SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-K/A
(Amendment No. 1)
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended January 31, 2000
OR
[_] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _______________to ______________.
Commission File Number 0-10593
CANDIE'S, INC.
(Exact Name of Registrant as Specified in Its Charter)
----------------------
Delaware 11-2481903
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 Columbus Avenue, Valhalla, New York 10595-1335
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (914) 769-8600
Securities registered under Section 12(b) of the Exchange Act:
Name of Each Exchange
Title of Each Class on which Registered
None Not Applicable
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.001 par value
Preferred Share Purchase Rights
(Title of Class)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_ No ___
Indicate by check if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [_]
The aggregate market value of the voting stock held by non-affiliates of
the registrant as of the close of business on May 12, 2000 was approximately
$23,489,000.
As of May 12, 2000, 17,896,393 shares of Common Stock, par value $.001 per
share were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE: None
<PAGE>
Item 2. Properties
As previously reported in the Company's Form 10-K for Fiscal 2000, the
Company's headquarters were located at 2975 Westchester Avenue, Purchase, New
York, pursuant to a lease which expired on March 31, 2000. Subsequent to such
filing, the Company completed lease negotiations for approximately 13,500 square
feet of office space located at 400 Columbus Avenue, Valhalla, New York and
entered into a lease dated May 1, 2000, effective May 15, 2000 until July 31,
2005. The Company has vacated the Purchase premises and is currently
headquartered in Valhalla, New York.
Item 10. Directors and Executive Officers of the Registrant
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is a list of the directors, executive officers and key
employees of the Company and their respective ages and positions are as follows:
Name Age Position
- ---- --- --------
Neil Cole 43 Chairman of the Board, President and
Chief Executive Officer
Deborah Sorell Stehr 37 Senior Vice President, Secretary and
General Counsel
John M. Needham 45 Vice President of Finance, Principal Finance
& Accounting Officer
Barry Emanuel 58 Director
Mark Tucker 52 Director
Steven Mendelow 57 Director
Peter Siris 55 Director
Neil Cole has been Chairman of the Board, President and Chief Executive
Officer of the Company since February 23, 1993. From February through April
1992, Mr. Cole served as director and as acting President of the Company. Mr.
Cole has also served as Chairman of the Board, President, Treasurer and a
director of New Retail Concepts, Inc. ("NRC"), which was merged with and into
the Company in August 1998, since its inception in 1986.
Deborah Sorell Stehr joined the Company in December 1998 as Vice President
and General Counsel, and was promoted to Senior Vice President in November 1999.
From September 1996 to December 1998, Ms. Sorell was Associate General Counsel
with Nine West Group Inc. ("Nine West"), a women's' footwear corporation with
sales approximating $2.0 billion, where Ms. Sorell Stehr was primarily
responsible for overseeing legal affairs relating to domestic and international
contracts, intellectual property, licensing, general corporate matters,
litigation and claims. Prior to joining Nine West, Ms. Sorell Stehr practiced
law for nine years at private law firms in New York City and Chicago in the
areas of corporate law and commercial litigation.
Barry Emanuel has been a director of the Company since May 1993. For more
than the past five years, Mr. Emanuel has served as President of Copen
Associates, Inc., a textile manufacturer located in New York, New York.
Mark Tucker has been a director of the Company since May 1996. From August
1993 to the present, Mr. Tucker has been a principal of Mark Tucker, Inc., a
family owned business engaged in the design and import of shoes. Mr. Tucker has
also been affiliated with Redwood Shoe Corp. ("Redwood"), a manufacturer and
distributor of footwear since June 1993. From December 1992 to August 1993, he
was an independent consultant to the shoe industry. From July 1992 to December
1992, Mr. Tucker was employed as Director of Far East Shoe Wholesale Operations
for United States Shoe Far East Limited, a subsidiary of U.S. Shoe Corp. For
more than five years prior to July 1992, Mr. Tucker was a principal of Mocambo
Ltd., a family owned shoe design and import company.
Steven Mendelow has been a principal with the accounting firm of Konigsberg
Wolf & Co. and its predecessor, which is located in New York, New York since
1972. Mr. Mendelow was a director of NRC from April 1, 1992 until NRC merged
into the Company in August 1998.
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<PAGE>
Peter Siris has been active in the apparel, retail and financial industries
for over 25 years. During the past two years, Mr. Siris has been the Managing
Director of Guerrilla Capital Management, while completing his best selling
book, "Guerilla Investing", and working as a columnist for the "New York Daily
News". Between 1995 and 1997, he served as Senior Vice President of Warnaco,
Inc. and Director of Investor Relations of Authentic Fitness Corporation and
Senior Vice President of ABN-Amro Incorporated. Between 1970 and 1995, Mr. Siris
served as Managing Director of Union Bank of Switzerland, Securities, Executive
Vice President and Director of The Buckingham Research, Executive Vice President
and Director of Sirco International Corporation, President of MERIC, Inc. and
President of Urban Innovations, Inc. Mr. Siris, who earned his MBA from Harvard
University, is also an expert on trade in China and authored a novel on that
subject, "The Peking Mandate".
John M. Needham joined the Company on January 24, 2000 as Vice President of
Finance. For the one and one-half years prior to joining the Company, Mr.
Needham served as Vice President and Controller of Aerosoles Group, Inc. For the
decade prior to that time, Mr. Needham acted as Vice President and Controller of
Grand Union Company. Mr. Needham is a CPA and a licensed attorney.
Directors are elected by the Company's stockholders. Officers are elected
by the Company's Board of Directors and serve at the discretion of the Company's
Board of Directors.
Compliance with Section 16(a) of Securities Exchange Act of 1934
Section 16(a) of Securities Exchange Act of 1934 requires the Company
officers and directors, and persons who beneficially own more than 10 percent of
a registered class of the Company equity securities, to file reports of
ownership and changes in ownership with the SEC. Officers, directors and greater
than 10 percent owners are required by certain SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on the Company's review of the copies of such forms received
by it, the Company believes that during Fiscal 2000, filing requirements
applicable to its officers, directors and 10% stockholders of the Common Stock
were complied with, except that (i) Mr. Cole failed to timely file a Form 4
report in November and December 1999 with respect to new grants of options to
purchase 400,000 and 10,000 shares of the Company Stock that had expired by
their terms during such months, (ii) Mr. Needham failed to timely file a Form 3
report in March 1999 with respect to options to purchase 75,000 shares of the
Company stock and (iii) Mr. Mendelow and Mr. Siris failed to file timely a Form
3 report in December 1999 and March 2000, respectively, when they became
directors of the Company.
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<PAGE>
Item 11. Executive Compensation
The following table sets forth all compensation paid or accrued by the
Company for the Fiscal 2000, 1999 and 1998, to or for the Chief Executive
Officer and for the other persons that served as executive officers of the
Company during Fiscal 2000 whose salaries exceeded $100,000 (collectively, the
"Named Executives"):
<TABLE>
<CAPTION>
Summary Compensation Table
-------------------------------------------------------------------------
Long-Term
Annual Compensation Compensation Awards
------------------------------- -------------------------------------
Other Securities
Fiscal Annual Com- Underlying
Name & Principal Positions Year Salary Bonus(1) pensation (2) Options (3)
- ------------------------------- ---------- ------------ ------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Neil Cole 2000 $ 500,436 $ -- $ 12,500 410,000
Chairman, President & 1999 445,833 -- 0 1,506,124(4)
Chief Executive Officer 1998 395,833 308,909(6) 0 400,000
Deborah Sorell Stehr 2000 132,692 25,000 -- 50,000
Senior Vice President & 1999 24,167 -- -- 30,000
General Counsel
John M. Needham 2000 3,923 -- -- 75,000
Vice President of Finance
Lawrence O'Shaughnessy 2000 322,144 -- 12,500 --
Former Executive Vice 1999 308,333 -- -- 370,125(7)
President and COO(5) 1998 291,667 92,672(6) 5,000 100,000
Frank Marcinowski 2000 144,113 25,000 -- 50,000(8)
Former Vice President and 1999 62,500 -- -- 30,000(8)
Chief Financial Officer(8)
David Golden 2000 119,336 -- -- --
Former Vice President and 1999 206,250 -- -- 125,000(9)
Chief Financial Officer (9)
</TABLE>
(1) Represents bonuses accrued under employment agreements.
(2) Represents amounts earned as director's fees.
(3) On December 11, 1998, certain options were re-priced to $3.50.
(4) 446,124 options of Candie's Common Stock were granted to the Named
Executive for compensation for services provided to New Retail Concepts,
Inc. prior to the merger with the Company. Also includes 10,000 options to
purchase shares earned as director's fees.
(5) Mr. O'Shaughnessy left the Company on March 31, 2000.
(6) Based on the restatement of Fiscal 1998 results of operations, $105,500 of
Mr. Cole's bonus and $31,660 of Mr. O'Shaughnessy's bonus reflected above
were repaid.
(7) 40,125 options of Candie's Common Stock were granted to the Named Executive
for compensation for services provided to New Retail Concepts, Inc. prior
to the merger with the Company. Also includes 10,000 options to purchase
shares earned as director's fees.
(8) Mr. Marcinowski left the Company on January 21, 2000, and pursuant to his
stock option agreements such options expired 90 days after his termination.
(9) Mr. Golden's employment with the Company was terminated on June 10, 1999,
and pursuant to his stock option agreement such option terminated upon his
termination.
Option Grants in Fiscal 2000 Year
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<PAGE>
The following table provides information with respect to individual stock
options granted during Fiscal 2000 to each of the Named Executives:
<TABLE>
<CAPTION>
Shares % of Total Potential Realizable Value
Underlying Options Granted at Assumed Annual Rates
Options to Employees Exercise Expiration of Stock Price Appreciation
Name Granted in Fiscal Year Price Date for Option Term
- ------------------------ ---------- ---------------- -------- ---------- --------------------------------
5% 10%
-------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Neil Cole 400,000 25.5% $1.50 11/29/04 $ -- (1) $ -- (1)
10,000 0.6 1.25 12/20/04 -- (1) -- (1)
Deborah Sorell Stehr 50,000(2) 3.2 1.1875 11/28/09 37,340 94,626
John M. Needham 75,000(2) 4.8 0.8125 01/24/10 38,324 97,118
Frank Marcinowski 50,000(2)(3) 3.2 1.1875 11/28/09 37,340 94,626
</TABLE>
(1) Due to the fact that the exercise price exceeded the fair market value
on the date of grant, the potential realizable value would not be a
positive number.
(2) These stock options were granted under the Company's 1997 Stock Option
Plan (the "1997 Plan").
(3) These stock options expired 90 days after termination of Mr.
Marcinowski's employment.
The following table sets forth information as of January 31, 2000, with
respect to exercised and unexercised stock options held by the Named Executives.
No options were exercised by any of the Named Executives during Fiscal 2000. On
August 1, 1999, December 20, 1999, and January 13, 2000, 400,000, 10,000, and
10,125 options, respectively, owned by Neil Cole expired.
Aggregated Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money
Options at January 31, 2000 Options at January 31, 2000
----------------------------------- -----------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ----------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Neil Cole 2,556,833 169,167 26,625 --
Deborah Sorell Stehr 25,000 55,000 -- --
John M. Needham -- 75,000 -- 14,063
Lawrence O'Shaughnessy 616,758(2) 86,667(2) -- --
Frank Marcinowski 35,000(3) 45,000(3) -- --
</TABLE>
(1) An option is "in-the-money" if the year-end closing market price per
share of the Company's Common Stock exceeds the exercise price of such
options. The closing market price on January 31, 2000 was $1.00.
(2) Pursuant to a written agreement dated March 31, 2000, the Company has
agreed to freeze the expiration dates of all of Mr. O'Shaughnessy's
options pending the outcome of certain regulatory proceedings.
(3) These stock options expired 90 days after termination of Mr.
Marcinowski's employment.
Employment Contracts and Termination and Change-in-Control Arrangements
On or about February 3, 1993, the Company entered into an employment
agreement with Neil Cole for a term expiring on February 28, 2000, at an annual
base salary of $400,000 for the 12 months ended February 28, 1998, $450,000 for
the 12 months ended February 28, 1999, and $500,000 for the 12 months ended
February 28, 2000, subject to annual increases at the discretion of the
Company's Board of Directors. On or about January 27, 2000, the Company and Mr.
Cole amended the employment agreement. Pursuant to the amended employment
agreement, Mr. Cole serves as President and Chief Executive Officer of the
Company devoting a majority of his business time to the Company and the
remainder of his business time to other business activities. Under the amended
employment agreement, Mr. Cole is entitled to: (i) receive a portion of an
annual bonus pool equal to 5% of the Company's annual pre-tax profits, if any,
as determined by the
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<PAGE>
Company's Board of Directors; and (ii) to customary benefits, including
participation in management incentive and benefit plans, reimbursement for
automobile expenses, reasonable travel and entertainment expenses and a life
insurance policy in the amount of $1,000,000. Mr. Cole is also entitled to
receive any additional bonuses as the Board of Directors may determine. Mr.
Cole's amended employment agreement extends the term of his employment at his
current salary through February 28, 2003. The amended employment agreement also
changed the definition of the term "Change in Control", and included a provision
whereby Mr. Cole would receive an amount equal to $100 less than three times his
annual compensation, plus accelerated vesting or payment of deferred
compensation, options, stock appreciation rights or any other benefits payable
to Mr. Cole in the event that within twelve months of a "Change in Control", Mr.
Cole is terminated by the Company without "Cause" or Mr. Cole terminates his
agreement for "Good Reason", as such terms are defined in his employment
agreement.
The Company entered into an employment arrangement with Deborah Sorell
Stehr for a term expiring on January 31, 2001 at an annual base salary of
$145,000 for the period ended January 31, 2000, and $160,000 for the period
ended January 31, 2001. Ms. Sorell Stehr is entitled to receive a bonus in the
amount of $25,000 for each year that she is employed. Ms. Sorell Stehr is also
entitled to customary benefits, including participation in management incentive
and benefit plans, reimbursement for automobile expenses, reasonable travel and
entertainment expenses and a life insurance policy in an amount equal to her
annual base salary. On or about January 27, 2000, the Company amended Ms. Sorell
Stehr's employment agreement to extend her term at her current salary through
February 28, 2003. The amendment also changed the definition of the term "Change
in Control" and added a provision whereby Ms. Sorell Stehr would receive an
amount equal to $100 less than three times her annual compensation, plus
accelerated vesting or payment of deferred compensation, options, stock
appreciation rights or any other benefits payable to Ms. Sorell Stehr in the
event that within twelve months of a "Change in Control", Ms. Sorell Stehr is
terminated by the Company without "Cause" or Ms. Sorell Stehr terminates her
agreement for "Good Reason" as such terms are defined in her employment
agreement.
On or about January 24, 2000, the Company entered into an employment
agreement with John Needham for a term expiring on January 26, 2001, at an
annual base salary of $170,000, plus a signing bonus of $10,000. Mr. Needham's
annual bonus will be in the discretion of the Company. Mr. Needham is also
entitled to customary benefits, including participation in management incentive
and benefit plans, reimbursement for automobile expenses, reasonable travel and
entertainment expenses and a life insurance policy in an amount equal to his
annual base salary. Mr. Needham also has a "Change of Control" provision in his
agreement permitting him to terminate the agreement for "Good Reason" upon such
an event.
On or about April 1, 1995, the Company entered into an amended employment
agreement with Mr. O'Shaughnessy for a term expiring on March 31, 2000 at an
annual base salary of $300,000 for the 12 months ended March 31, 1998 and
$350,000 thereafter, subject to annual increases at the discretion of the
Company's Board of Directors. Under the amended agreement, Mr. O'Shaughnessy was
entitled to a bonus, plus customary benefits, including participation in
management incentive and benefit plans, reimbursement for automobile expenses,
reasonable travel and entertainment expenses and a life insurance policy in an
amount equal to his annual base salary. Mr. O'Shaughnessy's agreement expired on
March 31, 2000, and was not renewed, and he is no longer employed by the
Company. Pursuant to a written agreement dated March 31, 2000, the Company has
agreed to freeze the expiration dates of all of Mr. O'Shaughnessy's options
pending the outcome of certain regulatory proceedings.
On or about April 26, 1998, the Company entered into an employment
arrangement with Frank Marcinowski at an annual base salary of $140,000 and a
bonus at the discretion of the Board. That agreement was terminated on or about
January 21, 2000, and he is no longer employed by the Company.
The Company had entered into an employment agreement as of March 1, 1998,
with David Golden which provided for his employment as Senior Vice
President-Chief Financial Officer at an annual salary of $225,000 for the twelve
months ended March 1, 1999 and $250,000 for the twelve months ended March 1,
2000. That agreement was terminated on June 10, 1999, and he is no longer
employed by the Company.
Compensation of Directors
During Fiscal 2000, Messrs. Emanuel and Tucker each received a total of
$12,500 in compensation for attending board meetings.
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<PAGE>
Under the Company 1989 Stock Option Plan (the "1989 Plan"), non-employee
directors (other than non-employee directors who are members of any Stock Option
Committee that may be appointed by the Company's Board of Directors to
administer the 1989 Plan) are eligible to be granted non-qualified stock options
and limited stock appreciation rights. No stock appreciation rights have been
granted under the 1989 Plan. Under the Company's 1997 Plan non-employee
directors are eligible to be granted non-qualified stock options.
The Company's Board of Directors or the Stock Option Committee of the 1989
Plan or the 1997 Plan, if one is appointed, has discretion to determine the
number of shares subject to each non-qualified option (subject to the number of
shares available for grant under the 1989 Plan or the 1997 Plan, as applicable),
the exercise price thereof (provided such price is not less than the par value
of the underlying shares of the Company's Common Stock), the term thereof (but
not in excess of 10 years from the date of grant, subject to earlier termination
in certain circumstances), and the manner in which the option becomes
exercisable (amounts, intervals and other conditions). No non-qualified options
were granted to non-employee directors under the 1989 Plan or under the 1997
Plan during Fiscal 2000.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information as of May 15, 2000,
based on information obtained from the persons named below, with respect to the
beneficial ownership of shares of the Company's Common Stock by (i) each person
known by the Company to be the beneficial owner of more than 5% of the
outstanding shares of the Company's Common Stock; (ii) each of the Named
Executives; (iii) each of the Company's directors; and (iv) all executive
officers and directors as a group:
<TABLE>
<CAPTION>
Amount and
Nature of Percentage of
Name and Address of Beneficial Beneficial
Beneficial Owner (1) Ownership (2) Ownership
- ------------------------------------ ------------- -------------
<S> <C> <C>
Neil Cole 3,461,478(3) 16.8%
Claudio Trust dated February 2, 1990 1,886,597 10.5
2925 Mountain Maple Lane
Jackson, WY 83001
Michael Caruso 1,986,597(4) 11.0
Redwood Shoe Corp. 825,000(5) 4.6
8F, 137 Hua Mei West Street
SEC. 1, Taichung, Taiwan, R.O.C
Mark Tucker 835,000(6) 4.7
Lawrence O'Shaughnessy 769,908(7) 4.2
Barry Emanuel 75,125(8) *
Steven Mendelow 116,125(9) *
Frank Marcinowski -- *
Deborah Sorell Stehr 25,000(10) *
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Amount and
Nature of Percentage of
Name and Address of Beneficial Beneficial
Beneficial Owner (1) Ownership (2) Ownership
- ------------------------------------ ------------- -------------
<S> <C> <C>
John M. Needham -- *
Peter Siris 22,000(11) *
David Golden -- *
All executive officers and directors 4,534,728(3)(6)(8)(9)(10)(11) 21.9
as a Group (seven persons)
</TABLE>
* Less than 1%
(1) Unless otherwise indicated, each beneficial owner has an address at
400 Columbus Avenue, Valhalla, New York 10595-1335.
(2) A person is deemed to have beneficial ownership of securities that can
be acquired by such person within 60 days of January 31, 2000, upon
exercise of warrants or options. Consequently, each beneficial owner's
percentage ownership is determined by assuming that warrants or
options held by such person (but not those held by any other person)
and which are exercisable within 60 days from January 31, 2000, have
been exercised. Unless otherwise noted, the Company believes that all
persons referred to in the table have sole voting and investment power
with respect to all shares of Common Stock reflected as beneficially
owned by them.
(3) Includes 2,666,416 shares of Common Stock issuable upon exercise of
options owned by Neil Cole. Also includes 72,978 shares held by a
charitable foundation, of which Mr. Cole and his wife are co-trustees.
Mr. Cole disclaims beneficial ownership of the shares held by such
charitable foundation.
(4) Represents shares held by Claudio Trust dated February 2, 1990, of
which Mr. Caruso is the trustee and includes 100,000 shares of Common
Stock issuable upon exercise of options owned by Michael Caruso.
(5) Represents shares of Common Stock, which shares were issued pursuant
to an agreement between the Company and Redwood pertaining to the
settlement of certain indebtedness of the Company to Redwood. Mr.
Tucker is affiliated with Redwood.
(6) Includes 10,000 shares of Common Stock issuable upon exercise of
options, and 825,000 shares held by Redwood with which Mr. Tucker is
affiliated.
(7) Includes 626,758 shares of Common Stock issuable upon exercise of
options. Also includes 51,566 shares of Common Stock owned by Mr.
O'Shaughnessy's children.
(8) Includes 70,125 shares of Common Stock issuable upon exercise of
options.
(9) Includes 60,750 shares of Common Stock owned by C&P Associates, of
which Mr. Mendelow and his wife are affiliated.
(10) Represents shares of Common Stock issuable upon exercise of options.
(11) Represents 20,000 shares of Common Stock issuable upon exercise of
options and 2,000 shares of Common Stock owned by Mr. Siris' minor
daughter.
Item 13. Certain Relationships and Related Transactions
In 1996, the Company entered into an agreement with Redwood to satisfy in
full certain trade payables amounting to $1,680,000. Under the terms of the
agreement, the Company issued Redwood 1,050,000 shares of Common Stock and an
option to purchase 75,000 shares of Common Stock at an exercise price of $1.75
and made a cash payment to Redwood of
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<PAGE>
$50,000. For Fiscal 2000, Redwood, as buying agent for the Company, initiated
the manufacture of approximately 74% of the Company's total footwear purchases.
At January 31, 2000, the Company had placed $13,775,920 of open purchase
commitments with Redwood. In Fiscal 2000 and Fiscal 1999, the Company purchased
approximately $38 million and $68 million, respectively of footwear products
through Redwood. At January 31, 2000 and 1999, the payable to Redwood totaled
approximately $1,286,000 and $943,000, respectively.
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<PAGE>
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this amendment to be signed
on its behalf.
CANDIE'S, INC.
By: /s/ NEIL COLE
-----------------------
Neil Cole
Chief Executive Officer
Dated: May 23, 2000
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