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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K/A
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Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 for the fiscal year ended January 29, 2000.
Commission File Number 0-22102
CYGNE DESIGNS, INC.
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(Exact name of Registrant as specified in its charter)
DELAWARE 04-2843286
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1410 BROADWAY, NEW YORK, NEW YORK 10018
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 997-7767
Securities registered pursuant to Section 12(b) of the Act:
None
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(Title of class)
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
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(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 mark 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. [X]
Aggregate market value of the Registrant's Common Stock held by non-affiliates
at April 14, 2000 (based on the closing sale price for such shares as reported
by the OTC Bulletin Board: $2,860,759 Common Stock outstanding as of April 14,
2000: 12,438,038 shares.
Documents incorporated by reference: None
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<PAGE>
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Directors:
The directors of the Company are as follows:
<TABLE>
<CAPTION>
YEAR FIRST
BECAME
DIRECTOR AGE DIRECTOR PRINCIPAL OCCUPATION DURING THE PAST FIVE YEARS
- -------- --- -------- ------------------------------------------------
<S> <C> <C> <C>
James G. Groninger 56 1993 President of the BaySouth Company since January 1995.
Managing Director of Paine Webber Incorporated from
April 1988 through December 1994.
Bernard M. Manuel 52 1988 Chief Executive Officer of Cygne since October 1988 and
Chairman of the Board since December 1989.
</TABLE>
Mr. Groninger is a director of Layton BioScience, Inc. and NPS Pharmaceuticals.
In September 1993 the Company established an Audit Committee and a Compensation
Committee. Mr. Groninger is the sole member of the Compensation Committee and
the Audit Committee. The Audit Committee is charged with reviewing the Company's
annual audit and meeting with the Company's independent accountants to review
the Company's internal controls and financial management practices. The
Compensation Committee reviews compensation practices, recommends compensation
for the Company's executives and key employees, and functions as the Committee
under the Company's 1993 Stock Option Plan. Each of the Compensation Committee
and the Audit Committee met once during the year ended January 29, 2000.
During the fiscal year ended January 29, 2000, the Board of Directors held three
meetings. Each director attended all of the meetings of the Board of Directors
held when he was a director and of all committees of the Board of Directors on
which he served.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's executive officers and directors, and persons who
beneficially own more than ten percent of the Company's Common Stock, to file
initial reports of ownership and reports of changes in ownership with the
Securities and Exchange Commission (the "SEC"). Executive officers, directors,
and greater than ten percent beneficial owners are required by the SEC to
furnish the Company with copies of all Section 16(a) forms they file.
Based upon a review of the copies of such forms furnished to the Company and
written representations from the Company's executive officers and directors, the
Company believes that during the fiscal year ended January 29, 2000, all Section
16(a) filing requirements applicable to its executive officers, directors and
greater than ten percent beneficial owners were complied with.
<PAGE>
Executive Officers:
See "Item 1. Business - Executive Officers of the Registrant."
ITEM 11. EXECUTIVE COMPENSATION
The following table shows all the cash compensation paid or to be paid by the
Company or its subsidiaries as well as certain other compensation paid or
accrued, during the fiscal years indicated, in all capacities in which they
served, to (i) the Company's Chief Executive Officer and (ii) the Company's only
other executive officer at January 29, 2000.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
ALL OTHER
YEAR SALARY COMPENSATION(1)
---- ------ ---------------
<S> <C> <C> <C>
Bernard M. Manuel 1999 $400,000 $ 941 (2)
Chairman of the Board and Chief Executive Officer 1998 403,000 1,001 (2)
1997 448,620 1,224 (2)
Roy E. Green 1999 245,000 3,141 (3)
Senior Vice President - Chief Financial Officer, 1998 245,000 3,685 (3)
Treasurer and Secretary 1997 245,000 3,181 (3)
</TABLE>
(1) Consists of certain insurance premiums on term life insurance paid by Cygne
for the benefit of the named individuals, except as otherwise indicated.
(2) Includes $818, $822, and $999 for years 1999, 1998, and 1997, respectively,
representing Cygne's matching contribution pursuant to its 401(k) defined
contribution plan.
(3) Includes $2,251, $2,425, and $2,425 for years 1999, 1998, and 1997,
respectively, representing Cygne's matching contribution pursuant to its
401(k) defined contribution plan.
During the fiscal year ended January 29, 2000, no options were granted to the
persons named in the Summary Compensation Table.
The following table sets forth information with respect to (i) stock options
exercised in the fiscal year ended January 29, 2000 by the persons named in the
Summary Compensation Table and (ii) unexercised stock options held by such
individuals on January 29, 2000.
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED,
OPTIONS HELD AT IN-THE-MONEY OPTIONS
SHARES FISCAL YEAR END (#) AT FISCAL YEAR END (1)
ACQUIRED VALUE --------------------------------- --------------------------------
NAME ON EXERCISE (#) REALIZED EXCERCISABLE UN-EXERCISABLE EXERCISABLE UN-EXERCISABLE
- ---- --------------- -------- ------------ -------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Bernard M. Manuel -- -- 55,000 -- $0 $0
Roy E. Green -- -- 80,000 -- $0 $0
</TABLE>
(1) Based on the closing stock price of the Common Stock on January 28, 2000 of
$0.19.
EMPLOYMENT AGREEMENTS
The Company currently has employment agreements with Bernard M. Manuel, its
Chairman and Chief Executive Officer, and Roy Green, its Senior Vice President -
Chief Financial Officer and Treasurer, and Secretary. These employment
agreements, which currently expire on April 30, 2001, provide for automatic
renewal for successive one year terms unless either party notifies the other to
the contrary at least 90 days prior to its expiration. The employment agreements
require each employee to devote substantially all of his time and attention to
the Company's business as necessary to fulfill his duties. Pursuant to the
employment agreements, Messrs. Manuel and Green are currently entitled to an
annual salary at a rate of $494,000 and $245,000, respectively, subject to
annual cost of living increases. The employment agreements also provide for the
payment of bonuses in such amounts as may be determined by the Board. Under the
employment agreements, the employee may terminate his employment upon 30 days'
notice. The employment agreements provide that in the event the employee's
employment is terminated by the Company at any time for any reason other than
justifiable cause, disability, or death, or the Company fails to renew the
agreement at any time within two years following a "Change of Control of the
Company," the Company must pay the employee his base salary and permit
participation in benefit programs for the greater of (i) the remaining term of
the agreement or (ii) two years in the case of Mr. Manuel and one year in the
case of Mr. Green. In the event the Company elects not to renew the agreement
(other than within two years following a "Change in Control in the Company"),
the Company will, (a) in the case of Mr. Manuel, pay him a severance payment
equal to the lesser of (i) two months' salary plus one-sixth of his most
recently declared bonus for each year he has been employed by the Company or
(ii) one year's annual salary,and (b) in the case of Mr. Green, pay him a
severance payment equal to the lesser of (i) one month's salary plus one-twelfth
of his most recently declared bonus for each year he has been employed by the
Company or (ii) six months' salary. Each agreement contains confidentiality
provisions, whereby each executive agrees not to disclose information regarding
the Company, as well as non-competition covenants. The non-competition covenants
survive the termination of an employee's employment for the greater of (i) the
remaining term of the agreement or (ii) two years in the case of Mr. Manuel and
one year in the case of Mr. Green.
<PAGE>
For purposes of the employment agreements, a "Change in Control of the Company"
shall be deemed to occur if (i) there shall be consummated (x) any consolidation
or merger of Cygne in which Cygne is not the continuing or surviving corporation
or pursuant to which shares of the Company's Common Stock would be converted
into cash, securities, or other property, other than a merger of Cygne in which
the holders of the Company's Common Stock immediately prior to the merger have
the same proportionate ownership of common stock of the surviving corporation
immediately after the merger, or (y) any sale, lease, exchange, or other
transfer (in one transaction or a series of related transactions) of all, or
substantially all, of the Company's assets, or (ii) the Company's stockholders
shall approve any plan or proposal for liquidation or dissolution of Cygne or
(iii) any person (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), of 40% or more of the Company's outstanding Common Stock other
than pursuant to a plan or arrangement entered into by such person and Cygne, or
(iv) during any period of two consecutive years, indivuduals who at the
beginning of such period constitute the entire Board of Directors shall cease
for any reason to constitute a majority thereof unless the election, or the
nomination for election by the Company's stockholders, of each new director was
approved by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of the period.
The employment agreements also provide that if, in connection with a change of
ownership or control of Cygne or a change in ownership of a substantial portion
of the Company's assets (all within the meaning of Section 280G(b)(2) of the
Internal Revenue Code of 1986, as amended (the "Code")), an excise tax is
payable by the employee under Section 4999 of the Code, then the Company will
pay to the employee additional compensation which will be sufficient to enable
the employee to pay such excise tax as well as the income tax and excise tax on
such additional compensation, such that, after the payment of income and excise
taxes, the employee is in the same economic position in which he would have been
if the provisions of Section 4999 of the Code had not been applicable.
COMPENSATION OF DIRECTORS
Each non-employee director receives $3,500 for each Board of Directors meeting
attended, and $1,500 for each meeting of any committee of the Board of Directors
attended. In addition, directors who are not employees are compensated through
stock options.
The Company adopted a Stock Option Plan for Non-Employee Directors (the
"Directors' Plan"), pursuant to which options to acquire a maximum aggregate of
100,000 shares of Common Stock may be granted to non-employee directors. Options
granted under the Directors' Plan do not qualify as incentive stock options
within the meaning of Section 422 of the Code. The Directors' Plan provides for
the automatic grant to each of the Company's non-employee directors of (1) an
option to purchase 10,000 shares of Common Stock on the date of such director's
initial election or appointment to the Board of Directors, and (2) an option to
purchase 2,000 shares of Common Stock on each annual anniversary of such
election or appointment, provided that such individual is on such anniversary
date a non-employee director. The options have an exercise price of 100% of the
fair market value of the Company's Common Stock on the date of the grant, have a
ten-year term, and become exercisable in four equal annual installments
commencing on the first anniversary of the grant thereof, subject to
acceleration in the event of a change of control (as defined in the Directors'
Plan). The options may be exercised by payment in cash, check, or shares of
Common Stock. On April 15, 1993, Mr. Groninger was elected as a director of
Cygne and was granted an option to purchase 10,000 shares of Common Stock at a
purchase price of $4.00 per share, the fair market value of the Common Stock on
the date of grant. On each of April 15, 1994, April 15, 1995, April 15, 1996,
April 15, 1997, April 15, 1998, April 15, 1999, and April 15, 2000, the
anniversary dates of his
<PAGE>
initial election to the Board of Directors, Mr. Groninger was granted options to
purchase 2,000 shares of Common Stock at a purchase price of $23.50, $11.75,
$1.75, $0.687, $0.281, $0.156, and $0.234, respectively, the fair market values
of the Company's Common Stock on the dates of grant.
As a result of the sale of its Ann Taylor business on September 20, 1996, a
change in control under the Directors' Plan was deemed to have occurred and all
options granted under the Directors' Plan prior to Spetember 20, 1996 became
vested. As a result of the sale of the Israeli based Knit business in 1999, a
change in control under the Directors' Plan was deemed to have occurred and all
options granted after September 20, 1996 and before November 16, 1999 became
vested.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of April 30, 2000 (except as
otherwise noted in the footnotes) regarding the beneficial ownership (as defined
by the SEC) of the Company's Common Stock by (i) each person known by the
Company to own beneficially more than five percent of the Company's outstanding
Common Stock; (ii) each director and nominee for election as a director of
Cygne; (iii) each executive officer named in the Summary Compensation Table (see
"Item 11. Executive Compensation"); and (iv) all directors and executive
officers of the Company as a group. Except as otherwise specified, the named
beneficial owner has the sole voting and investment power over the shares
listed.
AMOUNT AND NATURE
OF BENEFICIAL
OWNERSHIP OF PERCENTAGE OF
CYGNE CYGNE
NAME AND ADDRESS COMMON STOCK (1) COMMON STOCK
- ---------------- ------------------ -------------
James G. Groninger (2) 24,000 *
Bernard M. Manuel (3) 5,001,975 40.0%
Roy E. Green (4) 80,000 *
Directors and executive officers
as a group (3 persons) (5) 5,105,975 40.0%
* Less than one percent
(1) Beneficial ownership is determined in accordance with the rules of the SEC,
which generally attribute beneficial ownership of securities to persons who
possess sole or shared voting power and/or investment power with respect to
those securities.
(2) Includes 22,000 shares issuable pursuant to options which are exercisable
within 60 days of April 30, 2000. Does not include 2,000 shares which are
the subject of options which are not exercisable within 60 days of April
30, 2000.
(3) Includes 55,000 shares issuable pursuant to options. Mr. Manuel's address
is c/o Cygne Designs, Inc., 1410 Broadway, New York, New York 10018.
<PAGE>
(4) Consists of shares issuable pursuant to options.
(5) Includes 157,000 shares issuable pursuant to options which are exercisable
within 60 days of April 30, 2000. See Notes 2, 3, and 4.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
CYGNE DESIGNS, INC.
By: /s/ ROY E. GREEN
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Roy E. Green
Senior Vice President - Chief Financial Officer
and Treasurer and Secretary
May 23, 2000
