<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
STAGE II APPAREL CORP.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
================================================================================
- --------------------------------------------------------------------------------
STAGE II APPAREL CORP.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 16, 2000
To Our Shareholders:
The Annual Meeting of Shareholders of Stage II Apparel Corp. (the
"Company") will be held at the offices of Mahoney Cohen & Company, CPA, P.C., at
111 West 40th Street, 12th Floor, New York, New York at 9:00 a.m. on Friday,
June 16, 2000. The shareholders will be asked to vote on the following:
1. To elect three Class I directors of the Company for a term
expiring at its 2002 annual meeting of shareholders; and
2. To act upon any other matters that may be properly brought
before the meeting or any adjournment.
Shareholders of record at the close of business on May 3, 2000 are
entitled to this notice and to vote at the meeting. If you do not expect to
attend the meeting in person, please complete, date and sign the enclosed proxy
card and return it in the accompanying envelope at your earliest convenience. If
you attend the meeting, you may vote either in person or by your proxy. The
Company values your opinion and encourages your participation. The enclosed
proxy is being solicited by the Board of Directors.
Richard Siskind,
President and Chief Executive Officer
New York, New York
April 28, 2000
- --------------------------------------------------------------------------------
================================================================================
<PAGE>
PROXY STATEMENT
--------------------
STAGE II APPAREL CORP.
1385 BROADWAY
NEW YORK, NY 10018
--------------------
2000 ANNUAL MEETING OF SHAREHOLDERS
JUNE 16, 2000
PROXY SOLICITATION
This Proxy Statement is furnished on behalf of the Board of Directors
(the "Board") of Stage II Apparel Corp. (the "Company") for soliciting proxies
to be voted at the Company's 2000 Annual Meeting of Shareholders on June 16,
2000 or any adjournment. The meeting will be held at 9:00 a.m. at the offices of
Mahoney Cohen & Company, CPA, P.C., 111 West 40th Street, 12th Floor, New York,
New York 10018.
All properly executed proxies received prior to the meeting will be
voted in accordance with the instructions marked on the proxy cards. If no
instructions are made, the shares will be voted "for" the election of the
nominees to the Board. See "Election of Directors." The Company knows of no
other business to be presented for consideration at the meeting. If any other
matter is properly presented, the proxy holders will have discretionary
authority to vote in accordance with their best judgment. A shareholder giving a
proxy may revoke it at any time by giving written notice to the Secretary of the
Company before it is voted, by executing a proxy bearing a later date or by
attending the meeting and voting in person.
This Proxy Statement and related proxy card, together with a copy of
the Company's 1999 Annual Report on Form 10-K (the "Annual Report"), are being
mailed to shareholders on or about May 4, 2000. Upon request, additional proxy
materials will be furnished without cost to brokers and other nominees for
forwarding to beneficial owners of shares held in their names. In addition to
the use of the mails, proxies may be solicited by directors, officers and
employees of the Company, without additional compensation, by personal
interview, telephone or otherwise.
SHAREHOLDERS ENTITLED TO VOTE
Shareholders of record as of the close of business on May 3, 2000 are
entitled to notice of and to vote at the meeting. As of that date, the Company
had outstanding 4,121,267 shares of its common stock ("Common Stock"). On all
matters submitted to the shareholders of the Company, each share of Common Stock
entitles the holder to one vote. Cumulative voting is not allowed in the
election of directors or for any other purpose. The Company's bylaws provide
that a majority of the outstanding shares entitled to vote, represented in
person or by proxy, constitute a quorum at the meeting.
PROPOSAL 1 -- ELECTION OF DIRECTORS
GENERAL
The Board is divided into two classes. Three Class I directors are to
be elected at the 2000 Annual Meeting to serve for a two-year term expiring at
the 2002 annual meeting of shareholders or until their successors are chosen and
have qualified. Information about the Class I nominees is provided below under
the caption "Nominees," and information about the incumbent Class II directors
is included under the caption "Other Members of the Board."
<PAGE>
Except where authority to vote for one or more nominees is withheld,
the designated proxy holders will vote all shares represented by an executed
proxy for the election of the nominees listed below. The Company expects each of
the nominees to be able to serve as a director. If a nominee should become
unavailable to serve as a director for any reason presently not known or
contemplated, the proxy holders will have discretionary authority to vote for a
substitute designated by the Board. Nominees receiving a plurality of votes cast
at the meeting will be elected as directors. Abstentions and broker non-votes
will not be treated as votes cast for or against any particular director and
will not affect the outcome of the election.
NOMINEES
Each of the nominees for Class I director is a current director of the
Company, having joined the Board in connection with the a change of control
transaction in May 1998 (the "Change of Control Transactions"). See "Additional
Information about the Board B Change of Control Transactions." The names of the
nominees, along with information on their business experience and background,
are set forth below.
- --------------------------------------------------------------------------------
RICHARD SISKIND Richard Siskind joined the Company as President,
Chief Executive Officer and a director in May 1998
after acquiring a controlling interest from three of
its founders. He has been in the apparel business for
over 30 years, serving in a variety of roles and
positions. By 1977, Mr. Siskind had assumed the
position of president of David Small Industries, Inc.
In 1982, he co-founded Apparel Exchange, Inc., an
affiliated company. Both companies sold off-price
men's, women's and children's apparel and reached
sales aggregating over $100 million by 1989. Mr.
Siskind sold both companies in 1989. In 1991, he
AGE 54 founded R. Siskind and Company ("RSC"). He is a
director, sole shareholder and chief executive
officer of RSC, which is in the business of
purchasing top brand name men's and women's apparel
and accessories, and redistributing it to a global
clientele of upscale off-price retailers.
ROBERT GREENBERG Robert Greenberg has served as a director of the
Company since May 1998. He founded LA Gear, a
publicly held footwear company noted for making
athletic footwear fashionable. Mr. Greenberg launched
his second footwear venture with his sons in 1992. He
is now the Chairman and CEO of Skechers, Inc., which
sells casual lifestyle footwear to major retailers
throughout the United States and in approximately
sixty other countries. Skechers, Inc. was one of the
largest privately held footwear companies in the
United States and is now publicly traded on the New
AGE 59 York Stock Exchange.
BEVERLY ROSEMAN Beverly Roseman joined the Company as a Vice
President and director in May 1998. She joined RSC in
1992 as the Merchandise Manager. In 1995, Mrs.
Roseman was appointed as RSC's Vice President of
Buying, Merchandising and Operations. Mrs. Roseman
also oversees the Human Resources, MIS and
Operational divisions of RSC. From 1975 to 1980, Mrs.
Roseman worked for R.H. Macy's, first as trainee and
then as a buyer. She was employed from 1980 to 1982
as a buyer for The Broadway Department Stores in
California, from 1982 to 1988 as a buyer for
Marshall's Inc. and from 1988 to 1992 as a Senior
AGE 42 Buyer for T.J. Maxx. Mrs. Roseman is a graduate of
Adelphi University.
- --------------------------------------------------------------------------------
2
<PAGE>
OTHER MEMBERS OF THE BOARD
In addition to the Class I directors of the Company standing for
reelection at the 2000 Annual Meeting, the Board includes two Class II
directors. Each of the Class II directors joined the Board in connection with
the Change of Control Transactions and is currently serving for a two-year term
to expire at the 2001 annual meeting of shareholders. Biographical information
for these directors is set forth below.
- --------------------------------------------------------------------------------
BARRY FERTEL Barry Fertel has served as a director of the Company
since May 1998. He has been a partner in the law firm
of Goetz, Fitzpatrick, Most & Bruckman, LLP in New
York City since January 2000, prior to which he was a
partner in Roper, Barandes & Fertel since 1988. His
practice is concentrated in the field of commercial
litigation. From 1980 to 1988, Mr. Fertel was an
associate and later a partner of Bell, Kalnick, Klee,
Green & Beckman, a New York City law firm. From 1978
to 1980, he was an Assistant Attorney General for the
State of New York. He is a graduate of the State
University of New York at Stony Brook and received
his law degree from the State University of New York
AGE 46 at Buffalo. Mr. Fertel currently serves as President
of the Board of Education of the New Rochelle, New
York School District.
JON SISKIND Jon Siskind joined the Company as a director and Vice
President - Sales, Warehousing & Distribution in May
1998. He graduated from the University of Hartford in
1991, where he received his B.A. in Economics. He
joined RSC in the same year as an account executive
handling the Northeast and Mid West territories. In
1994, he was appointed National Sales Manager and
given the additional responsibility for overseeing
all sales and distribution. In 1995, he was appointed
as RSC's Vice President of Sales. Jon Siskind is the
AGE 31 son of Richard Siskind.
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE BOARD
CHANGE OF CONTROL TRANSACTIONS
In May 1998, the Company and three of its founders (the "Founders")
completed the Change of Control Transactions with Richard Siskind, the principal
shareholder and CEO of several companies engaged in the apparel industry. The
Change of Control Transactions included the sale to Mr. Siskind of 1.9 million
shares of Common Stock held by the Founders. In consideration for the Control
Shares, Mr. Siskind arranged for the Founders= release from their guarantees of
the Company's indebtedness to its factor and their receipt of options to
reacquire a total of 1.5 million Control Shares from Mr. Siskind at exercise
prices ranging from $.50 to $1.50 per share (the "Founders Options"). Later in
1998, Founder Options for 1.35 million Control Shares were acquired from the
Founders by Jon Siskind, an officer and director of the Company.
As part of the Change of Control Transactions, the Company added a new
management team headed by Mr. Siskind, reconstituted its board of directors and
obtained a new credit facility arranged by Mr. Siskind. The Company also issued
to Mr. Siskind options to purchase up to 1.5 million shares of Common Stock on
the same terms as the Founders Options, exercisable only to the extent the
Founders Options are exercised (the "Mirror Options"). In addition, in lieu of a
market rate salary, Mr. Siskind received options to purchase 900,000 shares of
Common Stock at $.75 per share under a 1998 nonqualified option plan (the "NSO
Plan"). See "Executive Compensation--Stock Options." The Company believes Mr.
Siskind's experience and industry contacts have substantially contributed to its
turnaround, reflected by its return to profitability in 1999.
3
<PAGE>
ACTIONS BY THE BOARD IN 1999
During 1999, the Board took action, either at meetings or by consent,
on a total of two occasions. No director attended or participated in fewer than
75% of these meetings or action by consent.
COMMITTEES AND COMMITTEE MEETINGS
The Board has an Audit Committee and a Compensation Committee. Both
committees are comprised of Robert Greenberg and Barry Fertel. The Audit
Committee is responsible for monitoring and reviewing the financial affairs and
financial statements of the Company and performing related internal financial
review procedures. The Compensation Committee is responsible for evaluating
compensation arrangements for all officers and key employees and for
administering the Company's employee benefit plans. During 1999, each of these
Committees held two meetings. The Board of Directors has no other standing
committees.
BENEFICIAL OWNERSHIP REPORTING
Based on a review of reporting forms filed with the Securities and
Exchange Commission by officers and directors of the Company to disclose changes
in their beneficial ownership of the Company's Common Stock, none of the
Company's officers or directors failed to file any required reports on a timely
basis during 1999.
COMPENSATION OF DIRECTORS
No fees were paid to directors of the Company during 1999.
EXECUTIVE COMPENSATION
COMPENSATION OF NAMED EXECUTIVE OFFICERS
The following table sets forth the total remuneration paid during the
last three years to executive officers of the Company who earned over $100,000
in any of the last three fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
NAME AND 1998 --------------------------- ---------------------- ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS OTHER(1) OPTION/SAR AWARDS (#) COMPENSATION(2)
- ------------------ ---- ------ ----- -------- --------------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Richard Siskind(3) 1999......$ 200,000 -- -- -- --
1998...... 131,000 -- -- $ 1,300,000(4) --
Carl Jenkins(3) 1998...... 127,000 -- -- -- --
EVP-Production 1997...... 156,000 -- -- -- $ 2,000
Ronald Cohen(3) 1998...... 108,000 -- -- -- --
EVP-Operations 1997...... 156,000 -- -- -- 3,000
Jack Clark(3) 1998...... 77,000 -- -- -- --
Chairman 1997...... 298,000 -- -- -- 4,000
</TABLE>
- --------------------
(1) Perquisites and other benefits did not exceed 10% of any named
officer's total annual salary.
(2) Reflects the Company's contribution to the accounts of the named
executive officers under its Employee Stock Ownership and Salary Deferral Plan.
See "Employee Benefit Plan" below.
(3) Served as an executive officer of the Company for only a portion of
1998.
(4) Excludes the Mirror Options, which are not compensatory. See
"Additional Information About the Board -- Change of Control Transactions" and
"Stock Options" below.
4
<PAGE>
STOCK OPTIONS
The Company maintains four stock option plans, comprised of (a)
incentive stock option plans adopted in 1998 and 1994 (the "1998 Plan" and "1994
Plan," respectively, and the "ISO Plans," collectively), (b) the NSO Plan
(collectively with the ISO Plans, the "Plans"), and (d) a nonqualified stock
option plan covering the Mirror Options adopted as part of the Change of Control
Transactions. "Additional Information About the Board -- Change of Control
Transactions" The 1998 Plan and the 1994 Plan cover 1 million shares and 300,000
shares, respectively, of Common Stock. The NSO plan covers 900,000 shares of
Common Stock. See "Employee Benefit Plans -- Stock Option Plans" below.
During 1999, no options were granted under the Plans to the Company's
executive officers. The following table sets forth information as of December
31, 1999 on stock options held by Richard Siskind, the only executive officer
earning over $100,000 in 1999. The dollar value of options listed in the table
reflects the difference between the exercise price of the options and the market
price of $1.25 for the Common Stock on December 31, 1999. The ultimate value of
the options may be more or less than the listed amounts. The Mirror Options are
not compensatory and are not included in the table.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
SHARES NUMBER OF UNEXERCISED
ACQUIRED UNEXERCISED IN-THE-MONEY
ON VALUE OPTIONS AT OPTIONS AT
NAME EXERCISE REALIZED YEAR END YEAR END(1)
- ---- -------- -------- -------- -----------
<S> <C> <C> <C> <C>
Richard Siskind........... None N/A 1,300,000 $624,500
</TABLE>
- --------------------
(1) Reflects the difference between the exercise price of the options
(ranging from $.75 to $.813 per share) and the market price of $1.25 for the
Common Stock on December 31, 1999 and may not reflect the ultimate value of the
options when exercised.
EMPLOYEE BENEFIT PLANS
STOCK OPTION PLANS. The Company maintains the ISO Plans to provide its
employees an opportunity to acquire or increase their proprietary interests in
the Company, adding to their incentive to contribute to its performance and
growth. The terms of the ISO Plans are substantially identical, except for the
additional shares of Common Stock covered by the 1998 Plan. The exercise price
for options granted under the ISO Plans is fixed by a Compensation Committee of
the Board at 100% of the market price of the Common Stock on the date of the
grant. Each option granted under the ISO Plans is exercisable for periods of up
to ten years from the date of grant, or three months after termination of
employment, with certain exceptions. At December 31, 1999, the 1994 Plan was
fully granted, and options to purchase a total of 399,000 shares of Common Stock
were available for future grants under the 1998 Plan.
The NSO Plan was adopted as part of the Change of Control Transactions
solely to compensate Richard Siskind for accepting a salary as President and CEO
of the Company substantially below prevailing market rates. Under the NSO Plan,
Mr. Siskind received options to purchase a total of 900,000 shares of Common
Stock at an exercise price of $.75 per share. The options vest in one-third
annual cumulative installments, beginning in May 1999, and expire four years
after the vesting date. The Mirror Options granted to Mr. Siskind as part of the
Change of Control Transactions are not compensatory, since they are intended
solely to enable him to maintain his equity position in the Company, without
gain or loss, to the extent that the Founders Options granted by him are
exercised. See "Additional Information About the Board -- Change of Control
Transactions."
5
<PAGE>
EMPLOYEE STOCK OWNERSHIP AND SALARY DEFERRAL PLAN. Between 1994 and
1997, the Company maintained an Employee Stock Ownership and Salary Deferral
Plan (the "Savings Plan"). Under the Savings Plan, for each dollar contributed
by electing employees to a retirement savings account from up to 12% of their
annual compensation, the Company could contribute up to $.40, subject to certain
limitations under Section 401(k) of the Code. The Company terminated the Savings
Plan in 1998.
MANAGEMENT AGREEMENT
As part of the Change of Control Transactions, the Company entered into
a Management Agreement with Richard Siskind (the "Management Agreement"),
providing for Mr. Siskind to join the Company as President and Chief Executive
Officer for a three-year term beginning in May 1998. In accordance with the
Management Agreement, Mr. Siskind arranged a new credit facility for the
Company, part of which he guaranteed, to provide the Company with adequate
financial flexibility at lower costs than the facility in place prior to the
Change of Control Transactions. Consistent with his objective of reducing the
Company's overhead, Mr. Siskind receives an annual salary of $200,000 for his
services under the Management Agreement. In lieu of salary at a market rate, the
Management Agreement provides for his receipt of the Mirror Options, the options
contemplated by the NSO Plan and any additional options deemed appropriate by
the Compensation Committee. See "Stock Options" above.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Since the Change of Control Transactions, the Compensation Committee
has been comprised of Messrs. Fertel and Greenberg. Neither one of these
directors has ever served as an officer of the Company or any of its
subsidiaries or had any related party transactions with the Company in 1999,
except that the law firm in which Mr. Fertel was a partner provided legal
services to the Company during the year.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION POLICY. In connection with the Change of Control
Transactions, the Board adopted a business plan developed by Richard Siskind for
accelerating the Company's efforts to achieve a return to profitability (the
"Mission Statement"). The Mission Statement included the following measures
intended to achieve increased product sales and profit margins as well as
reductions in overhead as part of this strategy:
- INCREASING SALES. The new management team added as part of the Change
of Control Transactions ("New Management"), headed by Richard Siskind, Beverly
Roseman and Jon Siskind, refocused on sales by division or brand name. This
structure contributed to a more highly motivated sales staff with a deeper
knowledge of each product line and targeted customer base.
- INCREASING PROFIT MARGINS. An effort was made to increase profit
margins on all sales through reductions in manufacturing inefficiencies and
greater control of inventories, with a view to lowering the cost of sales and
creating faster inventory turn, thereby avoiding unnecessary markdowns.
- ADMINISTRATIVE EFFICIENCIES. Cost cutting efforts were undertaken, on
an aggressive basis where appropriate, with a minimum objective of bringing
overhead costs in line with sales.
- REDUCTIONS IN FIXED OVERHEAD. Office and showroom space was subleased
from a company owned by Jon Siskind, generating annual savings to the Company
over $330,000. See "Certain Transactions."
- FINANCIAL CONTROLS. New Management implemented more stringent
financial controls with a view to reducing factoring charges and debt levels.
The Company also focused more aggressively on collection of accounts receivable
and on the management of returns and allowances.
- MANAGEMENT COSTS AND EFFICIENCIES. The Board prioritized efforts to
keep the Company's cost of management below prior ratios as a percentage of
sales and increase organizational efficiencies. This goal was facilitated by the
increased the use of stock options to offset substantial reductions in salary
levels.
6
<PAGE>
In keeping with the Mission Statement, the Company's executive
compensation policy was revamped as part of the Change of Control Transactions
to implement below market levels of pay, augmented with equity incentives to
attract and retain qualified executives with interests, as co-owners of the
Company, identical to those of its unaffiliated shareholders. This policy was
implemented through participation in the Plans. The Board's objective, reflected
in recommendations by the Compensation Committee, is to integrate these
compensation components with the annual and long term performance of the Company
as well as the achievements and contributions of the individual executives. In
this way, the Committee believes that the Company's compensation program enables
it to balance the relationship between compensation and performance in the best
interests of the shareholders.
SALARY REDUCTIONS. Commencing in May 1998, New Management substantially
replaced the members of the Company's prior management, who resigned their
positions with the Company between August and October 1998. They were replaced
by Richard Siskind as President and CEO, Beverly Roseman and Jon Siskind as Vice
Presidents and Neil Fox as Chief Financial Officer. Beverly Roseman and Jon
Siskind agreed to accept options in lieu of any salary until the Company
achieved profitability, and Richard Siskind accepted a below market salary of
$200,000 in accordance with the Management Agreement. See "Management Agreement"
above.
STOCK OPTIONS. As contemplated by the Mission Statement, the Committee
recommended that members of New Management receive substantial option grants as
the major or sole form of their compensation in 1999. In addition to the Mirror
Options, which are not compensatory, Richard Siskind was awarded options in 1998
to purchase 900,000 shares of Common Stock at an exercise price of $.75 per
share under the NSO Plan and options to purchase 400,000 shares of Common Stock
at an exercise price of $.8125 per share under the 1998 Plan. Beverly Roseman
and Jon Siskind were each awarded options to purchase 150,000 shares of Common
Stock at an exercise price of $.625 per share under the 1994 Plan. See "Stock
Options" above.
CONCLUSION. The Committee believes that the executive compensation
policies implemented through its recommendations serve the interest of the
Company's shareholders and the long range goals of the Company.
THIS REPORT HAS BEEN APPROVED BY THE FOLLOWING
MEMBERS OF THE COMPENSATION COMMITTEE: BARRY FERTEL ROBERT GREENBERG
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the
Company's cumulative total shareholder return with the cumulative return
(assuming reinvestment of dividends) of (i) the Russell 2,000 Index and (ii) an
Apparel Index group as published by Value Line. Inc.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
Stage II Apparel Corp, Russell 2000 Index and Value Line Apparel Index
(Performance Results Through 12/31/99)
$250
-0- Stage II Apparel Cop
-[]- Russell 2000 Index
-/\- Apparel
$200
$150
[GRAPH TO COME]
$100
$50
$0
1994 1995 1996 1997 1998 1999
Assumes $100 invested at the close of trading 12/94 in Stage II Apparel Corp
common stock, Russell 2000 Index, and Apparel.
*Cumulative total return assumes reinvestment of dividends.
SOURCE: VALUE LINE, INC.
Factual material is obtained from sources believed to be reliable, but the
publisher is not responsible for any errors or omissions contained herein.
VALUE LINE INSTITUTIONAL SERVICES
1-800-531-1426
SUMMARY DATA
NAME 1995 1996 1997 1998 1999
- ---- ---- ---- ---- ---- ----
STAGE II APPAREL CORP -27.27 -33.33 -56.18 14.29 12.50
Russell 2000 Index 28.44 16.44 22.20 -2.73 17.84
Apparel 9.68 36.96 16.66 23.72 8.63
GRAPH PLOT POINTS
NAME 1994 1995 1996 1997 1998 1999
- ---- ---- ---- ---- ---- ---- ----
STAGE II APPAREL CORP 100.00 72.73 48.48 21.25 24.28 27.32
Russell 2000 Index 100.00 128.44 149.55 182.75 177.76 209.46
Apparel 100.00 109.68 150.21 175.23 216.78 235.49
7
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth information on the beneficial ownership
of the Common Stock as of March 31, 1999 by (i) ) each person known by the
Company to own beneficially more than 5% of the outstanding Common Stock, (ii)
the Company's five most highly compensated executive officers during its last
fiscal year, (iii) each director of the Company and (iv) all directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
COMMON STOCK
ADDRESS OF BENEFICIALLY PERCENTAGE
5% SHAREHOLDERS 5% BENEFICIAL OWNERS OWNED OF CLASS
- --------------- ---------------------- ------------- ----------
<S> <C> <C> <C>
Richard Siskind 1385 Broadway 2,840,260(1) 61.5%
New York, NY 10018
</TABLE>
<TABLE>
NAMED EXECUTIVE OFFICERS AND DIRECTORS
- --------------------------------------
<S> <C> <C>
Richard Siskind....................................................... 2,840,260(1) 61.5
Barry Fertel.......................................................... 40,000 1.0
Robert Greenberg...................................................... 190,000 4.6
All officers and directors
as a group (10 persons).............................................. 3,384,739(2) 69.8
</TABLE>
- --------------------
(1) Includes a total of 500,000 shares issuable upon the exercise of
options vested under the Plans. Excludes (a) 600,000 shares issuable under the
NSO Plan at an exercise price of $.75 per share and vesting 50% in May 2000 and
the balance in May 2001, (b) 200,000 shares issuable under the 1998 Plan at an
exercise price of $.8125 per share and vesting in December 2000 and (c) a total
of up to 1,488,000 shares issuable upon exercise of the Mirror Options at
exercise prices ranging from $.50 to $1.50 per share, exercisable only to the
extent that the Founders Options granted by him in the Change of Control
Transactions for the same number of shares are exercised by the holders of the
Founders Options. See "Additional Information About the Board -- Change of
Control Transactions" and "Executive Compensation -- Stock Options."
(2) Includes a total of 725,000 shares issuable upon the exercise of
options vested under the Plans. Excludes a total of (a) 825,000 shares subject
to unvested stock options, (b) 1,350,000 shares subject to Founders' Options
held by Jon Siskind and (c) up to 1,488,000 shares issuable upon exercise of the
Mirror Options.
CERTAIN TRANSACTIONS
During 1999, RSC, a company controlled by Richard Siskind, the
President, Chief Executive Officer and a director and principal shareholder of
the Company, opened letters of credit of $180,000 for the purchase of
merchandise by the Company. During the year, certain employees of the RSC also
performed services for the Company at no charge, and the Company shared certain
office and warehouse space of RSC at no charge. The Company also purchased $2.2
million of inventory from RSC during the year. At December 31, 1999, the Company
was indebted to RSC in the amount of $640,000.
In 1998, the Company entered into a sublease for showroom and office
space at 1385 Broadway in New York City with a company owned by Jon Siskind, an
officer and director of the Company and the son of Richard Siskind.
Rent expense of $87,000 was charged to operations for the sublease during 1999.
In 1999, the Company purchased a trademark from a group including
Robert Greenberg, an outside director of the Company. In payment for the
trademark, the Company exchanged 200,000 shares of its Common Stock from
treasury shares in payment for the trademark.
It is the Company's policy to structure any transactions with related
parties only on terms that are no less favorable to the Company than could be
obtained on an arm's length basis from unrelated parties.
8
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SOLICITATION OF PROXIES
The cost of solicitation of proxies will be borne by the Company. Proxy
cards and materials will also be distributed to beneficial owners of the
Company's Common Stock through brokers, custodians and other nominees who will
be reimbursed by the Company for their charges and expenses.
PROPOSALS BY SHAREHOLDERS
Any proposal that a shareholder wishes to present for consideration at
the 2001 annual meeting must be received by the Company at its principal
executive offices no later than December 31, 2000. This date will provide
sufficient time for consideration of the proposal for inclusion in the 2001
proxy materials.
By Order of the Board of Directors
RICHARD SISKIND
President and Chief Executive Officer
New York, New York
April 28, 2000
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FORM OF PROXY CARD
FRONT:
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STAGE II APPAREL CORP.
(THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS)
STAGE II APPAREL CORP.--PROXY FOR THE ANNUAL MEETING OF
SHAREHOLDERS AT 9:00 A.M., JUNE 16, 2000, AT 111 WEST 40TH STREET, 12TH FLOOR,
NEW YORK, NEW YORK
The undersigned hereby appoints Neil Fox and Beverly Roseman, and each
of them, with full power of substitution, as Proxies to vote the Common Stock of
the undersigned at the aforementioned Annual Meeting, and any adjournments
thereof, upon the matters set forth in the Notice of Annual Meeting and Proxy
Statement, as follows:
1. ELECTION OF DIRECTORS C for the terms set forth in the Proxy
Statement. The nominees are:
(1) Richard Siskind (2) Robert Greenberg (3) Beverly Roseman
/ / FOR ALL NOMINEES / / AGAINST ALL NOMINEES
/ / FOR ALL NOMINEES, except the following ______________________
2. In their discretion, the Proxies are authorized to vote upon such
matters as may properly come before the Annual Meeting.
This Proxy will be voted as specified. If no specification is made, it
will be voted FOR Proposal 1 and at the discretion of the Proxies on any other
business.
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BACK:
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Any Proxy heretofore given by the undersigned with respect to such
stock is hereby revoked. Receipt of the Notice of Annual Meeting and
Proxy Statement is hereby acknowledged.
Do you plan to attend the Meeting? / / Yes / / No
Please mark, sign, date and return the
Proxy Card promptly using the enclosed
envelope.
DATED: _________________________, 2000
______________________________________
______________________________________
(Joint owners must EACH sign. Please
sign EXACTLY as your name(s) appear(s)
on the card. When signing as attorney,
trustee, executor, administrator,
guardian or corporate officer, please
give your FULL title.)
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