SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
(Amendment No. _)
______________________
Filed by the Registrant [X]
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 Materials Pursuant to ss.ss 240.14a-11(c) or ss.ss 240.14a-12
FRENCH FRAGRANCES, INC.
(Name of Registrant as specified in its Charter)
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(20) or
Item 22(a)(2) of Schedule 14A.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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 No.: ____________________________
(3) Filing Party: __________________________________________________
(4) Date Filed: ____________________________________________________
<PAGE>
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FRENCH FRAGRANCES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be Held on June 16, 2000
Notice is hereby given that the Annual Meeting (the "Annual Meeting") of
Shareholders of French Fragrances, Inc. (the "Company") will be held on
Friday, June 16, 2000 at 10:30 a.m., Eastern Standard Time, at the Company's
principal executive offices at 14100 N.W. 60th Avenue, Miami Lakes, Florida
33014, for the following purposes, as described in the attached proxy
statement:
1. To elect a board of six directors to serve until the next annual
meeting of shareholders or until their successors are duly elected
and qualified;
2. To ratify the appointment of Deloitte & Touche LLP as the independent
auditors of the Company for the fiscal year ending January 31, 2001;
and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 17, 2000
as the record date for the determination of shareholders entitled to notice of
and to vote at the Annual Meeting and at any adjournment thereof. Accordingly,
only shareholders of record at the close of business on that date will be
entitled to vote at the Annual Meeting.
It is important that your shares be represented at the Annual Meeting
regardless of the size of your holdings. Whether or not you intend to be
present at the Annual Meeting in person, we urge you to please complete, date
and
sign the enclosed proxy card and return it in the envelope provided for that
purpose.
By Order of the Board of Directors
OSCAR E. MARINA
Secretary
Miami, Florida
May 5, 2000
YOU ARE URGED TO COMPLETE, DATE, SIGN AND PROMPTLY MAIL THE ENCLOSED PROXY IN
THE ACCOMPANYING POSTAGE-FREE ENVELOPE. THE PROXY IS REVOCABLE AT ANY TIME
PRIOR TO ITS USE.
<PAGE>
<PAGE>
FRENCH FRAGRANCES, INC.
_________________________
PROXY STATEMENT
_________________________
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 16, 2000
General
This Proxy Statement has been prepared and is furnished by the Board of
Directors of French Fragrances, Inc. (the "Company"), in connection with the
solicitation of proxies for use at the Annual Meeting of Shareholders of the
Company (the "Annual Meeting") to be held at the Company's principal executive
offices at 14100 N.W. 60th Avenue, Miami Lakes, Florida 33014, at 10:30 a.m.,
Eastern Standard Time, on June 16, 2000, and at any adjournment thereof, for
the purposes set forth in the accompanying notice of meeting.
It is anticipated that the Company's Annual Report on Form 10-K for the
fiscal year ended January 31, 2000, definitive copies of this Proxy Statement
and the accompanying form of proxy card will be mailed to shareholders on or
about May 12, 2000. The Annual Report is not to be regarded as proxy
soliciting material.
The Company was organized in Florida in 1960 and, until the November 30,
1995 merger (the "Merger") of a privately-held Florida corporation named
French Fragrances, Inc. ("FFI") with and into the Company, was known as Suave
Shoe Corporation. Prior to the Merger, the Company had been engaged in the
manufacture and importation of casual, athletic and leisure footwear.
Following the Merger, the Company, as the surviving corporation, changed its
name to "French Fragrances, Inc." and management of FFI became the management
of the Company. Since the Merger, the Company's principal business operations
consist of the business operations previously conducted by FFI, which is the
manufacture and marketing of prestige fragrances and related skin treatment
and cosmetic products.
Outstanding Shares and Voting Rights
Only shareholders of record of the Common Stock, $.01 par value (the
"Common Stock") on the books of the Company at the close of business on April
17, 2000 (the "Record Date"), are entitled to notice of and to vote at the
Annual Meeting. On the Record Date, there were 13,262,551 shares of Common
Stock entitled to vote on each matter to be presented at the Annual Meeting.
Holders of the Common Stock have one vote per share on all matters. No other
class of stock of the Company has voting rights.
A majority of the shares of Common Stock entitled to vote on a matter,
represented in person or by proxy, shall constitute a quorum for action on a
matter at the Annual Meeting. In determining the presence of a quorum at the
Annual Meeting, abstentions are counted and broker non-votes are not. The
Company's Bylaws provide that the affirmative vote of a majority of the shares
of the voting stock represented, in person or by proxy, and entitled to vote
on a matter at a meeting in which a quorum is present shall be the act of the
shareholders, except as otherwise provided by law. The Florida Business
Corporation Act provides that directors are elected by a plurality of the
votes cast. Abstentions and broker non-votes have no legal effect on whether a
nominee for director is elected, but will have the same effect as votes
against the ratification of the appointment of Deloitte & Touche, LLP as the
independent auditors of the Company for the fiscal year ending January 31,
2001.
As of April 17, 2000, the directors and executive officers of the Company
(including companies under their control) beneficially owned approximately
41.7% of the Common Stock. The aggregate beneficial ownership of such persons
permits them to have effective control of the Company and to direct the
management and affairs of the Company.
Shares represented by a properly executed proxy received in time to permit
its use at the Annual Meeting or any adjournment thereof will be voted in
accordance with the instructions indicated therein. If no instructions are
indicated, the shares represented by the proxy will be voted FOR the election
of all of the nominees for director, FOR the ratification of the appointment
of Deloitte & Touche LLP as the independent auditors of the Company for the
fiscal year ending January 31, 2001, and in the discretion of the proxy
holders as to any other matter which may properly come before the Annual
Meeting.
You are requested, regardless of the number of shares you hold, to sign
the proxy and return it promptly in the enclosed envelope. Each shareholder
giving a proxy has the power to revoke it at any time before it is voted,
either in person at the Annual Meeting, by written notice to the Secretary of
the Company or by delivery of a later-dated proxy.
<PAGE>
<PAGE>
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth, as of April 17, 2000: (i) the ownership
of Common Stock by all persons known by the Company to own beneficially more
than 5% of the outstanding shares of Common Stock; and (ii) the beneficial
ownership of Common Stock, Series B Convertible Preferred Stock of the
Company, $.01 par value ("Series B Convertible Preferred"), and Series C
Convertible Preferred Stock of the Company, $.01 par value ("Series C
Convertible Preferred"), by (a) directors and nominees (listed by name) of the
Company, (b) the Company's chief executive officer and its four other most
highly compensated executive officers for the fiscal year ended January 31,
2000, and (c) all directors and executive officers of the Company as a group,
without naming them.
<TABLE>
<CAPTION>
COMMON STOCK SERIES B CONVERTIBLE PREFERRED
------------------------------ ------------------------------
AMOUNT AND NATURE PERCENTAGE AMOUNT AND NATURE PERCENTAGE
NAME AND ADDRESS OF OF BENEFICIAL OF THE OF BENEFICIAL OF THE
BENEFICIAL OWNER(1) OWNERSHIP(2) CLASS(2) OWNERSHIP CLASS
<S> <C> <C> <C> <C>
Rafael Kravec(3)(5) 2,169,890 16.3% 3,889 1.5%
E. Scott Beattie(4)(5) 978,045 7.0 5,961 2.2
Gretchen Goslin(6) 60,927 * -- --
Paul West(7) 38,599 * -- --
William J. Mueller(8) 61,180 * -- --
Oscar E. Marina(9) 53,189 * -- --
J.W. Nevil Thomas(10) 133,486 1.0 7,919 3.0
Fred Berens(11) 835,253 6.3 -- --
Richard C.W. Mauran(12) 2,139,964 15.0 100,279 37.7
George Dooley(13) 38,500 * -- --
Fragrance Marketing
Group, Inc.(14) 1,112,727 7.7
SAFECO Corporation(15) 1,143,350 8.3
All directors and
executive officers
as a group
(10 persons)(16) 6,384,033 41.7 118,048 44.4
</TABLE>
<PAGE>
<TABLE>
(RESTUBBED TABLE FROM ABOVE)
<CAPTION>
SERIES C CONVERTIBLE PREFERRED
------------------------------
AMOUNT AND NATURE PERCENTAGE
NAME AND ADDRESS OF OF BENEFICIAL OF THE
BENEFICIAL OWNER(1) OWNERSHIP(2) CLASS
<S> <C> <C>
Rafael Kravec(3)(5) 8,835 1.7%
E. Scott Beattie(4)(5) 9,185 1.8
Gretchen Goslin(6) 3,220 *
Paul West(7) 2,765 *
William J. Mueller(8) 3,220 *
Oscar E. Marina(9) 3,222 *
J.W. Nevil Thomas(10) 11,682 2.3
Fred Berens(11) -- --
Richard C.W. Mauran(12) 131,518 25.7
George Dooley(13) -- --
Fragrance Marketing
Group, Inc.(14) -- --
SAFECO Corporation(15) -- --
All directors and
executive officers
as a group
(10 persons)(16) 173,647 34.6
- ----------------
* Less than one percent of the class.
(1) The address of each of the persons shown in the above table other than Messrs.
Thomas and Mauran, Fragrance Marketing Group, Inc. ("FMG"), and SAFECO
Corporation is c/o French Fragrances, Inc., 14100 N.W. 60th Avenue, Miami
Lakes, Florida 33014. The address of Mr. Thomas is Scotia Plaza, 40 King
Street W., Suite 4712, Toronto, Canada M5H 3Y2. The address of Mr. Mauran is
31 Burton Court, Franklins Row, London SW3, England. The address of FMG is
7445 N.W. 12th Street, Miami, Florida 33126. The address of SAFECO
Corporation is SAFECO Plaza, Seattle, Washington 98185.
(2) Includes, where applicable, shares of Common Stock issuable upon the
conversion of Series B Convertible Preferred, Series C Convertible Preferred
and 7.5% Convertible Debentures Due 2006 ("7.5% Convertible Debentures"), and
upon the exercise of warrants and of options to acquire Common Stock
("Options"), held by such persons which may be converted or exercised within
60 days after April 17, 2000. A total of 7.12 shares of Common Stock are
issuable upon conversion of one share of Series B Convertible Preferred at a
conversion price of $3.30 per Common Stock share. One share of Common Stock
is issuable upon
2
<PAGE>
<PAGE>
conversion of one share of Series C Convertible Preferred at a conversion
price of $5.25 per Common Stock share. The 7.5% Convertible Debentures are
convertible into shares of Common Stock at $7.20 per share. Unless otherwise
indicated, the Company believes that all persons named in the table above have
sole voting power and investment power with respect to all shares of Common
Stock, Series B Convertible Preferred and Series C Convertible Preferred
beneficially owned by them.
(3) The Common Stock includes (i) 2,133,365 shares of Common Stock owned by Mr.
Kravec, including 1,000 shares which are owned by Mr. Kravec's daughter and as
to which he disclaims beneficial ownership, (ii) 27,690 shares of Common Stock
issuable upon the conversion of Series B Convertible Preferred owned by
National Trading Manufacturing, Inc., a corporation which is controlled by Mr.
Kravec ("National Trading"), and (iii) 8,835 shares of Common Stock issuable
upon the conversion of Series C Convertible Preferred owned by National
Trading.
(4) The Common Stock includes (i) 111,887 shares of Common Stock owned by Mr.
Beattie, (ii) 624,167 shares of Common Stock issuable upon the exercise of
Options, (iii) 42,442 shares of Common Stock issuable upon the conversion of
Series B Convertible Preferred, (iv) 9,185 shares of Common Stock issuable
upon the conversion of Series C Convertible Preferred, (v) 1,163 shares of
Common Stock issuable upon conversion of 7.5% Convertible Debentures, and (vi)
the shares of Common Stock referred to in Note (5). The Common Stock also
includes 64,201 shares of Common Stock owned by E.S.B. Consultants, Inc.
("ESB"), a company that until September 1997 was controlled by Mr. Beattie,
and as to which he disclaims beneficial ownership.
(5) The Common Stock includes 125,000 shares of Common Stock which Mr. Beattie has
an option to purchase.
(6) The Common Stock includes (i) 31,040 shares of Common Stock owned individually
by Ms. Goslin, (ii) 26,667 shares of Common Stock issuable upon the exercise
of Options, and (iii) 3,220 shares of Common Stock issuable upon the
conversion of Series C Convertible Preferred.
(7) The Common Stock includes (i) 2,500 shares of Common Stock owned individually
by Mr. West, (ii) 33,334 shares of Common Stock issuable upon the exercise of
Options, and (iii) 2,765 shares of Common Stock issuable upon the conversion
of Series C Convertible Preferred.
(8) The Common Stock includes (i) 31,293 shares of Common Stock owned individually
by Mr. Mueller, (ii) 26,667 shares of Common Stock issuable upon the exercise
of Options, and (iii) 3,220 shares of Common Stock issuable upon the
conversion of Series C Convertible Preferred.
(9) The Common Stock includes 46,667 shares of Common Stock issuable upon the
exercise of Options and 3,222 shares of Common Stock issuable upon the
conversion of Series C Convertible Preferred. The remaining 3,300 shares of
Common Stock are owned by Mr. Marina together with his spouse as joint tenants
with right of survivorship.
(10) The Common Stock includes 37,624, 2,872, 2,784 and 36 shares of Common Stock
owned by Mr. Thomas, his spouse, four trusts for the benefit of his children
and for which he serves as a trustee (the "Thomas Trusts") and Nevcorp, Inc.,
a corporation controlled by Mr. Thomas ("Nevcorp"), respectively. The Common
Stock also includes 241, 53, 2,044 and 54,046 shares of Common Stock issuable
upon the conversion of Series B Convertible Preferred owned by Mr. Thomas, his
spouse, the Thomas Trusts and Nevcorp, respectively. The Common Stock also
includes 11,682 shares of Common Stock issuable upon the conversion of Series
C Convertible Preferred owned by Nevcorp and 22,500 shares of Common Stock
issuable upon the exercise of Options owned by Mr. Thomas. Mr. Thomas
disclaims beneficial ownership as to the shares of Common Stock owned or
issuable upon the conversion of Series B Convertible Preferred Stock owned by
Mr. Thomas' spouse and the Thomas Trusts.
(11) The Common Stock includes (i) 736,920 shares of Common Stock, (ii) 22,500
shares of Common Stock issuable upon the exercise of Options, and (iii) 75,833
shares of Common Stock issuable upon conversion of 7.5% Convertible
Debentures.
(12) The Common Stock includes 911,579, 115,441, 127,768 and 6,210 shares of Common
Stock owned by Euro Credit Investments Limited, a company controlled by Mr.
Mauran ("Euro Credit"), Devonshire Trust, a trust of which Mr. Mauran is a
trustee ("Devonshire"), Bed B.V.I. Corp., a company controlled by Mr. Mauran
("Bed B.V.I."), and Devonshire Holdings, a trust of which Mr. Mauran is a
beneficiary ("Holdings"), respectively. The Common Stock also includes
489,051, 125,329, 95,014 and 4,590 shares of Common Stock issuable upon the
conversion of Series B Convertible Preferred owned by Euro Credit, Devonshire,
Bed B.V.I. and Holdings, respectively, and 108,254 and 23,264 shares of Common
Stock issuable upon the conversion of Series C Convertible Preferred owned by
Euro Credit and Devonshire, respectively. The Common Stock also includes
109,114 and 1,850 shares of Common Stock issuable upon conversion of 7.5%
Convertible Debentures owned by Mr. Mauran and Devonshire, respectively, and
22,500 shares of Common Stock issuable upon the exercise of Options owned by
Mr. Mauran.
3
<PAGE>
<PAGE>
(13) The Common Stock includes 29,500 shares of Common Stock issuable upon the
exercise of Options. The remaining 9,000 shares of Common Stock are owned by
Mr. Dooley together with his spouse as joint tenants with right of
survivorship.
(14) Represents shares of Common Stock issuable upon the exercise of warrants which
were issued to FMG in connection with the Company's acquisition of the
principal assets of FMG in May 1996.
(15) Based on a Schedule 13G dated January 28, 2000. SAFECO Corporation has shared
voting and dispositive power over 1,143,350 shares of Common Stock, including
1,136,700 shares which are owned beneficially by registered investment
companies for which SAFECO Corporation's subsidiary, SAFECO Asset Management
Company, is an advisor.
(16) The Common Stock includes (i) 840,501 shares of Common Stock issuable upon the
conversion of Series B Convertible Preferred, (ii) 173,647 shares of Common
Stock issuable upon the conversion of Series C Convertible Preferred, (iii)
187,960 shares of Common Stock issuable upon the conversion of the 7.5%
Convertible Debentures, and (iv) 854,502 shares of Common Stock issuable upon
the exercise of Options.
</TABLE>
PROPOSAL 1 - ELECTION OF DIRECTORS
Nominees
Six directors are to be elected at the Annual Meeting. The six nominees
named below are currently serving as the directors of the Company and have
been designated by the Board of Directors (the "Board") as nominees for
election as directors, to serve until the next annual meeting of shareholders
and until their successors are duly elected and qualified. In the event that
any nominee is unable or unwilling to serve, discretionary authority is
reserved to the persons named in the accompanying form of proxy to vote for
substitute nominees. The Board does not anticipate that such an event will
occur. Each director must be elected by a plurality of the votes cast.
The names of the nominees and information about them are set forth below.
E. Scott Beattie, age 41, has served as Chairman of the Board since April
2000, as President and Chief Executive Officer of the Company since March 1998
and as a director of the Company since the Merger. Mr. Beattie served as
President and Chief Operating Officer of the Company from April 1997 to March
1998 and as Vice Chairman of the Board and Assistant Secretary of the Company
from November 1995 to April 1997. Since the inception of FFI in 1992, Mr.
Beattie has been actively involved in the Company's management and
development, including the recruitment of members of senior management, brand
acquisitions and financings, business strategy development and implementation,
customer and supplier relationships and other operating activities.
Mr. Beattie served as Executive Vice President of Bedford Capital
Corporation ("Bedford"), a Toronto, Canada-based merchant banking firm from
March 1995 to March 1998 and as a Vice President of Bedford from September
1989 to March 1995. Prior to co-founding Bedford, Mr. Beattie served as a
Vice President and Director of Mergers & Acquisitions of Merrill Lynch, Inc.,
where he specialized in management buyouts and divestitures. Mr. Beattie also
was a Manager of Andersen Consulting, specializing in the design and
implementation of enterprise resource planning systems. Mr. Beattie is a
director of Bedford and Janna Systems Inc., an e-commerce customer
relationship management software company.
Rafael Kravec, age 68, has served as a director of the Company since the
Merger and served as Chairman of the Board from April 1997 to April 2000. Mr.
Kravec served as Chief Executive Officer of the Company from the date of the
Merger in November 1995 until March 1998 and as President and Chief Executive
Officer and a director of FFI from its formation in July 1992 until the
consummation of the Merger. Mr. Kravec has also served as President and Chief
Executive Officer and a director of National Trading since 1981.
J.W. Nevil Thomas, age 62, has served as Vice Chairman of the Board of
the Company since April 1997 and previously served as Chairman of the Board
of the Company from the consummation of the Merger until April 1997. Mr.
Thomas served as Chairman of the Board of FFI from its formation in July 1992
until the consummation of the Merger. Since 1970, Mr. Thomas has served as
President of Nevcorp, a financial and management consulting firm which is
controlled by Mr. Thomas. Mr. Thomas is Chairman of the Board of Bedford and
a director of Pet Valu, Inc., a pet food retailer.
Fred Berens, age 57, has served as a director of the Company since the
Merger. Mr. Berens served as a director of FFI from its formation in July
1992 until the consummation of the Merger. Mr. Berens has served as Senior
4
<PAGE>
<PAGE>
Vice President - Investments of Prudential Securities, Inc., an investment
banking firm, since March 1965. Mr. Berens previously served as a director of
the Company, when it was known as Suave Shoe Corporation, until December 1994.
Richard C.W. Mauran, age 66, has served as a director of the Company
since the Merger. Mr. Mauran served as a director of FFI from its formation
in July 1992 until the consummation of the Merger. Mr. Mauran is a private
investor and serves as a director of Bedford, Microbix Biosystems, Inc., a
biotechnology company, Pet Valu, Inc., and US Physical Therapy, Inc., which
owns and operates physiotherapy centers.
George Dooley, age 67, has served as a director of the Company since
March 1996. Mr. Dooley has served as President and Chief Executive Officer of
(i) Community Television Foundation of South Florida, Inc., a not-for-profit
corporation supporting, and a licensee of, public television station WPBT
Channel 2, since 1955, (ii) WPBT Communications Foundation, Inc., a
not-for-profit corporation supporting public television station WPBT Channel
2, since 1981, and (iii) Comtel, Inc., a company providing television
facilities to television producers, since 1981.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" EACH NOMINEE
FOR DIRECTOR.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Federal securities laws require the Company's directors, executive
officers, and persons who beneficially own more than 10 percent of the Common
Stock to file reports of initial ownership and reports of subsequent changes
in ownership with the Securities and Exchange Commission (the "Commission")
and to provide copies of these reports to the Company. Specific due dates
have been established and the Company is required to disclose in this Proxy
Statement any failure of the foregoing persons to file timely those reports
during its fiscal year ended January 31, 2000. To the best of the Company's
knowledge, based solely upon a review of copies of reports furnished to it and
written representations that no other reports were required, all of the
Company's directors, executive officers and 10 percent or greater beneficial
owners of Common Stock made all such filings timely, with the exception of one
report reporting one transaction for director J.W. Nevil Thomas, which was
inadvertently filed late.
MEETINGS AND COMMITTEES OF THE BOARD
General
During the fiscal year ended January 31, 2000, the Board of Directors
held four meetings and each director attended at least 75% of the total
meetings of the Board and at least 75% of the total meetings of the committees
of the Board in which he served. The Board has an Audit Committee and a
Compensation Committee.
The Audit Committee consists of Messrs. Berens, Dooley and Thomas, none
of whom are presently or formerly employees of the Company. The Audit
Committee oversees the procedures, scope and results of the annual audit and
reviews the services provided by the Company's independent auditors. The
Audit Committee met once during the fiscal year ended January 31, 2000.
The Compensation Committee consists of Messrs. Berens and Dooley. The
Compensation Committee administers the Company's stock option plans and
determines the compensation of the Company's executive officers. The
Compensation Committee met once during the fiscal year ended January 31, 2000.
The Board does not have a standing nominating committee. The Board
performs this function.
<PAGE>
DIRECTOR COMPENSATION
Directors who are employees of the Company do not receive any monetary
compensation for serving on the Board or any of its committees. Directors who
are not employees of the Company (currently Messrs. Thomas, Berens, Dooley and
Mauran) receive an annual retainer of $3,000 and a fee of $500 for each
meeting of the Board or a committee of the Board attended. The Board also
reimburses all directors for all expenses incurred in connection with their
activities as directors. Under the terms of the Non-Employee Director Stock
Option Plan (the "Directors' Plan"), non-employee directors receive stock
options for 7,000 shares of Common Stock upon their initial election to the
Board and stock options for 7,500 shares of Common Stock annually upon
reelection to the Board at the annual meeting of shareholders. All options
granted under the Directors' Plan are exercisable one year from the date of
grant. During the fiscal year ended January 31, 2000, upon their reelection
to the Board at the annual meeting of shareholders in June 1999, each of
Messrs. Thomas, Berens, Dooley and Mauran were granted stock options under the
Directors' Plan for 7,500
5
<PAGE>
<PAGE>
shares of Common Stock exercisable at $7.00 per share. Directors who are not
on the Compensation Committee may also be granted stock options under the 1995
Stock Option Plan (the "1995 Plan"). During the fiscal year ended January 31,
2000, in consideration of his services as President and Chief Executive
Officer of the Company, Mr. Beattie was granted options for 100,000 shares of
Common Stock under the 1995 Plan, exercisable in thirds at $6.00 per share
following 6, 12 and 24 months after the grant date.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation
paid by the Company for the fiscal years ended January 31, 2000, 1999 and 1998
to the Company's Chief Executive Officer and the four other most highly
compensated executive officers of the Company during the fiscal year ended
January 31, 2000 whose compensation exceeded $100,000 (the "Named
Executives").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
-----------------------------------------------------
OTHER ANNUAL
NAME AND YEAR SALARY BONUS COMPENSATION
PRINCIPAL POSITION (1) ($) ($)(2) ($)(3)
- ------------------------ ------- -------- -------- ------------
<S> <C> <C> <C> <C>
E. Scott Beattie 1/31/00 375,000 200,000 3,961
Chairman, President and 1/31/99 367,790 100,000 3,745
Chief Executive Officer(5) 1/31/98 257,405 175,000 --
Paul West 1/31/00 250,000 100,000 269
Executive Vice 1/31/99 198,948 15,000 --
President - Sales
Management and
Planning (6)
Gretchen Goslin 1/31/00 197,116 100,000 207
Executive Vice 1/31/99 175,000 80,000 --
President - Marketing 1/31/98 175,000 88,000 --
William J. Mueller 1/31/00 196,539 80,000 3,945
Senior Vice President, 1/31/99 170,000 80,000 3,605
Chief Financial 1/31/98 170,000 88,000 4,585
Officer and Treasurer
Oscar E. Marina 1/31/00 170,000 75,000 296
Senior Vice President, 1/31/99 168,077 70,000 --
General Counsel and 1/31/98 150,000 75,000 --
Secretary
- -------------
</TABLE>
<PAGE>
<TABLE>
(RESTUBBED TABLE FROM ABOVE)
<CAPTION>
LONG-TERM
COMPENSATION
------------
COMMON STOCK ALL
UNDERLYING OTHER
NAME AND OPTIONS COMPENSATION
PRINCIPAL POSITION (#) ($)(4)
- -------------------- ------------ ------------
<S> <C> <C>
E. Scott Beattie 100,000 3,413
Chairman, President and 400,000 204
Chief Executive Officer(5) 7,500 --
Paul West 50,000 2,879
Executive Vice -- 1,502
President - Sales
Management and
Planning(6)
Gretchen Goslin 10,000 2,915
Executive Vice 10,000 1,113
President - Marketing -- --
William J. Mueller 10,000 772
Senior Vice President, 10,000 204
Chief Financial -- --
Officer and Treasurer
Oscar E. Marina 10,000 2,869
Senior Vice President, 10,000 1,332
General Counsel and 10,000 --
Secretary
- -------------
(1) The amounts shown for "1/31/00," "1/31/99" and "1/31/98" are for the
fiscal years ended January 31, 2000, 1999 and 1998, respectively.
(2) The Company creates an annual bonus pool for members of its management
and other key personnel (the "Bonus Pool"). On an annual basis, the
Compensation Committee approves the allocation of the Bonus Pool among
the members of the Company's management and other key personnel.
(3) During the fiscal year ended January 31, 2000, the Named Executives were
reimbursed for the following amounts of taxes incurred as a result of
the payment of executive disability insurance premiums: (a) E. Scott
Beattie - $216; (b) Paul West - $269; (c) Gretchen Goslin - $207; (d)
William J. Mueller - $288; and (e) Oscar E. Marina - $296. The amounts
shown for Messrs. Beattie and Mueller also include $3,745 and $3,657,
respectively, which represents the amount reimbursed by the Company for
the payment of taxes on the value received by them from a
Company-provided automobile. The amounts reflected in the above table
do not include any amounts for perquisites and other personal benefits.
The aggregate amount of such compensation for each Named Executive
6
<PAGE>
<PAGE>
did not exceed 10% of the total annual salary and bonus of such Named
Executive and, accordingly, has been omitted from the table as permitted
by the rules of the Commission.
(4) Consists of matching payments made by the Company under the Company's
401(k) Plan, term life insurance premiums and disability insurance
premiums paid or reimbursed by the Company, as follows:
<CAPTION>
401(k) Life Disability
Year Match($) Insurance($) Insurance($)
------- -------- ------------ ------------
<S> <C> <C> <C> <C>
E. Scott Beattie 1/31/00 2,889 131 393
1/31/99 -- 28 176
1/31/98 -- -- --
Paul West 1/31/00 2,400 94 385
1/31/99 1,298 28 176
Gretchen Goslin 1/31/00 2,429 97 389
1/31/99 909 28 176
1/31/98 -- -- --
William J. Mueller 1/31/00 286 97 389
1/31/99 -- 28 176
1/31/98 -- -- --
Oscar E. Marina 1/31/00 2,400 89 380
1/31/99 1,128 28 176
1/31/98 -- -- --
(5) Mr. Beattie was appointed to the position of President and Chief
Executive Officer of the Company in March 1998. Mr. Beattie was
appointed to the position of President of the Company in April 1997.
Salary for 1/31/98 represents $71,155 in salary paid to Mr. Beattie
following his becoming an employee of the Company in September 1997, and
$186,250 in consulting fees paid to ESB under the terms of certain
consulting or monitoring agreements pursuant to which ESB, through Mr.
Beattie, provided financial advisory and management services to the
Company. All consulting and monitoring agreements between the Company
and ESB were terminated during the fiscal year ended January 31, 1998.
(6) Mr. West was appointed an executive officer of the Company as its Senior
Vice President Sales Management and Planning in March 1999. Mr. West
joined in the Company in April 1998.
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information regarding Options granted
during the fiscal year ended January 31, 2000 by the Company to the Named
Executives:
<PAGE>
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
COMMON EXERCISE RATES OF STOCK PRICE
STOCK PERCENT OF TOTAL OR APPRECIATION FOR OPTION
UNDERLYING OPTIONS GRANTED BASE TERM (1)
OPTIONS TO EMPLOYEES PRICE EXPIRATION -----------------------
NAME GRANTED IN FISCAL YEAR ($/SH)(2) DATE 5%($) 10%($)
- ------------------ ---------- ---------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
E. Scott Beattie. 100,000 42.6% 6.00 3/3/09 377,337 956,245
Paul West . . . . 50,000 21.3% 6.00 3/3/04 82,884 183,153
Gretchen Goslin . 10,000 4.2% 6.00 3/3/04 16,577 36,631
William J. Mueller 10,000 4.2% 6.00 3/3/04 16,577 36,631
Oscar E. Marina . 10,000 4.2% 6.00 3/3/04 16,577 36,631
- ------------------
(1) Amounts represent hypothetical gains that could be achieved for the respective Options if
exercised at the end of the option term. These gains are based on assumed rates of stock
price appreciation of 5% and 10% compounded annually from the date the respective Options
were granted to their expiration dates. Hypothetical gains are calculated based on
7
<PAGE>
<PAGE>
rules promulgated by the Commission and do not represent an estimate by the Company of its
future stock price growth. This table does not take into account any appreciation in the
price of the Common Stock to date. Actual gains, if any, on Option exercises and Common
Stock holdings are dependent on the timing of such exercises and the future performance of
the Common Stock. There can be no assurances that the rates of appreciation assumed in
this table can be achieved or that the amounts reflected will be received by the Named
Executives.
(2) The exercise price for the Options granted was based upon the market price of the Common
Stock on the date of grant.
</TABLE>
AGGREGATED FISCAL YEAR END OPTION VALUE TABLE
The following table sets forth certain information concerning Options
exercised by the Named Executives during the fiscal year ended January 31,
2000 and unexercised Options held by the Named Executives at January 31, 2000.
<TABLE>
<CAPTION>
Number of Shares
of Common Stock Value of Unexercised
Shares Underlying Unexercised In-the-Money Options at
Acquired on Value Options at January 31, 2000
Exercise Realized January 31, 2000 ($)(2)
Name (#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
- -------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
E. Scott Beattie . . 53,400 132,485 590,834 66,666 79,167 33,333
Paul West. . . . . . -- -- 16,667 33,333 8,334 16,667
Gretchen Goslin. . . 27,293(1) 184,228 20,001 9,999 1,667 3,333
William J. Mueller . 27,293(1) 184,228 20,001 9,999 1,667 3,333
Oscar E. Marina. . . -- -- 40,001 9,999 26,667 3,333
- ----------------
(1) Value is based on the difference between the Option exercise price and the fair market
value per share of Common Stock on the date of exercise multiplied by the number of shares
underlying the Option. Shares acquired for Ms. Goslin and Mr. Mueller reflect the shares
received following a cashless exercise of their Options for 53,400 shares of Common Stock.
(2) Value is based on the difference between the Option exercise price and the fair market
value per share of Common Stock on January 31, 2000 multiplied by the number of shares
underlying the Option.
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Fred Berens served as a member of the Compensation Committee of the
Board for the fiscal year ended January 31, 2000. Mr. Berens owns $546,000
principal amount of the Company's 7.5% Convertible Debentures. See "Certain
Relationships and Related Transactions."
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee submits the following report for fiscal 2000:
The function of the Compensation Committee is to determine the
compensation of the Company's senior management and other key personnel who
have contributed to the performance of the Company, including bonuses, and to
administer the Company's 1995 Stock Option Plan. The Company's executive
compensation program consists of three primary components: base salaries,
bonuses and grants of stock options. In the past, certain members of
management have also received Company vehicles or car allowances. Bonuses for
senior management and other key personnel are allocated from the Company's
Bonus Pool. The Compensation Committee may also, in its discretion,
supplement monetary compensation with incentive compensation in the form of
the grant of stock options under the 1995 Plan. All of the components of
executive compensation are designed to facilitate fulfillment of the
compensation objectives of the Board of Directors and the Compensation
Committee, which objectives include: (i) providing market competitive
compensation to attract and retain key management personnel; (ii) relating
management compensation to the achievement of Company goals and the Company's
performance; and (iii) aligning the interests of management with those of the
Company's shareholders.
The determination of the total compensation package for the Company's
senior management and other key personnel of the Company was made after
reviewing and considering a number of factors, including Company performance,
achievement of Company goals and the individual's contribution to the
achievement of Company goals, job responsibility, level of individual
performance, compensation levels at competitive companies, as well as
companies of similar size to the Company, and the Company's historical
compensation levels. Following the completion of the fiscal year, the
Compensation Committee
8
<PAGE>
<PAGE>
met with the President and Chief Executive Officer to review his
recommendations with respect to the compensation package for members of senior
management and other key personnel of the Company. The Compensation Committee
then determined the allocation of bonuses from the Bonus Pool and the grant of
stock options. Other than the Bonus Pool, which is specifically tied to
Company performance, the compensation decisions for fiscal 2000 were based
upon an overall review of all of the relevant factors without giving specific
weight to any one factor.
In its allocation of the Bonus Pool and the decision on the individuals
who should receive, and the amounts of, stock option grants for fiscal 2000
performance, the Compensation Committee considered additional factors,
including, (i) that, commensurate with the Company's growth in sales,
profitability and operations, a greater number of management personnel and key
employees made significant contributions to the Company in fiscal 2000, (ii)
the contributions of certain key executives whose monetary compensation had
not been adjusted for some time, and (iii) the form of incentive compensation
most appropriate for a specific individual. Based on all of these factors,
the Compensation Committee allocated the Bonus Pool and granted stock options
to a greater number of individuals than in past years. For fiscal 2000
performance, the Compensation Committee granted options for a total of 590,000
shares of Common Stock, including 375,000 to the Named Executives. The period
for full vesting of these option grants was extended from two to three years.
The Compensation Committee's stock option grants reflected in the Summary
Compensation Table for the Named Executives for the fiscal year ended January
31, 2000 were granted in March 1999 and were based primarily on fiscal 1999
performance.
The compensation of the Company's President and Chief Executive Officer
was determined based on the above-described factors. Based on his long-term
commitment to the Company and significant contributions during fiscal 2000,
including, among other things, with respect to the Company's record levels of
profitability and continued improvements in supply chain management, sales
growth and relationships with its top retailers, the development of
relationships with fragrance suppliers, and operational and management
initiatives, including the Company's new e-commerce and internet initiatives,
the Compensation Committee allocated a bonus of $200,000 and granted a stock
option for 150,000 shares of Common Stock to Mr. Beattie in March 2000
exercisable in thirds after each succeeding year from the date of grant.
At the Compensation Committee meeting held in March 2000, the
Compensation Committee also adopted and the Board approved certain changes to
the Company's compensation structure for the current fiscal year 2001,
including, (i) establishing potential bonus ranges based on the person's job
responsibilities, (ii) establishing specific criteria for the determination of
bonuses, including, percentages based on Company performance and percentages
based on the person's attainment of certain key performance indicators, and
(iii) standardizing the Company's car allowance program. The Compensation
Committee also adopted and the Board approved that the aggregate number of
shares of Common Stock available for grant as stock options to the managers
and key personnel of the Company be equal to 10% of the fully diluted number
of shares of Common Stock outstanding. The Compensation Committee believes
that these changes will provide both greater incentives for employees to focus
on the collective goal of improving Company performance and greater certainty
in understanding how to achieve those personal goals which will most benefit
the Company. In addition, the Compensation Committee believes that these
changes will assist the Company in continuing to attract and retain top
managerial talent.
Fred Berens
George Dooley
<PAGE>
Performance Graph
NOTE: Prior to the November 1995 Merger, the Company (which was then known as
Suave Shoe Corporation) had discontinued its shoe manufacturing and
distribution operations. Management of the Company believes that reflecting
total return data for the Company relating to the shoe operations prior to the
Merger would be of no relevance to its shareholders and potentially
misleading. Accordingly, management of the Company has omitted all historical
data which does not relate to the Company's fragrance operations following the
Merger and has begun the performance graph comparison as of the effective date
of the Merger.
The performance graph data set forth below compares the cumulative total
returns, including the reinvestment of dividends, of the Common Stock with the
companies in The Nasdaq Stock Market (U.S.) Index and with four peer group
companies (the "Peer Group"), which include: Allou Health & Beauty Care,
Inc.; Jean Philippe Fragrances, Inc.; Parlux Fragrances, Inc.; and Perfumania,
Inc. (now known as eCom Ventures, Inc.). The Peer Group consists of companies
engaged in fragrance manufacturing, distribution and sales with similar market
capitalizations to the Company at the beginning of the comparative period.
The comparison covers a 50-month period from the November 30, 1995 effective
date of the Merger in which the Company's operations became the fragrance
operations of FFI until January 31, 2000, and is based on an assumed $100
investment on November 30, 1995 in The Nasdaq Stock Market (U.S.) Index, the
Peer Group and in the Common Stock. The Common Stock is listed on The Nasdaq
National Market under the symbol "FRAG."
9
<PAGE>
<PAGE>
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
Cumulative Total Return
11/95 1/96 1/97 1/98 1/99 1/00
----- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
French Fragrances, Inc. 100 141 168 235 170 139
Peer Group 100 99 70 57 90 85
NASDAQ National Market (U.S.) 100 100 131 155 242 377
</TABLE>
10
<PAGE>
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Relationships
E. Scott Beattie is the Chairman, President and Chief Executive Officer
and a director of the Company. Rafael Kravec, a director of the Company, is
the controlling shareholder of National Trading. Richard C.W. Mauran, a
director of the Company, is the co-trustee of Devonshire. Fred Berens is a
director of the Company.
Related Transactions
At January 31, 2000, the Company had outstanding approximately
$4,779,000 aggregate principal amount of 7.5% Convertible Debentures, of which
(i) $2,184,000 aggregate principal amount were owned by Mr. Kravec and
National Trading, (ii) $546,000 aggregate principal amount were owned by Mr.
Berens, (iii) $798,942 aggregate principal amount were owned by Mr. Mauran and
Devonshire, and (iv) $8,374 aggregate principal amount were owned by Mr.
Beattie. On February 9, 2000, the Company repurchased the 7.5% Convertible
Debentures owned by Mr. Kravec and National Trading for an aggregate purchase
price of $2,652,000.
In August 1998, National Trading sold a facility (the "NTM Facility"),
which formerly served as the Company's executive offices, to an unaffiliated
third party. The Company had an option to purchase the NTM Facility. As part
of the consideration for relinquishing its option to purchase the NTM
Facility, National Trading issued to the Company a promissory note in the
aggregate principal amount of $300,000. The note is payable upon demand and
bears interest at 8.5% per annum. At January 31, 2000, $100,000 principal
amount of the note, plus accrued interest of $16,000, was outstanding, which
represented the highest amount outstanding during the fiscal year ended
January 31, 2000.
In December 1998, the Company provided loans to E. Scott Beattie, the
President and Chief Executive Officer of the Company, in the aggregate
principal amount of $500,000 for payment of certain Canadian tax liabilities
resulting from his relocation to Florida. The loans accrue interest at 8.5%
per annum and mature in August and November 2000. At January 31, 2000, the
entire principal amount of $500,000, plus accrued interest of $55,675, was
outstanding.
PROPOSAL 2 - RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed the firm of Deloitte & Touche LLP
to continue as the independent auditors for the Company for the fiscal year
ending January 31, 2001. Deloitte & Touche LLP has been acting as the
independent auditors of the Company since February 22, 1996, and served as the
independent auditors of FFI, whose fragrance distribution operations became
the operations of the Company following the Merger, since FFI's inception in
1992.
Representatives of Deloitte & Touche LLP are expected to be present at
the Annual Meeting, will be given an opportunity to make a statement if they
desire to do so, and are expected to be available to respond to appropriate
questions from shareholders.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE INDEPENDENT AUDITORS OF THE
COMPANY FOR THE FISCAL YEAR ENDING JANUARY 31, 2001.
<PAGE>
SHAREHOLDER PROPOSALS
Shareholder proposals to be considered for inclusion in the proxy
materials of the Company for its 2001 Annual Meeting of Shareholders must be
received by the Company by January 6, 2001.
OTHER MATTERS
The expense of soliciting proxies will be borne by the Company. Proxies
will be solicited principally by mail, but directors, officers and regular
employees of the Company may solicit proxies personally, by telephone or by
facsimile transmission. The Company will reimburse custodians, nominees or
other persons for their out-of-pocket expenses in sending proxy materials to
beneficial owners.
11
<PAGE>
<PAGE>
The Board of Directors is not aware of any matters to be presented at
the Annual Meeting other than the matters described herein and does not intend
to bring any other matters before the Annual Meeting. If any other matters
should, however, come before the Annual Meeting, or any adjournment thereof,
the persons named in the enclosed proxy will have discretionary authority to
vote all proxies in accordance with their best judgment.
By Order of the Board of Directors
OSCAR E. MARINA
Secretary
Miami, Florida
May 5, 2000.
12
<PAGE>
<PAGE>
REVOCABLE PROXY - COMMON STOCK
FRENCH FRAGRANCES, INC.
ANNUAL MEETING OF SHAREHOLDERS
June 16, 2000
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Oscar E. Marina and Joel B. Ronkin as
proxies each with full powers of substitution to act, as attorneys and proxies
for the undersigned, to vote all shares of Common Stock of French Fragrances,
Inc., which the undersigned is entitled to vote at the Annual Meeting of
Shareholders, to be held at the Company's executive offices at 14100 N.W. 60th
Avenue, Miami Lakes, Florida 33014, on Friday, June 16, 2000 at 10:30 a.m.,
Eastern Standard Time, and at any postponement or adjournment thereof, as
stated on the reverse side.
THIS PROXY WHEN PROPERLY EXECUTED AND RETURNED IN A TIMELY MANNER WILL
BE VOTED AT THE ANNUAL MEETING AND AT ANY POSTPONEMENT OR ADJOURNMENT THEREOF
IN ACCORDANCE WITH THE DIRECTIONS SPECIFIED HEREIN. IF NO DIRECTIONS ARE
INDICATED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES FOR
DIRECTORS LISTED IN PROPOSAL 1 AND FOR THE RATIFICATION OF THE APPOINTMENT OF
THE INDEPENDENT AUDITORS SET FORTH IN PROPOSAL 2, AND ON OTHER MATTERS
PRESENTED FOR A VOTE, IN ACCORDANCE WITH THE JUDGMENT OF THE PERSONS ACTING
UNDER THIS PROXY. IN THE EVENT ANY NOMINEE FOR ELECTION AS A DIRECTOR BECOMES
UNAVAILABLE TO SERVE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE BALANCE
OF THOSE NAMED AND A SUBSTITUTE SELECTED BY THE PERSONS NAMED IN THE PROXY.
Each shareholder giving a proxy has the power to revoke it any time
before it is voted, either in person at the Annual Meeting, by written notice
to the Secretary of French Fragrances, Inc. or by delivery of a later-dated
proxy. Attendance at the Annual Meeting without further action will not
automatically revoke a proxy.
[CONTINUED AND TO BE MARKED, DATED AND SIGNED ON REVERSE SIDE]
<PAGE>
[REVERSE SIDE OF CARD]
<TABLE>
<S> <C>
The Board of Directors recommends a vote FOR Please mark your votes as indicated in
Items 1, 2 and 3. this example [X]
Item 1- ELECTION OF DIRECTORS Item 2- RATIFICATION OF APPOINTMENT
OF DELOITTE & TOUCHE LLP AS THE
E. Scott Beattie J.W. Nevil Thomas INDEPENDENT AUDITORS FOR THE
Rafael Kravec Fred Berens FISCAL YEAR ENDED JANUARY 31,
Richard C.W. Mauran George Dooley 2001
FOR WITHHOLD AUTHORITY FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ]
Instruction: To withhold authority to vote
for any individual nominee, write that
nominee's name in the space provided
below:
__________________________________________
__________________________________________
__________________________________________
Other Business
- --------------
In their judgment, the proxies are authorized to vote
upon such other business as may properly come
before the Annual Meeting and any adjournment
or postponement thereof.
Signature: ____________________ Signature: ____________________ Date: _____________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing
as attorney, executor, administrator, trustee or guardian, please give full title
as such.
</TABLE>
