. Contributions to the ESOP are made in the form of Common Stock or cash
used to purchase Common Stock and the amount of such contributions is dependent
upon the Company meeting a certain earnings per share target. Beginning with the
1997 fiscal year ESOP contribution, each participant has the right to receive up
to one-half of his contribution directly from the Company in the form of cash.
If the Company's actual earnings per share fall within a range of the target
earnings per share, then the Company will adjust its ESOP contribution, upward
or downward, accordingly. For the 1999 fiscal year, the Company did not make a
contribution to the ESOP. The Company also maintains for executives a
split-dollar insurance program and a supplemental executive retirement plan,
which are described, respectively, in Footnote 3 to the "Summary Compensation
Table" and in "Other Benefit Plans" below. The Company also offers to its
executives a plan pursuant to which they may be reimbursed, up to a designated
amount, for personal tax and financial planning expenses.
Paul G. Gillease (Chairman)
Donald B. Dixon
Grant M. Wilson
PERFORMANCE GRAPH
Set forth below is a line graph comparing the five-year cumulative total
stockholder return on the Common Stock with the cumulative return of the
Standard & Poor's 500 Stock Index and with an index comprised of certain peer
group companies, assuming the reinvestment of dividends. The peer group index
represents the cumulative total return on the common stock of the following
textile companies: Burlington Industries, Inc., Collins & Aikman Corp., Concord
Fabrics Inc., Cone Mills Corp., Crown Crafts, Inc., Culp, Inc., Delta Woodside
Industries, Inc., Dixie Group, Inc., Dyersburg Corp., Fab Industries, Inc.,
Fieldcrest Cannon, Inc., Foamex International Inc., Galey & Lord, Inc., Johnston
Industries, Inc., Pillowtex Corp., Quaker Fabric Corp., Springs Industries,
Inc., Texfi Industries, Inc., Thomaston Mills, Inc., Unifi, Inc., Wellman, Inc.
and WestPoint Stevens Inc. (Fieldcrest Cannon, Inc was acquired by Pillowtex
Corp. during fiscal year 1998 and, therefore, the stockholder returns of
Fieldcrest Cannon, Inc. are included in only the first three years reflected in
the performance graph. The common stock of Texfi Industries, Inc. ceased to be
publicly traded during fiscal year 1999 and, as a result, the stockholder
returns of such company are included in only the first four years reflected in
the performance graph.) The return of each company included in the peer group
index has been weighted according to its respective stock market capitalization.
9
<PAGE>
[GRAPH APPEARS HERE WITH THE FOLLOWING PLOT POINTS]
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
09/30/94 09/30/95 09/30/96 09/30/97 09/30/98 09/30/99
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
GUILFORD MILLS $100.0 $116.5 $111.0 $196.5 $114.5 $ 68.9
- ---------------------------------------------------------------------------------------------------------------------
S&P 500 $100.0 $129.7 $156.1 $219.2 $239.0 $305.5
- ---------------------------------------------------------------------------------------------------------------------
PEER GROUP $100.0 $ 96.7 $ 95.7 $136.8 $ 93.9 $ 72.2
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: ASSUMES AN INITIAL INVESTMENT OF $100 ON SEPTEMBER 30, 1994. TOTAL RETURN
INCLUDES REINVESTMENT OF DIVIDENDS.
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows for the fiscal years ended October 3, 1999,
September 27, 1998 and September 28, 1997 the cash compensation paid by the
Company, as well as certain other compensation paid or accrued for those
periods, to Mr. Hayes, the Company's Chairman and Chief Executive Officer, and
to the Company's four most highly compensated executive officers (other than Mr.
Hayes).
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
--------------------------
All Other
Annual Compensation Long-Term Compensation Compen-sation
--------------------------------- ----------------------- ----------
Other
Annual Restricted
Compens- Stock
ation Awards
Name and Principal Position Fiscal Year Salary ($) Bonus ($) ($) ($)(2) Options (#) ($) (3)
- --------------------------- ----------- ---------- --------- --- ------ ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Charles A. Hayes, Chairman 1999 675,000 0 -- 0 0 70,417
and Chief Executive Officer 1998 675,000 0 -- 0 0 115,517
1997 625,000 656,250 -- 2,294,178 105,000 104,549
John A. Emrich, President 1999 625,000 250,000 -- 0 0 47,039
and Chief Operating Officer 1998 566,667 0 -- 790,000 150,000 73,405
1997 450,000 489,375 191,758(1) 1,788,750 99,000 64,395
Christopher J. Richard, 1999 250,000 149,000 -- 0 0 20,197
Senior Vice President, 1998 237,500 0 -- 0 14,000 24,592
President/U.S. Automotive 1997 150,000 83,025 -- 208,687 33,000 5,608
Business Unit (4)
Terrence E. Geremski, 1999 325,000 50,000 -- 0 0 27,620
Executive Vice President and 1998 325,000 0 -- 355,500 90,000 42,377
Chief Financial Officer 1997 275,000 239,250 -- 894,375 75,000 42,533
Byron J. McCutchen, Senior 1999 278,750 15,000 -- 0 0 36,762
Vice President, President/ 1998 270,000 0 -- 0 14,000 48,896
Fibers Business Unit 1997 260,000 193,050 -- 298,125 18,000 51,094
</TABLE>
10
<PAGE>
- -------------------
(1) This amount includes, among other items, (i) a payment of $100,000 for
certain moving related costs and expenses (including costs related to the sale
of a former residence) incurred in connection with Mr. Emrich's relocation from
the Company's New York City office to the Company's Kenansville, North Carolina
office and (ii) a tax reimbursement of $62,630 related to the preceding payment.
(2) The amounts shown in this column reflect the market value of the
restricted stock granted, under the terms of the Restricted Plan, to Messrs.
Hayes, Emrich, Richard, Geremski and McCutchen. (The market value is given as of
the date of grant of the restricted stock.)
The restricted stock awarded to an executive officer is held by an
escrow agent, appointed by the Company, until such officer vests in his award.
Similarly, the dividends paid on each share of restricted stock (which are paid
to the same extent as dividends on the Common Stock generally) are held by the
escrow agent until the executive vests in his restricted stock, at which time he
will also be entitled to receive the interest credited by the Company on such
dividends. Each executive officer who received a restricted stock award during
the 1997 fiscal year (the "1997 Restricted Award") vested in 20% of such award
on the date of grant. The balance of each executive's 1997 Restricted Award, as
well as the award made to Mr. Geremski during fiscal year 1998, will vest in
four annual installments, commencing in May, 2001. With respect to the
restricted stock granted to him during the 1996 fiscal year, Mr. Emrich has
vested in 24,000 shares and will vest in the remaining 6,000 shares of such
award on October 1, 2000. With respect to the restricted stock granted to him
during the 1998 fiscal year, Mr. Emrich has vested in 26,666 shares and will
vest in the remaining 13,334 shares on September 30, 2000. Notwithstanding the
foregoing, upon a "change in control" of the Company, as such term is defined in
the Restricted Plan, the restrictions applicable to an outstanding restricted
stock award will lapse and the executive will immediately vest in such award and
in any dividends paid on such award and then held in escrow, together with
interest thereon. The Restricted Plan also permits the Compensation Committee,
in its discretion, to remove restrictions on outstanding awards. Upon an
executive's voluntary termination of employment or termination of employment for
cause, the executive will forfeit his rights in any restricted stock, and in any
dividends and interest thereon, not then vested. If the executive's employment
is terminated by the Company without cause or by reason of death or disability,
then the executive, or his estate, as the case may be, will become vested in the
restricted stock, and related dividends and interest, on the date of such
termination. As of the last day of the 1999 fiscal year Messrs. Hayes, Emrich,
Richard, Geremski and McCutchen held 85,864, 91,334, 8,400, 54,000 and 12,000
shares of restricted stock, respectively, at an aggregate market value of
$745,943, $793,464, $72,975, $469,125 and $104,250, respectively (based upon a
price of $8.6875 per share - the closing price of the Common Stock on the last
business day of the 1999 fiscal year).
(3) The components of the amounts shown in this column for the 1999 fiscal
year consist of the following:
(i) Contributions of $9,600 each to the accounts of Messrs. Hayes,
Emrich, Richard, Geremski and McCutchen, pursuant to the Profit-Sharing Plan.
(ii) Contributions of $30,900, $27,900, $5,400, $9,900 and $7,125 to
the accounts of Messrs. Hayes, Emrich, Richard, Geremski and McCutchen,
respectively, pursuant to the Company's excess benefit plan which is designed to
supplement the Profit-Sharing Plan and the ESOP.
(iii) With respect to Messrs. Emrich, Richard, Geremski and McCutchen,
the value of benefits under the Company's Senior Managers' Life Insurance Plan,
a split dollar plan, and with respect to Mr. Hayes, the value of benefits under
a separate split dollar arrangement with the Company. During the 1999 fiscal
year, each of Messrs. Emrich, Richard, Geremski and McCutchen paid the amount of
the premium associated with the term life component of his split dollar life
insurance coverage. With respect to Mr. Hayes, the Company paid, during the 1999
fiscal year, $9,520 in premiums for the term portion of his coverage, and paid
the remainder of the premium associated with the whole life component of the
coverage. For each named executive officer, the Company expects to recover the
premiums it pays. The following amounts reflect the benefits related to the
non-term portion of the premiums to be paid by the Company under the insurance
policies purchased on the lives of the named executives, in each case with the
non-term portion of the premium being treated as the present value of an
interest-free loan to age 65: Mr. Hayes - $10,097; Mr. Emrich - $9,539; Mr.
Richard - $5,197; Mr. Geremski - $8,120; and Mr. McCutchen - $20,037.
11
<PAGE>
(iv) For the 1999 fiscal year, that portion of interest earned
(that the Securities and Exchange Commission ("SEC") considers to be at above
market rates) on the deferred compensation accounts of Mr. Hayes in the amount
of $10,300.
(4) Mr. Richard joined the Company in January, 1997.
STOCK OPTION EXERCISES AND FISCAL YEAR-END STOCK OPTION VALUES
The table below shows option exercises by the persons named in the "Summary
Compensation Table" above during the 1999 fiscal year, as well as the value of
the options held by such persons at the end of the 1999 fiscal year.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
-----------------------------------------------
AND FISCAL YEAR-END OPTION VALUES
---------------------------------
Number of Securities
Shares Underlying
Acquired Value Unexercised Options at
Name on Exercise (#) Realized ($)(1) Fiscal Year-End (#) (2)
-----------------------
Exercisable/Unexercisable
-------------------------
<S> <C> <C> <C> <C>
Charles A. Hayes 5,625 7,607 46,250/70,000
John A. Emrich - - 36,000/216,000
Christopher J. Richard - - 11,000/36,000
Terrence E. Geremski - - 36,250/140,000
Byron J. McCutchen - - 9,000/26,000
- --------------------
</TABLE>
(1) The value in this column represents the product of the number of options
exercised and the excess of the market value of the underlying Common Stock
on the date of exercise over the option exercise price.
(2) None of the options listed in this column were "in-the-money" on the
last business day of the 1999 fiscal year based on the closing price of
$8.6875.
OTHER BENEFIT PLANS
SUPPLEMENTAL RETIREMENT PLAN. In 1992, the Company adopted the Senior
Managers' Supplemental Retirement Plan (the "SERP") which provides for
retirement and death benefits to a select group of senior managers. The SERP
provides that upon retirement from the Company after attaining age 65, and after
at least 60 months of service with the Company, participants will be entitled to
receive a specified dollar amount for a period of ten years following retirement
("Ten Year Payments"). If the officer dies prior to the termination of his or
her employment or during the period while the Ten Year Payments are being made,
the full amount of the Ten Year Payments or the unpaid portion thereof, as the
case may be, will be paid according to the installment schedule to the officer's
designated beneficiary.
The SERP also provides that if the officer's employment with the
Company is terminated for any reason other than his or her death or disability
(prior to the officer attaining age 65) and the officer has been employed by the
Company for at least 60 months, the officer will be entitled to a reduced
retirement benefit commencing at age 65. Such reduced benefit will be based upon
the officer's total months of employment with the Company as compared with the
total months of employment the officer would have had with the Company if he or
she had remained in the employ of the Company until age 65. If, at the time of
his or her termination of employment with the Company for any reason other than
death or disability, the officer has been employed by the Company for less than
60 months following the effective date of the agreement, he or she will not be
entitled to any retirement benefits and his or her beneficiaries will not be
entitled to any death benefits. If an officer becomes disabled prior to
attaining age 65 and such disability continues until age 65, the officer will be
entitled to receive the full amount of the Ten Year Payments commencing at age
65, regardless of whether he or she has completed 60 months of service with the
Company.
12
<PAGE>
The Company has purchased life insurance policies on the lives of all
executive officers participating in the SERP in amounts which are designed to
enable the Company ultimately to recover all sums paid pursuant to the SERP.
Such life insurance policies are held in trust for the benefit of such officers.
The following table sets forth the Ten Year Payments for each of the
executive officers named in the "Summary Compensation Table" above.
Name of Individual Ten Year Payments (Per Annum)
------------------- -----------------------------
Charles A. Hayes $345,000
John A. Emrich 300,000
Christopher J. Richard 125,000
Terrence E. Geremski 125,000
Byron J. McCutchen 125,000
SEVERANCE AGREEMENTS. The Company has entered into severance
agreements with certain key managers, including each of the executive officers
named in the "Summary Compensation Table" above. The severance agreements
provide for the payment of specified compensation and benefits to such employees
upon certain terminations of their employment within two years after a change in
control of the Company. These severance agreements are intended to assure that
management will continue to act in the interest of the stockholders rather than
be affected by personal uncertainties during any attempts to effect a change in
control of the Company, and to enhance the Company's ability to attract and to
retain executives.
The compensation and benefits which may be awarded under the severance
agreements include, among other specified items of compensation and other
benefits, a lump sum payment equal to three times an employee's highest annual
salary during the year preceding the change in control (including any bonuses
and contributions made on the employee's behalf to the Profit-Sharing Plan, ESOP
and excess benefit plan), and also include continuation of participation in the
Company's life, health, accident and disability and insurance plans for a period
of three years (or until the employee commences full-time substantially
equivalent employment with a new employer). If the total payments made to any
particular employee (other than the Chairman, President and Chief Financial
Officer) under a severance agreement or under any other plan, arrangement or
agreement with the Company would not be tax deductible by the Company by virtue
of Section 280G of the Code, such payments will be reduced until no portion of
such payments would fail to be deductible by reason of being an excess parachute
payment. Pursuant to amendments approved by the Board in November, 1999, any
payments made to the Chairman, President or Chief Financial Officer will not be
reduced as described in the preceding sentence. The Board also approved, at its
November, 1999 meeting, an amendment to the severance agreement for each of the
Chairman, President and Chief Financial Officer, providing that if any severance
payments thereunder or under any other plan, arrangement or agreement with the
Company would cause the imposition of an excise tax on the individual executive
officer by virtue of Section 4999 of the Code, then the Company will make a tax
reimbursement payment to the executive officer in an amount designed to place
him in the same after-tax position he would have been in had such payments not
been subject to the excise tax. The severance agreements further provide that in
order for an employee to receive the benefits contemplated by the severance
agreement, if any person or organization takes steps designed to effect a change
in control of the Company, the employee will not voluntarily terminate his or
her employment and will continue to perform his or her regular duties, until
such person or organization has abandoned or terminated such effort to effect a
change in control.
Had a "change in control" taken place during the fiscal year ended
October 3, 1999, Messrs. Hayes, Emrich, Richard, Geremski and McCutchen would
have received (taking into account the severance agreement amendments described
in the preceding paragraph), had their employment ceased on that date, lump sum
payments in the approximate amounts of $7,321,150, $6,207,910, $898,189,
$3,692,246 and $1,293,160, respectively.
CERTAIN TRANSACTIONS
During the 1999 fiscal year, the Company paid $150,000 in consulting
fees to Japan Tech, Inc., of which Mr. Adachi, a director of the Company, is the
President and controlling stockholder. In addition, in the ordinary course of
its business and through a series of arm's-length transactions, the Company
purchased machinery, equipment and certain services from Japan Tech, Inc. during
the 1999 fiscal year totaling approximately $332,000.
13
<PAGE>
In the ordinary course of business and through a series of arm's-length
transactions, during the 1999 fiscal year, the Company paid $1,067,409 for
forklifts and forklift repairs to Western Carolina Forklift, Inc., which is
controlled by David Hayes, the son of Charles A. Hayes, the Chairman and Chief
Executive Officer of the Company. Charles A. Hayes, together with George
Greenberg, a director of the Company, serve on the Board of Directors of Western
Carolina Forklift, Inc.
Dr. Zaidenweber (a director of the Company) serves as the Chairman of
the Board of Grupo Ambar, S.A. de C.V., a subsidiary of the Company ("Grupo
Ambar"). Dr. Zaidenweber, who is a minority stockholder of Grupo Ambar, receives
an annual salary of approximately $300,000 for his service as Chairman of the
Board of Grupo Ambar.
An indirect wholly-owned subsidiary of the Company (the "Optionee") is
a party to an option agreement with Tucci Associates, Inc. (the "Optionor"),
pursuant to which the Optionor granted the Optionee the exclusive right to
acquire certain proprietary technology. Nathan Dry, the Company's Vice President
and General Manager of Apparel, owns 24.5% of the capital stock, and is the
President, of the Optionor. If it elects to exercise the option, then the
Optionee will be required to make an additional payment to the Optionor of
$4,975,000.
During the 1999 fiscal year, the Company guaranteed the repayment of a
$40,000 loan which a third party extended to Nathan Dry.
Pursuant to the Hofmann Purchase Agreement, the Company acquired during
the 1996 fiscal year 100% of the issued and outstanding capital stock of the
Hofmann Companies from Bruno Hofmann, a director of the Company. In connection
with such acquisition, Mr. Hofmann entered into an employment agreement with the
Hofmann Companies pursuant to the amended terms of which he will serve as
General Manager of the Hofmann Companies for a period ending on December 31,
2000. The Hofmann Companies, as a group, pay Mr. Hofmann an annual base salary
of $305,000 in consideration for such services. Under the terms of his amended
employment agreement, Mr. Hofmann is also eligible to receive a cash bonus of up
to 75% of his annual base salary based upon the Company's earnings per share
results. Since the Company's acquisition of the Hofmann Companies, Mr. Hofmann
has not received any cash bonus from either the Company or the Hofmann
Companies.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers, and any persons holding
more than 10% of the Company's equity securities, to file with the SEC and the
New York Stock Exchange reports disclosing their initial ownership of the
Company's equity securities, as well as subsequent reports disclosing changes in
such ownership. To the Company's knowledge, based solely on a review of such
reports furnished to it and written representations by certain reporting persons
that no other reports were required, during the 1999 fiscal year, the Company's
directors, executive officers and greater than 10% beneficial owners complied
with all Section 16(a) filing requirements, except that Mr. Richard, an
executive officer of the Company, did not timely file one report for one
transaction representing a purchase of an aggregate of 608 shares of Common
Stock.
RATIFICATION OF THE SELECTION OF
INDEPENDENT AUDITORS FOR THE
FISCAL YEAR ENDING OCTOBER 1, 2000
The Board has selected Arthur Andersen LLP to serve as independent
auditors to audit the financial statements of the Company for the fiscal year
ending October 1, 2000 and recommends that stockholders vote to ratify such
selection. Representatives of Arthur Andersen LLP are expected to attend the
Annual Meeting and will be afforded an opportunity to make a statement and to
respond to appropriate questions.
THE BOARD RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS
RATIFY THE SELECTION OF ARTHUR ANDERSEN LLP
14
<PAGE>
MISCELLANEOUS
STOCKHOLDER PROPOSALS
Any stockholder who wishes to present a proposal for action at the next
annual meeting and who wishes to have it set forth in the Proxy Statement and
identified in the form of proxy prepared by the Company must notify the Company
in such manner so that such notice is received by the Company by August 25, 2000
and in such form as is required under the rules and regulations promulgated by
the SEC.
A proposal submitted by a stockholder outside of the process of SEC
Rule 14a-8 will not be considered timely unless notice of such proposal is
received by the Company at its principal executive offices prior to the notice
date set forth in the Company's advance notice By-Law provision described in the
following paragraph. The proxy to be solicited on behalf of the Company's Board
of Directors for the annual meeting to be held in 2001 may confer discretionary
authority to vote on any such proposal not considered to have been timely
received that nonetheless properly comes before the 2001 annual meeting.
Under the By-Laws, in order for business to be properly brought before
the next annual meeting, notice of such business must be received by the
Secretary of the Company not less than 60 days and not more than 90 days prior
to such meeting (provided that if less than 70 days notice or prior public
disclosure of the date of the meeting is given to stockholders, notice of such
business must be received by the Secretary of the Company no later than ten days
following the day on which notice of the date of the meeting was mailed or such
public disclosure was made, whichever occurs first). Such notice must contain
(i) a brief description of the business and the reasons for conducting it at the
meeting, (ii) the name and address of the stockholder proposing such business,
(iii) a representation that the proposing stockholder is a holder of record and
the number of shares of the Company that are beneficially owned by such
stockholder and (iv) a description of any material interest of such stockholder
in such business. The chairman of the meeting may disregard any business that he
or she determines was not properly brought before the meeting in accordance with
the By-Laws.
The By-Laws also provide that if a stockholder of the Company intends
to nominate at a meeting one or more persons for election to the Board, notice
of such nomination must be received by the Secretary of the Company not less
than 60 days and not more than 90 days prior to such meeting (provided that if
less than 70 days notice or prior public disclosure of the date of the meeting
is given to stockholders, such nomination must be received by the Secretary of
the Company no later than ten days following the day on which notice of the date
of the meeting was mailed or such public disclosure was made, whichever occurs
first). Such notice must contain (a) as to each proposed nominee, (i) the name,
age and business and residence address of such nominee, (ii) the principal
occupation of such nominee, (iii) the number of shares, if any, of the Company
that are beneficially owned by such nominee and (iv) any other information that
must be disclosed pursuant to the proxy rules of the SEC if such person had been
nominated by the Board and (b) as to the proposing stockholder, (i) the name and
address of such stockholder, (ii) a representation that the proposing
stockholder is a holder of record of shares of the Company entitled to vote at
the meeting and the number of shares of the Company that are beneficially owned
by such stockholder, (iii) a representation that the proposing stockholder
intends to appear in person or by proxy at the meeting to nominate the person or
persons specified in the notice and (iv) a description of all arrangements and
understandings between the stockholder and each nominee pursuant to which the
nominations are to be made by the stockholder. The chairman of the meeting may
disregard any nomination that he or she determines was not made in accordance
with the foregoing procedures. Pursuant to an amendment adopted by the Board of
Directors in November, 1998, the By-Laws also provide that no director may serve
as such beyond the age of 70, except that directors serving as such on September
5, 1998 may serve until the later of the expiration of their current term of
office or age 72.
ANNUAL REPORT ON FORM 10-K
Any stockholder of record on December 17, 1999 who desires a copy of
the Company's 1999 Annual Report on Form 10-K, as filed with the SEC, may obtain
a copy (excluding exhibits) without charge by addressing a request to the
Secretary, Guilford Mills, Inc., P.O. Box 26969, Greensboro, North Carolina
27419-6969. A charge equal to the reproduction cost will be made if the exhibits
are requested.
15
<PAGE>
OTHER MATTERS
The Board is not aware of any matters to be presented for action at the
Annual Meeting other than those described herein and does not intend to bring
any other matters before the Annual Meeting. However, if other matters shall
come before the Annual Meeting, it is intended that the holders of proxies
solicited hereby will vote thereon in their discretion.
By Order of the Board of Directors
/s/Robert A. Emken, Jr.
Robert A. Emken, Jr.
GENERAL COUNSEL AND SECRETARY
Dated: December 22, 1999
<PAGE>
********************************************************************************
APPENDIX
GUILFORD MILLS, INC.
ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 3, 2000
Proxy Solicited by the Board of Directors
The undersigned hereby appoints CHARLES A. HAYES and TERRENCE E. GEREMSKI, or
either of them, with full power of substitution in each, proxies (and if the
undersigned is a proxy, substitute proxies) to vote all Common Stock of the
undersigned in Guilford Mills, Inc. at the Annual Meeting of Stockholders of
such Company to be held on February 3, 2000, and at any and all adjournments
thereof, with authority to vote such stock on the matters set forth on the
reverse side hereof and upon such other matters as may properly come before the
meeting.
- --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED?
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Continued and to be signed on reverse side)
<PAGE>
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
GUILFORD MILLS, INC.
February 3, 2000
(arrow) Please Detach and Mail in the Envelope Provided (arrow)
[x] Please mark your
votes as in this
example.
<TABLE>
<CAPTION>
WITHHOLD
FOR ALL AUTHORITY
EXCEPT to vote for all nominees
(as noted below) listed at right.
<S> <C> <C> <C>
1. Election of
Directors [ ] [ ] Nominees: Sherry R. Jacobs
Tomokazu Adachi
NOTE: If you do not wish your shares voted "FOR" a John A. Emrich
particular nominee, mark the "FOR ALL EXCEPT" Bruno Hofmann
box and strike a line through the name(s) of the Stig A. Kry
nominee(s). Your shares will be voted for the
remaining nominee(s).
</TABLE>
FOR AGAINST ABSTAIN
2. Proposal to approve the appointment of Arthur
Andersen LLP as independent auditors of the
Company. [ ] [ ] [ ]
Discretion will be used with respect to such other matters as may properly come
before the meeting or at any adjournments thereof.
This Proxy is solicited by the Board of Directors. If no specification is made,
this Proxy will be voted FOR Proposals 1 and 2.
Mark box at right if an address change has
been noted on the reverse side of this card. [ ]
Please be sure to sign and date this Proxy.
Stockholder sign here_____________________________________________
Co-owner sign here________________________________________________
Date:_____________________________________________________________
NOTE: Please sign name as it appears on stock certificate. Only one of several
joint owners need sign. Fiduciaries should give full title.
