SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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[ ] Soliciting Material Pursuant to Section 240.14a-12
NAUTICA ENTERPRISES, INC.
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(Name of Registrant as Specified In Its Charter)
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NAUTICA ENTERPRISES, INC.
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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New York, New York
June 6, 2003
To the Stockholders of
NAUTICA ENTERPRISES, INC.
The Annual Meeting of Stockholders of Nautica Enterprises, Inc. will be
held on July 8, 2003 at the offices of the Company, 40 West 57th Street, New
York, New York, 7th floor, at 10:00 a.m. for the following purposes:
(1) To elect directors to serve until the next annual meeting of
stockholders or until their successors are duly elected and qualified;
(2) To ratify the appointment of Grant Thornton LLP as the Company's
independent certified public accountants for the fiscal year ended
February 28, 2004; and
(3) To transact such other business as may properly come before the meeting
and any adjournment or postponement thereof.
Only stockholders of record at the close of business on May 29, 2003 are
entitled to notice of and to vote at the meeting and any adjournment or
postponement thereof.
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING IN PERSON, BUT WISH
THEIR STOCK TO BE VOTED ON MATTERS TO BE PRESENTED TO THE MEETING, ARE URGED TO
REVIEW THE ATTACHED PROXY STATEMENT PROMPTLY AND THEN COMPLETE AND RETURN THE
ENCLOSED PROXY IN THE ACCOMPANYING POSTAGE-PAID, ADDRESSED ENVELOPE, OR VOTE BY
TELEPHONE OR VIA THE INTERNET BY FOLLOWING THE INSTRUCTIONS FOR VOTING SET FORTH
IN THE ATTACHED PROXY STATEMENT AND ON THE PROXY CARD. IF YOU ATTEND THE
MEETING, YOU MAY WITHDRAW YOUR PROXY AND VOTE YOUR SHARES PERSONALLY.
By Order of the Board of Directors,
HARVEY SANDERS,
Chairman
NAUTICA ENTERPRISES, INC.
40 WEST 57TH STREET
NEW YORK, NEW YORK 10019
PROXY STATEMENT
This Proxy Statement is furnished with respect to the solicitation of
proxies by the Board of Directors of Nautica Enterprises, Inc. (the "Company")
for the Annual Meeting of Stockholders of the Company to be held at 10:00 a.m.
on July 8, 2003 and at any adjournment or postponement thereof, at 40 West 57th
Street, 7th floor, New York, New York. The approximate date on which the Proxy
Statement and form of proxy were first sent or given to stockholders was June 6,
2003.
As of the close of business on May 29, 2003, the date for determining the
stockholders of record entitled to notice of and to vote at the Annual Meeting
and any adjournment or postponement thereof, there were issued and outstanding
33,590,100 shares of the Company's Common Stock, the holders thereof being
entitled to one vote per share. The presence at the Annual Meeting of a majority
of such shares, in person or by proxy, are required for a quorum. All shares
that have been properly voted, whether by telephone, Internet or mail, and not
revoked, will be treated as being present for the purpose of determining the
presence of a quorum at the Annual Meeting and will be voted at the Annual
Meeting.
The form of proxy solicited by the Board of Directors affords stockholders
the ability to specify a choice among approval of, disapproval of, or abstention
with respect to, each matter to be acted upon at the Annual Meeting. Shares
represented by the proxy will be voted and, where the solicited stockholder
indicates a choice with respect to any matter to be acted upon, the shares will
be voted as specified. If any other matters are properly presented for
consideration at the Annual Meeting, the persons named in the proxy will have
the discretion to vote on those matters.
The expense of the solicitation of proxies for the meeting, including the
cost of mailing, will be borne by the Company. In addition to mailing copies of
the enclosed proxy materials to stockholders, the Company may request persons,
and reimburse them for their expenses with respect thereto, who hold stock in
their names or custody or in the names of nominees for others to forward copies
of such materials to those persons for whom they hold stock of the Company and
to request authority for the execution of the proxies. In addition to the
solicitation of proxies by mail, it is expected that some of the officers,
directors, and regular employees of the Company, without additional
compensation, may solicit proxies on behalf of the Board of Directors by
telephone, telefax, and personal interview.
Stockholders of record may vote by telephone, via the Internet or by mail.
A toll-free telephone number and web site address are included on the proxy
card. For stockholders who choose to vote by mail, a postage-paid envelope is
provided.
Voting by Telephone. Stockholders of record may vote by using the
toll-free number listed on the proxy card. Telephone voting is available 24
hours a day. Easy-to-follow voice prompts allow stockholders to vote their
shares and confirm that their instructions have been properly recorded. The
Company's telephone voting procedures are designed to authenticate stockholders
by using individual control numbers provided on each proxy card. Stockholders
who vote by telephone need not return the proxy card. Please see the proxy card
for specific instructions.
Voting via the Internet. Stockholders of record may also vote via the
Internet as instructed on the proxy card. Internet voting is available 24 hours
a day. As with telephone voting, stockholders will be given the opportunity to
confirm that votes have been properly recorded. The Company's Internet voting
procedures are designed to authenticate stockholders by using individual control
numbers provided on each proxy card. Stockholders who vote via the Internet need
not return the proxy card. Please see the proxy card for specific instructions.
Voting by Mail. If a stockholder chooses to vote by mail, the proxy card
should be signed, dated and returned in the postage-paid envelope provided. If a
proxy card is signed, dated and mailed without indicating how it should be
voted, it will be voted as recommended by the Board of Directors.
PROPOSAL ONE
ELECTION OF DIRECTORS
The persons named in the accompanying proxy intend to vote for the election
as directors the eight nominees listed herein. All of the nominees have
consented to serve if elected. All directors will be elected to hold office
until the next annual meeting of stockholders, and, in each case, each director
will serve until his successor is elected and qualified or until his earlier
resignation or removal. If a nominee should be unable to act as a director,
which is not anticipated, the persons named in the proxy will vote for any
nominee who shall be designated by the present Board of Directors to fill the
vacancy. Each of the nominees presently serves as a director.
Set forth below is biographical information for each of the nominees.
Unless otherwise indicated, each has served in his stated capacity for the last
five years:
Robert B. Bank, age 56, has been a Director of the Company since 1989. He
is President of Robert B. Bank Advisory Services, a private capital investment
and consulting firm.
David Chu, age 48, joined the Company in 1984 and has been a Director since
1987. He was elected Vice Chairman of the Company in 2001. Mr. Chu served as
Executive Vice President of the Company from 1989 until 2001, and served as
President of Nautica International, Inc. and Nautica Apparel, Inc., each
wholly-owned subsidiaries of the Company, from 1984 until 2001.
Israel Rosenzweig, age 55, has been a Director of the Company since 1990.
He is a Senior Vice President of BRT Realty Trust and has served in this
capacity since April 1, 1998. On March 28, 2000, Mr. Rosenzweig became President
of GP Partners, Inc., a corporation that renders advice to two private funds
engaged in investing primarily in securities of real estate investment trusts
and financial institutions. He was a Director of Bankers Federal Savings FSB, a
savings and loan association from 1993 through April 1997, and was its Executive
Vice President and Chief Lending Officer from November 1994 through April 1997.
From May 1, 1997 to March 31, 1998, Mr. Rosenzweig was associated on a full-time
basis with Gould Investors, L.P., a limited partnership which owns a diverse
real estate portfolio, and he is currently a Vice President of the managing
general partner of such limited partnership.
Harvey Sanders, age 53, has been President, Chief Executive Officer and a
Director of the Company since 1977 and Chairman of the Board since October 1993.
2
Charles H. Scherer, age 59, has been a Director of the Company since May
1994. He is managing partner of Hughes Hubbard & Reed LLP, an international law
firm that provides legal services to the Company.
Steven H. Tishman, age 46, became a Director of the Company in September
2001. He has been a Managing Director of Rothschild Inc. since November 2002.
Prior to November 2002, he was a Managing Director of Robertson Stephens
beginning in November 1999. Prior to November 1999, Mr. Tishman was a Senior
Managing Director of Bear, Stearns & Co. Inc. Mr. Tishman is a Director of
Claire's Stores, Inc. and Cedar Fair, L.P.
John Varvatos, age 48, has been a Director of the Company since April 2000.
He has served as Senior Vice President of the Company since September 1998 and
President of John Varvatos Company since October 1999. From July 1994 to August
1998, he was Senior Vice President of Men's Design for Polo/Ralph Lauren.
Ronald G. Weiner CPA, age 57, has been a Director of the Company since
October 1995. He is President of Perelson Weiner LLP, a certified public
accounting firm based in New York City.
Shares represented by proxies solicited by the Board of Directors will,
unless contrary instructions are given, be voted in favor of the election as
Directors of the nominees named above. If a stockholder wishes to withhold
authority to vote for any nominee, such stockholder can do so by following the
directions set forth on the form of proxy solicited by the Board of Directors or
on the ballot distributed at the Annual Meeting if such stockholder wishes to
vote in person. Directors shall be elected by a plurality vote of the shares of
Common Stock present in person or represented by proxy at the meeting.
Abstentions and broker non-votes will have no effect on the election of
directors. Broker non-votes occur when a person holding shares through a bank or
brokerage account does not provide instructions as to how his or her shares
should be voted and the broker does not exercise discretion to vote those shares
on a particular matter.
During fiscal year 2003, the Board of Directors held six meetings. The
Compensation Committee of the Board of Directors is comprised of Messrs. Bank
and Weiner. The Compensation Committee reviews the Company's compensation
policies and practices and develops recommendations with respect to compensation
for the Company's senior executives. The Audit Committee of the Board of
Directors is comprised of Messrs. Bank, Rosenzweig and Weiner. The Audit
Committee reviews the audit plan with the Company's independent certified public
accountants, the scope and results of their audit and other related audit and
accounting issues. All of the members of the Audit Committee and the
Compensation Committee are "independent directors" as independence is defined in
the Marketplace Rules of The Nasdaq Stock Market. During fiscal year 2003, the
Compensation Committee held two meetings and the Audit Committee held four
meetings. The Nominating Committee of the Board of Directors is comprised of
Messrs. Bank, Rosenzweig, Tishman and Weiner. The Nominating Committee
identifies candidates for election to the Board of Directors. The committee will
consider nominations from stockholders, provided they are made in accordance
with the Company's By-laws. Each of the incumbent directors attended at least
75% of the meetings of the Board and the committees to which the director was
assigned, with the exception of Mr. Varvatos, whose schedule resulted in his
attending fewer Board meetings.
3
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors oversees the Company's
financial reporting process on behalf of the Board of Directors. Management of
the Company has the primary responsibility for the Company's financial
statements and reporting process, including the Company's systems of internal
controls. The Audit Committee is comprised of three independent directors and
operates under a written charter annually adopted by the Board of Directors. On
April 29, 2003, the Board of Directors amended the charter of the Audit
Committee to reflect, among other things, requirements of recently adopted
federal legislation, including the Sarbanes-Oxley Act of 2002, new and proposed
rules of the Securities and Exchange Commission and certain proposed listing
standards of The Nasdaq Stock Market. A copy of such charter, as amended, is
annexed to this Proxy Statement as Annex A.
In the performance of its oversight responsibilities, the Audit Committee
has reviewed and discussed the audited financial statements of the Company for
the fiscal year ended March 1, 2003 with management of the Company, including a
discussion of the quality and acceptability of the Company's financial reporting
and controls. In addition, the Audit Committee has discussed with the
independent certified public accountants, who are responsible for expressing an
opinion on the fair presentation of those audited financial statements in
accordance with accounting principles generally accepted in the United States of
America, the matters required to be discussed by Statement on Auditing Standards
No. 61, as amended, Communication with Audit Committees.
The Audit Committee has received the written disclosures and the letter
from the independent certified public accountants required by Independence
Standards Board Standard No. 1, Independence Discussions with Audit Committees,
and has discussed with the independent certified public accountants such
accountants' independence. The Audit Committee also considered whether the
independent certified public accountants' provision of non-audit related
services to the Company is compatible with maintaining independence. Further,
the Audit Committee discussed with the Company's independent certified public
accountants the overall scope of their audit. The Audit Committee meets
periodically with the Company's independent certified public accountants, with
and without management present, to discuss the results of their audits or
reviews, their assessments of the Company's internal controls and the overall
quality of the Company's financial reporting.
In reliance on the review and discussions described above with management
and the independent certified public accountants, and subject to the limitations
of the Audit Committee's role, the Audit Committee recommended to the Board of
Directors that the audited financial statements referred to above be included in
the Company's Annual Report on Form 10-K for the fiscal year ended March 1, 2003
and filed with the Securities and Exchange Commission. The Audit Committee has
also recommended and the Board of Directors has approved, subject to stockholder
ratification as discussed in Proposal Two below, the selection of the Company's
independent certified public accountants.
Submitted by the Audit Committee
Ronald G. Weiner, Chairman,
Robert B. Bank, and
Israel Rosenzweig
4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding ownership of
the Company's Common Stock as of May 23, 2003 by each nominee for director, by
each of the executive officers of the Company included in the Summary
Compensation Table below, by all directors and executive officers as a group
and, as of the dates set forth in footnotes 3 and 4 below, by all stockholders
known to the Company to have been beneficial owners of more than five percent of
its Common Stock.
AMOUNT BENEFICIALLY PERCENT OF
NAME OF BENEFICIAL OWNER OWNED(1)(2) CLASS(%)
------------------------ ------------------- ----------
Robert B. Bank...................................... 32,000 *
David Chu........................................... 1,795,392 5.1
Paulette McCready................................... 163,700 *
Israel Rosenzweig................................... 20,000 *
Harvey Sanders...................................... 4,698,440 13.5
Charles H. Scherer.................................. 21,000 *
Steven H. Tishman................................... 3,000 *
John Varvatos....................................... 116,000 *
Ronald G. Weiner.................................... 27,500 *
Don Witkowski....................................... 7,000 *
All Directors and Executive Officers as a group..... 6,884,032 18.8
FMR Corp. and related parties(3).................... 3,580,000 10.7
Royce & Associates, Inc.(4)......................... 2,931,000 8.7
---------------
* Indicates holdings of less than 1%.
(1) Directly and indirectly. The inclusion of securities owned by others as
beneficially owned by the respective nominees and officers does not
constitute an admission that such securities are beneficially owned by them.
All of the named individuals have, except as set forth in Note 2 below, sole
voting and investment powers with respect to the aforesaid shares.
(2) Includes the following shares which may be acquired pursuant to existing
stock options which are exercisable on or before July 22, 2003: Robert B.
Bank -- 32,000; David Chu -- 1,358,940; Paulette McCready -- 163,700; Israel
Rosenzweig -- 20,000; Harvey Sanders -- 1,294,500; Charles H.
Scherer -- 20,000; Steven H. Tishman -- 1,000; John Varvatos -- 116,000;
Ronald G. Weiner -- 20,000; and, Don Witkowski -- 7,000. With respect to Mr.
Sanders, includes 1,200,000 shares owned by the Harvey Sanders Grantor
Retained Income Trust. Such trust has sole voting and investment power with
respect to such shares.
(3) Information is based upon statements filed under Section 13 of the
Securities Exchange Act of 1934 reporting shareholdings as of December 31,
2002. In addition to FMR Corp., related parties on the filing are Fidelity
Low Priced Stock Fund, Fidelity Management and Research Company, Edward C.
Johnson 3d and Abigail P. Johnson. The reporting persons have sole
dispositive power with respect to all 3,580,000 shares. The address for FMR
Corp. and related parties is 82 Devonshire Street, Boston, Massachusetts
02109.
(4) Information is based upon statements filed under Section 13 of the
Securities Exchange Act of 1934 reporting shareholdings as of December 31,
2002. Royce & Associates, Inc. is deemed to have sole voting and dispositive
power with respect to all 2,931,000 shares. The address for Royce &
Associates, Inc. is 1414 Avenue of the Americas, New York, New York 10019.
5
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the fiscal years ended March 1, 2003, March
2, 2002 and March 3, 2001 the cash compensation paid by the Company and its
subsidiaries, to the Company's Chief Executive Officer and each of the four most
highly compensated executive officers of the Company other than the Company's
Chief Executive Officer as of March 1, 2003.
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
----------------- ------------ ALL OTHER
SALARY BONUS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#) ($)(1)
--------------------------- ---- ------- ------- ------------ ------------
Harvey Sanders.......................... 2003 941,169 498,418 -- 3,345
Chairman of the Board, 2002 943,115 162,800 -- 2,001
Chief Executive Officer and President 2001 915,971 526,800 -- 2,956
David Chu............................... 2003 459,633 374,950 -- 6,244
Vice Chairman 2002 834,418 130,200 -- 5,231
2001 811,115 421,400 --
6,251
Paulette McCready(2).................... 2003 550,000 388,239 -- 2,687
President -- Nautica Jeans Company and 2002 553,739 398,500 -- 1,530
Nautica Children's Company, wholly- 2001 531,388 110,000 -- 2,550
owned subsidiaries of the Company
John Varvatos(2)........................ 2003 735,000 67,271 -- 3,135
President -- John Varvatos Company, 2002 736,346 -- -- 3,135
a wholly-owned subsidiary of the 2001 728,885 330,000 -- 3,135
Company
Don Witkowski(3)........................ 2003 650,000 437,415 -- 1,158
President -- Nautica International, 2002 415,385 -- 35,000 --
Inc.,
a wholly-owned subsidiary of the
Company
---------------
(1) "All Other Compensation" is comprised of contributions made by the Company
to the named executives pursuant to the Company's 401(k) Plan and, with
respect to Messrs. Sanders, Chu and Varvatos in 2003, 2002 and 2001, the
following additional amounts representing the economic value attributable to
each of them for split-dollar life insurance, respectively: Mr.
Sanders -- $547, $471 and $406; Mr. Chu -- $3,473, $3,701 and $3,701; and,
Mr. Varvatos -- $3,135, $3,135 and $3,135. Due to considerations raised by
the Sarbanes-Oxley Act of 2002, the Company has ceased paying premiums under
such split-dollar life insurance policies.
6
(2) Ms. McCready, age 44, joined the Company in 1990 and has held numerous
positions, most recently as President of Nautica Jeans Company and Nautica
Children's Company. Mr. Varvatos joined the Company in 1998 as a Senior Vice
President and is currently President of John Varvatos Company.
(3) Mr. Witkowski commenced working for the Company on October 29, 2001 and
ceased working for the Company on May 19, 2003.
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the Company's
executives listed in the Summary Compensation Table above, concerning the
exercise of options during the last fiscal year and unexercised options held as
of the end of the 2003 fiscal year:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FY-END(#) AT FY-END($)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- ----------- ------------------------- -------------------------
Harvey Sanders............ 337,500 3,716,213 1,214,500/120,000 1,364,730/0
David Chu................. -- -- 1,278,940/120,000 2,822,695/0
Paulette McCready......... -- -- 137,000/ 46,700 0/0
John Varvatos............. -- -- 91,000/ 54,000 0/0
Don Witkowski............. -- -- 7,000/ 28,000 0/0
DIRECTOR COMPENSATION
During fiscal year 2003, each non-employee Director received compensation
of $2,000 for each Board and committee meeting attended, and an annual fee of
$20,000. No fees are payable to officers and employees of the Company who serve
as directors.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company and Messrs. Sanders and Chu have entered into an agreement that
provides that upon the death of either of them, the Company will purchase a
portion of the shares of Common Stock of such stockholder. The Company has
obtained policies of life insurance on the lives of such stockholders for the
purpose of utilizing the proceeds from such insurance for the purchase of the
shares. The agreement provides for the Company to purchase the shares of the
deceased stockholder at a value which is equal to the average of the last sale
price as reported on the National Market List of the Nasdaq (or the closing
price if the shares are listed on a national securities exchange) for the thirty
trading days prior to the date of death of the deceased stockholder. The
Company's obligation to purchase the Common Stock of the deceased stockholder is
limited to the life insurance proceeds received by the Company on the death of
such stockholder. The agreement also provides, as soon after the death of the
stockholder as is practicable, for the filing of a registration statement with
the Securities and Exchange
7
Commission for a secondary offering to provide for the sale of the balance of
the shares owned by the deceased stockholder.
Mr. David Chu, Vice Chairman of the Company, is entitled to receive 50% of
the net income Nautica Apparel, Inc. receives from all royalty income earned
with respect to the Nautica name and trademarks. For the year ended March 1,
2003, Mr. Chu earned net royalty income of $9,305,282. Through a separate
arrangement, Mr. Chu was entitled to receive, subject to certain conditions, a
design fee of up to 1.5% of the net sales of certain new products. On January 7,
2002, this agreement was cancelled by the Company for a payment of $5,630,123.
During fiscal year 2003, the Company paid $539,089 to the law firm of
Hughes Hubbard & Reed LLP for professional services rendered to the Company.
Samuel Sultanik, Esq., the brother-in-law of Harvey Sanders, Chairman of the
Board, Chief Executive Officer and President of the Company, is a partner of
Hughes Hubbard & Reed LLP and Charles H. Scherer, Esq., a Director of the
Company, is managing partner of Hughes Hubbard & Reed LLP. From time to time,
Rothschild Inc. may provide financial advisory services to the Company. Steven
H. Tishman, a Director of the Company, is a Managing Director of Rothschild Inc.
No such services were provided to the Company during fiscal year 2003.
During fiscal year 2003, the Company paid $55,272 to the firm of
Chu/Pettersen Interior Design, Inc. for interior design and related services
provided to the Company. Mr. Peter Chu, the brother of David Chu, Vice Chairman
of the Company, is a stockholder and Vice President in such firm.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of
its Common Stock to file reports of ownership and changes in ownership with the
Securities and Exchange Commission (the "Commission"). Officers, directors and
greater than ten percent stockholders are required by the Commission to furnish
the Company with copies of all Section 16(a) forms they file.
The Company believes that, based solely on its review of the copies of such
forms received by it, or written representations from certain reporting persons
that no reports on Form 5 were required for those persons, during fiscal year
2003 all Section 16(a) reports applicable to its officers, directors and greater
than ten percent stockholders were timely filed.
EMPLOYEE CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
The Company has entered into agreements with Messrs. Sanders, Chu and
Varvatos providing that in the event of a change in control of the Company, as
defined in the agreements, each has the right to receive a lump sum payment upon
termination of employment other than for cause, for permanent disability or for
resignation for good reason within three years after the change in control. At
March 1, 2003, the maximum amount payable to Mr. Sanders, Mr. Chu and Mr.
Varvatos under such agreements was $4,311,000, $2,556,500 and $2,460,800,
respectively.
8
The Company has entered into split-dollar agreements with trusts
established by each of Mr. Sanders and Mr. Chu, and with Mr. Varvatos. Pursuant
to each of the agreements, the Company pays the annual premium on specified life
insurance policies owned by each of the trusts and by Mr. Varvatos, net of the
amount of the "economic benefit" attributable to each of the employees. The
amount of the premiums paid by the Company constitutes indebtedness from each of
the trusts and Mr. Varvatos to the Company and is secured by collateral
assignments of each of the insurance policies to the Company. The premium
payable by the Company in fiscal 2003 for the benefit of Mr. Sanders' trust was
$57,232, for Mr. Chu's trust, $49,402 and for Mr. Varvatos, $89,336. Due to
considerations raised by the Sarbanes-Oxley Act of 2002, the Company has ceased
paying premiums under such split-dollar life insurance policies. The face value
of the policy for Mr. Sanders' trust is $5,000,000, for Mr. Chu's trust,
$5,050,000 and for Mr. Varvatos, $5,000,000.
The Company has entered into an employment agreement with Mr. Varvatos
which provides for continued service by Mr. Varvatos in his present position as
President of John Varvatos Company ("JVC") until February 28, 2005, subject to
extension for additional three year segments unless either the Company or Mr.
Varvatos provides notice of non-extension. During fiscal year 2003, Mr. Varvatos
was entitled to receive a salary of $735,000. Thereafter, any increases are
determined by the Board of Directors, subject to a minimum increase of no less
than 5%. Mr. Varvatos is entitled to annual bonuses in accordance with the
Company's policies in effect from time to time. The employment agreement
includes the change in control provisions set forth above and provides that if
during the term of employment Mr. Sanders is no longer employed by the Company
then the Company shall exercise one of the following options: (i) spin-off to
the Company's stockholders the shares of JVC with Mr. Varvatos serving as its
Chief Executive Officer; (ii) sell JVC to Mr. Varvatos at fair market value, or
(iii) pay to Mr. Varvatos an annual amount equal to 10% of JVC's net income
(after taxes) for so long as he remains JVC's Chief Executive Officer. The
Company can elect to cease making the annual payments provided for in clause
(iii) above by making a lump sum payment to the executive in an amount equal to
two times the JVC average annual net income (after taxes) for the prior three
years; provided, however, such sum shall not exceed $50 million. Mr. Varvatos
has assigned to the Company all of his right, title and interest in and to the
names John Varvatos, Varvatos and John Varvatos Company, and any derivations
thereof.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Robert B. Bank and Ronald G. Weiner serve as members of the compensation
committee (the "Compensation Committee") of the Board of Directors. No member of
the Compensation Committee has a relationship that would constitute an
interlocking relationship with the Company's executive officers or other
Directors.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors consists of two
independent non-employee directors. The Compensation Committee reviews the
Company's executive compensation policies and practices and develops
recommendations to the Board with respect to compensation for the Company's
senior executives. An executive compensation program adopted by the Board
provides a framework for
9
administering the Company's executive compensation program. The Committee also
administers the Company's Incentive Compensation Plan and the 1996 Stock
Incentive Plan.
The goals of the Company's compensation policies are as follows:
- to attract, retain, reward and motivate executive officers and employees
by establishing compensation levels generally competitive with the
marketplace;
- to align executive compensation with the Company's business objectives;
- to position compensation to reflect the individual's performance as well
as the level of responsibility, skill and strategic value of the
executive; and
- to align the interests of the Company's employees with those of its
stockholders.
In setting compensation, the Compensation Committee reviews, with the
assistance, from time to time, of independent compensation consultants,
available information for similar positions or levels at comparable companies.
Such companies include a diverse range of apparel manufacturers with sales
within, below and above the range of sales of the Company. The Compensation
Committee has adopted a policy to seek to maintain executive compensation within
the deduction cap of Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code").
The Company's executive compensation program consists of three main
components: base salary, cash bonus or incentive awards, and long-term
stock-based incentives. Base salaries are determined with reference to a
competitive norm and job grades with consideration given to the executive's
strategic value, experience, proficiency and performance. Ranges of salary are
assigned to each grade with a minimum salary representing the lowest entry
level, a midpoint salary representing a market value of experienced good
performers and a maximum salary representing the highest value for the most
experienced and proficient employees. Cash bonuses to eligible employees are
based upon a formula to provide a direct "pay-for-performance" vehicle. The
annual bonus also serves to focus executives on those activities that most
directly affect stockholder value which are within their control and for which
they are held accountable. At the beginning of the fiscal year, specific
performance measures and goals are established based upon corporate and/or
business unit profitability and individual performance. Each participant is
assigned a target bonus award opportunity that relates to his or her level. That
target award level represents the level of bonus payment the participant can
expect to earn in the event all performance goals are achieved at 100% during
the ensuing fiscal year. When performance levels exceed or fall below
expectations, actual awards are proportionately increased or decreased from the
target, with bonuses "at risk." In fiscal year 2003, the target levels
established at the corporate and business unit levels were based upon earnings
before income taxes.
With respect to certain senior executives, including Harvey Sanders, the
Chairman of the Board, President and Chief Executive Officer of the Company,
David Chu, the Vice Chairman of the Company, and John Varvatos, President of
John Varvatos Company, a wholly-owned subsidiary of the Company, annual
incentive award opportunities are set in accordance with the Company's Incentive
Compensation Plan (the "Plan"). At the start of each fiscal year, the
Compensation Committee, in consultation with management, establishes target
levels of either earnings before income taxes, net earnings and/or return on
equity for the Company or a business unit. In fiscal year 2003, threshold levels
of earnings were
10
established. If the designated minimum level of earnings was not achieved, the
participants would have received no incentive award for fiscal year 2003
performance under the Plan (although in its discretion, the Compensation
Committee may authorize awards outside of the Plan). During such year, certain
of the Company's business units exceeded the minimum threshold level, and the
participants received an incremental proportionately greater payment than the
minimum. Other business units did not exceed the minimum and participants
received no bonuses, while others received discretionary bonuses. The
Compensation Committee has established target levels for fiscal year 2004 and
has granted incentive award opportunities for such year to each of Messrs.
Sanders, Chu and Varvatos.
The Company's senior executives are eligible to receive stock options
and/or restricted stock in accordance with the Company's 1996 Stock Incentive
Plan. The objectives of such participation are to align executive and
stockholder long term interests and to enable executives to develop a stock
ownership position in the Company. The Compensation Committee has the
responsibility of granting stock options and restricted stock awards to
executive and management employees. In granting stock options, the Compensation
Committee takes into account Company performance, subsidiary performance and
individual performance, utilizing the same factors as those used in the
determination of cash compensation. The Compensation Committee also takes into
account the number of options held by an individual and the total number of
stock options outstanding. No stock options were granted to the executive
officers listed in the Summary Compensation table above in fiscal year 2003.
The Chairman of the Board, President and Chief Executive Officer of the
Company is Harvey Sanders. The criteria by which the Compensation Committee
determines salary, bonus and the grant of stock options for senior executives,
as set forth above, is also utilized by the Compensation Committee in
determining cash compensation and stock awards for Mr. Sanders.
Compensation Committee
Robert B. Bank
Ronald G. Weiner
11
PERFORMANCE GRAPH
The following performance graph assumes $100 invested in Nautica
Enterprises, Inc. Common Stock, the Nasdaq Stock Market (U.S.) and S&P 600
Textiles Index on March 1, 1998. Where applicable, it assumes reinvestment of
dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN FOR
NAUTICA ENTERPRISES, INC., NASDAQ STOCK MARKET (U.S.) AND
S&P 600 TEXTILES INDEX
FOR THE FIVE YEARS ENDED MARCH 1, 2003
(PERFORMANCE LINE GRAPH)
BASE YEARS ENDING MARCH 1,
------------------------------------------------
1998 1999 2000 2001 2002 2003
PERIOD ---- ------ ------ ------ ------ -----
COMPANY/INDEX
NAUTICA ENTERPRISES INC.................... 100 52.06 39.48 62.26 48.21 33.04
S&P 600 TEXTILES INDEX..................... 100 43.65 29.02 14.57 11.56 8.61
NASDAQ U.S. INDEX.......................... 100 130.24 277.87 119.39 102.72 76.90
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF ACCOUNTANTS
The Board of Directors proposes the ratification by the stockholders at the
Annual Meeting of Stockholders of the Company of the appointment of the
accounting firm of Grant Thornton LLP as independent certified public
accountants who will make an examination of the accounts of the Company for the
year ending February 28, 2004. Grant Thornton LLP served as the Company's
independent certified public accountants for the years ended March 1, 2003 and
March 2, 2002. Stockholder ratification of the selection of Grant Thornton LLP
as the Company's independent certified public accountants is not required by the
Company's By-laws or otherwise. If the stockholders fail to ratify the
selection, the Board of Directors will consider whether to retain that firm.
Even if the selection is ratified, the Board of Directors in its discretion may
direct the appointment of a different independent accounting firm at any time
during the year if it determines that such a change would be in the best
interests of the
12
Company and its stockholders. A representative of Grant Thornton LLP is expected
to be present at the annual meeting to respond to appropriate questions and to
make a statement if that representative so desires.
This Proposal Two relating to the ratification of the appointment of Grant
Thornton LLP, will be adopted if a majority of the voting power of the shares of
Common Stock present at the meeting, in person or by proxy, and entitled to
vote, affirmatively vote in favor of the proposal. Broker non-votes will have no
effect on the adoption of this proposal.
The Board of Directors recommends that stockholders vote FOR the
ratification of the appointment of Grant Thornton LLP as the Company's
independent certified public accountants.
AUDIT FEES
The aggregate fees billed by Grant Thornton LLP in each of the last two
fiscal years for professional services rendered for the audit of the Company's
annual financial statements, review of financial statements included in the
Company's quarterly reports on Form 10-Q and services that were provided in
connection with statutory and regulatory filings or engagements were $342,110
for 2003 and $296,000 for 2002.
AUDIT-RELATED FEES
The aggregate fees billed by Grant Thornton LLP in each of the last two
fiscal years for assurance and related services that were reasonably related to
the performance of the audit or review of the Company's financial statements
were $84,193 in 2003 and $411,106 in 2002. The nature of the services performed
for these fees included, among other things, employee benefit plan audits,
special projects, internal control reviews, and consultations concerning
financial accounting and reporting matters not classified as audit.
TAX FEES
The aggregate fees billed by Grant Thornton LLP in each of the last two
fiscal years for professional services rendered for tax compliance, tax advice,
and tax planning were $256,024 for 2003 and $330,154 for 2002.
ALL OTHER FEES
There were no fees billed by Grant Thornton LLP in fiscal year 2003 for
products and services other than those reported in the three prior categories.
The aggregate fees billed by Grant Thornton LLP in 2002 for products and
services other than those reported in the three prior categories was $361,189.
The nature of the other services performed included advisory services with
respect to information systems and other matters, and implementation of
information systems.
The Audit Committee of the Board of Directors has considered whether
provision of non-audit services by Grant Thornton LLP is compatible with
maintaining the independent public accountants' independence. The Audit
Committee has established a policy requiring its review and approval of all
13
audit services, engagements and permitted non-audit services to be performed by
the Company's independent public accountants. The policy allows the Audit
Committee to delegate pre-approval authority to one or more Audit Committee
members.
PROPOSALS BY STOCKHOLDERS-2004 ANNUAL MEETING
All proposals by stockholders intended to be presented at the next annual
meeting of stockholders (scheduled to be held in July 2004) must be received by
the Company at its office at 40 West 57th Street, New York, New York 10019, no
later than February 6, 2004 in order to be included in the Proxy Statement and
form of proxy relating to such meeting. All such proposals must comply with
applicable Securities and Exchange Commission rules and regulations.
OTHER BUSINESS
Management is not aware of any matters to be presented at the meeting other
than those set forth in this Proxy Statement. However, should any other business
properly come before the meeting, or any adjournment or postponement thereof,
the enclosed proxy confers upon the persons entitled to vote the shares
represented by such proxies, discretionary authority to vote the same in respect
to any such other business in accordance with their best judgment in the
interest of the Company.
MANAGEMENT UNDERTAKES TO PROVIDE ITS STOCKHOLDERS WITHOUT CHARGE, UPON
WRITTEN OR VERBAL REQUEST BY ANY SUCH STOCKHOLDER BY FIRST CLASS MAIL WITHIN ONE
BUSINESS DAY OF RECEIPT OF SUCH REQUEST, A COPY OF THE COMPANY'S ANNUAL REPORT
ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULE FILED THEREWITH.
WRITTEN REQUEST FOR SUCH REPORT SHOULD BE ADDRESSED TO NAUTICA ENTERPRISES,
INC., 40 WEST 57TH STREET, NEW YORK, NEW YORK 10019, ATTENTION: INVESTOR
RELATIONS. VERBAL REQUESTS SHOULD BE MADE BY TELEPHONE TO NAUTICA ENTERPRISES,
INC. AT (212) 541-5757.
Stockholders are urged to vote the enclosed proxy, solicited on behalf of
the Board of Directors, or vote by telephone or via the Internet. Unless a
contrary direction is indicated, proxies will be voted for the election as
directors of the nominees listed in this Proxy Statement and for Proposal Two.
The proxy does not affect the right to vote in person at the meeting and may be
revoked by the stockholder any time prior to its being voted.
By Order of the Board of Directors,
HARVEY SANDERS,
Chairman
June 6, 2003
14
ANNEX A
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS OF
NAUTICA ENTERPRISES, INC.
The Board of Directors (the "Board") of Nautica Enterprises, Inc. (the
"Company") has constituted and established an Audit Committee (the "Committee")
with authority, responsibility, and specific duties as described in this Audit
Committee Charter.
COMPOSITION
The members of the Committee shall meet the independence and experience
requirements of the NASDAQ Stock Market ("NASDAQ"), Section 10A(m)(3) of the
Securities Exchange Act of 1934 (the "Exchange Act") and the rules and
regulations of the Securities and Exchange Commission (the "SEC"). The Committee
shall be comprised of at least three directors, the members of which shall be
appointed by the Board.
PRINCIPAL FUNCTIONS
The Committee shall assist the Board in monitoring (1) the accounting and
financial reporting processes of the Company and the integrity of the Company's
financial statements, (2) the compliance by the Company with financial reporting
requirements, and (3) the independence and performance of the Company's internal
and external auditors. As such, the Committee shall have the authority to retain
special legal, accounting or other consultants to advise and assist the
Committee in carrying out its duties. The Committee may request any officer or
employee of the Company or the Company's outside counsel or independent auditor
to attend a meeting of the Committee or to meet with any members of, or
consultants to, the Committee.
The Committee's principal functions shall include the following:
- Review and reassess the adequacy of this Charter annually and recommend
any proposed changes to the Board for approval.
- The sole authority to appoint (subject, if applicable, to stockholder
ratification), compensate, retain, oversee (including working with
management of the Company and such public accounting firm(s) to resolve
disagreements regarding financial reporting), evaluate and if deemed
appropriate, terminate the work of any public accounting firm engaged for
the purpose of preparing or issuing an audit report or performing other
audit, review or attest services for the Company. Each such public
accounting firm shall report directly to the Committee.
- Direct the Company, in its capacity as a committee of the Board of
Directors, to provide appropriate funding for (a) payment of compensation
to any public accounting firm engaged for the purpose of preparing or
issuing an audit report or performing other audit, review or attest
services for the Company, (b) payment of compensation to any advisors
employed by the
Committee, and (c) ordinary administrative expenses of the Committee that
are necessary or appropriate in carrying out its duties.
- Approve all audit engagement fees and terms.
- Review, evaluate and pre-approve all audit services and permissible
non-audit services provided by the Company's auditor as set forth in
Section 10A(i) of the Exchange Act. The Audit Committee may delegate
authority to one or more members, when appropriate, including the
authority to grant pre-approvals of audit and permitted non-audit
services, provided that decisions made by such member or members are
presented to the full Committee for consideration and ratification at its
next scheduled meeting.
- Establish procedures for the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal
accounting controls or auditing matters, including procedures for the
confidential, anonymous submission by employees of the Company of
concerns regarding questionable accounting or auditing matters.
- Receive periodic reports from the Company's independent auditor(s)
regarding the auditor's independence consistent with Independence
Standards Board Standard 1, which requires that auditors discuss with the
Committee any significant relationship that could impair their
independence, and discuss such reports with the auditor.
- Review the planning of the independent audit and any special audit
procedures required.
- Review the results of the external audit of the Company's financial
statements, the independent auditor's opinion, any related management
letter, management's responses to recommendations made by the independent
auditor in connection with the audit, reports submitted to the Committee
by the Company's chief financial officer, and management's responses to
those reports.
- Review with management and the independent auditor the Company's
quarterly financial statements prior to the filing of its Form 10-Q.
- Review the Company's annual financial statements prior to filing of its
Form 10-K, and discuss with management and the independent auditor any
significant issues regarding accounting principles, practices and
judgments; and report to the Board and to the stockholders of the Company
whether, based on such reviews and discussions, it recommends to the
Board that the most recent year's audited financial statements be
included in the Company's Form 10-K to be filed with the SEC.
- Review disclosures made to the Committee by the Company's CEO and CFO
during their certification process for the Form 10-K and Form 10-Q about
any significant deficiencies in the design or operation of internal
controls or material weaknesses therein and any fraud involving
management or other employees who have a significant role in the
Company's internal controls.
- Review, in consultation with the independent auditor and the Company's
chief financial officer, any major issues as to the adequacy of the
Company's internal financial controls and any special steps adopted in
light of material control deficiencies.
2
- Approve any material changes and other material questions regarding the
appropriate accounting principles and practices to be followed when
preparing the Company's financial statements.
- Prepare the report required by the rules of the Securities and Exchange
Commission to be included in the Company's annual proxy report.
- Such other oversight duties and responsibilities as may be assigned to
the Committee, from time to time, by the Board and/or Chairman of the
Board, or in order to comply with the requirements of the Exchange Act,
NASDAQ or the SEC.
MEETINGS
The Committee will meet as often as necessary to carry out its
responsibilities, but not less frequently than quarterly. Meetings may be called
by the Chairman of the Committee, the Chief Executive Officer of the Company or
any member of the Committee. In addition, the Committee will make itself
available to the independent auditor(s) of the Company as requested by such
independent auditor(s). All meetings of the Committee shall be held pursuant to
the Bylaws of the Company with regard to notice and waiver thereof, and written
minutes of each meeting shall be duly filed in the Company's records. Written or
oral reports of meetings of the Committee shall be made to the Board at its next
regularly scheduled meeting following the Committee meeting accompanied by any
recommendations to the Board approved by the Committee.
LIMITATION OF RESPONSIBILITIES
While the Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Committee to plan or conduct audits or to
determine that the Company's financial statements are complete and accurate and
are in accordance with generally accepted accounting principles. This is the
responsibility of management and the independent auditor.
APPROVAL
This Charter, as amended, was approved by the Board on April 29, 2003.
3
PROXY PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
NAUTICA ENTERPRISES, INC.
PROXY -- ANNUAL MEETING OF STOCKHOLDERS, JULY 8, 2003
The undersigned hereby appoints Harvey Sanders and David Chu, and each of
them, proxies and attorneys-in-fact of the undersigned, with the power to
appoint his substitute, and hereby authorizes them to represent and to vote, as
designated below, all the shares of common stock of Nautica Enterprises, Inc.
held of record by the undersigned on May 29, 2003 at the Annual Meeting of
Stockholders to be held on July 8, 2003 or any adjournment or postponement
thereof.
(Continued and to be signed on reverse side.)
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ADDRESS CHANGE/COMMENTS (MARK THE CORRESPONDING BOX ON THE REVERSE SIDE)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
YOU CAN NOW ACCESS YOUR NAUTICA ENTERPRISES, INC. ACCOUNT ONLINE.
Access your Nautica Enterprises, Inc. stockholder account online via Investor
ServiceDirect(SM) (ISD).
Mellon Investor Services LLC, agent for Nautica Enterprises, Inc., now makes it
easy and convenient to get current information on your stockholder account.
After a simple, and secure process of establishing a Personal Identification
Number (PIN), you are ready to log in and access your account to:
- View account status - Make address changes
- View certificate history - Establish/change your PIN
VISIT US ON THE WEB AT HTTP://WWW.MELLONINVESTOR.COM
AND FOLLOW THE INSTRUCTIONS SHOWN ON THIS PAGE.
STEP 1: FIRST TIME USERS - ESTABLISH A PIN
You must first establish a Personal Identification Number (PIN) online by
following the directions provided in the upper right portion of the web screen
as follows. You will also need your Social Security Number (SSN) or Investor ID
available to establish a PIN.
THE CONFIDENTIALITY OF YOUR PERSONAL INFORMATION IS PROTECTED USING SECURE
SOCKET LAYER (SSL) TECHNOLOGY.
- SSN or Investor ID
- PIN
- Then click on the Establish PIN button
Please be sure to remember your PIN, or maintain it in a secure place for future
reference.
STEP 2: LOG IN FOR ACCOUNT ACCESS
You are now ready to log in. To access your account please enter your:
- SSN or Investor ID
- PIN
- Then click on the Submit button
If you have more than one account, you will now be asked to select the
appropriate account.
STEP 3: ACCOUNT STATUS SCREEN
You are now ready to access your account information. Click on the appropriate
button to view or initiate transactions.
- Certificate History
- Issue Certificate
- Address Change
FOR TECHNICAL ASSISTANCE CALL 1-877-978-7778 BETWEEN
9AM-7PM MONDAY-FRIDAY EASTERN TIME
Please Mark Here for Address Change or Comments [ ]
SEE REVERSE SIDE
For Withhold
All All
1. Election of Directors [ ] [ ]
Nominees:
01 Robert B. Bank 02 David Chu
03 Israel Rosenzweig 04 Harvey Sanders
05 Charles H. Scherer 06 Steven H. Tishman
07 John Varvatos 08 Ronald G. Weiner
INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the blank space below.
FOR AGAINST ABSTAIN
2. Ratification of the appointment of Grant [ ] [ ] [ ]
Thornton LLP as independent certified
public accountants for the Company.
In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS "1" AND "2".
Signature Signature Date
--------------------- --------------------- ------------
PLEASE SIGN EXACTLY AS YOUR NAME OR NAMES APPEAR HEREON. WHEN SHARES ARE HELD BY
JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY, AS EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL NAME AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER AUTHORIZED
OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
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FOLD AND DETACH HERE
VOTE BY INTERNET OR TELEPHONE OR MAIL
24 HOURS A DAY, 7 DAYS A WEEK
INTERNET AND TELEPHONE VOTING IS AVAILABLE THROUGH 11PM EASTERN TIME
THE DAY PRIOR TO ANNUAL MEETING DAY.
YOUR INTERNET OR TELEPHONE VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR SHARES
IN THE SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY CARD.
INTERNET
HTTP://WWW.EPROXY.COM/NAUT
Use the Internet to vote your proxy. Have your proxy card in hand when you
access the web site. You will be prompted to enter your control number, located
in the box below, to create and submit an electronic ballot.
OR
TELEPHONE
1-800-435-6710
Use any touch-tone telephone to vote your proxy. Have your proxy card in hand
when you call. You will be prompted to enter your control number, located in the
box below, and then follow the directions given.
OR
MAIL
Mark, sign and date your proxy card and return it in the enclosed postage-paid
envelope.
IF YOU VOTE BY TELEPHONE OR THE INTERNET, DO NOT MAIL BACK THIS PROXY CARD.
PROXIES SUBMITTED BY TELEPHONE OR THE INTERNET MUST BE RECEIVED BY 11:00 PM
EASTERN TIME, ON JULY 7, 2003.