As filed with the Securities and Exchange Commission on September 9, 2002.
Registration No. 333-90742
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
CASUAL MALE RETAIL GROUP, INC.
(formerly known as Designs, Inc.)
(Exact name of Registrant as specified in its charter)
Delaware 04-2623104
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
555 Turnpike Street
Canton, Massachusetts 02021
(781) 828-9300
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
----------------
Dennis R. Hernreich
Chief Financial Officer
555 Turnpike Street
Canton, Massachusetts 02021
(781) 828-9300
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-----------------
Copy to:
Peter G. Smith, Esq.
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
(212) 715-9100
Approximate date of commencement of proposed sale to the public: At such
time or times as may be determined by the selling stockholders after this
Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, as amended (the "Securities Act"), check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_| _______
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_| _______
If the delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. |_|
-----------------------------------------------------
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act or until this Registration Statement shall become effective on
such date as the Securities and Exchange Commission, acting pursuant to said
Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. These
securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Subject to completion, dated September 9, 2002
Preliminary Prospectus
-----------------------------
24,809,338 SHARES
CASUAL MALE RETAIL GROUP, INC.
COMMON STOCK
-----------------------------
This prospectus relates to the offer and sale by the selling
stockholders listed beginning on page 10 of up to 24,809,338 shares of common
stock, par value $0.01 per share, of Casual Male Retail Group, Inc. (formerly
known as Designs, Inc.), consisting of (i) 1,379,300 shares of recently issued
common stock, (ii) 18,016,200 shares of common stock issued following the
conversion on August 8, 2002 of our series B convertible preferred stock, par
value $0.01 per share, (iii) 3,391,471 shares of common stock issuable upon
exercise of outstanding warrants, (iv) 1,140,000 shares of common stock issuable
upon exercise of outstanding options and (v) 882,367 presently outstanding
shares of common stock.
We issued 1,379,300 shares of common stock and 180,162 shares of series
B preferred stock to certain selling stockholders in various private placement
transactions in April and May 2002. Each share of series B preferred stock was
automatically converted into 100 shares of common stock following the approval
of the issuance of such common stock by our stockholders at the annual meeting
of stockholders held on August 8, 2002. The selling stockholders may sell all or
some of their respective shares offered pursuant to is prospectus through public
or private transactions, at prevailing market prices, or at privately negotiated
prices. We will not receive any proceeds from the sale of any of the shares by
the selling stockholders.
Our common stock is listed on the Nasdaq National Market under the
symbol "CMRG" (and was formerly listed under the symbol "DESI"). On September 6,
2002, the last reported sale price of our common stock was $4.89 per share.
Investing in our common stock involves risks. See "Risk Factors"
beginning on page 4.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is [___________], 2002.
TABLE OF CONTENTS
THE COMPANY...................................................................3
RECENT DEVELOPMENTS...........................................................4
RISK FACTORS..................................................................4
FORWARD-LOOKING STATEMENTS...................................................10
DIVIDENDS....................................................................10
USE OF PROCEEDS..............................................................10
SELLING STOCKHOLDERS.........................................................10
PLAN OF DISTRIBUTION.........................................................15
WHERE YOU CAN FIND MORE INFORMATION..........................................17
-------------------------------
You should rely only on the information or representations provided in
this prospectus or incorporated by reference into this prospectus. We have not
authorized anyone to provide you with any different information or to make any
different representations in connection with any offering made by this
prospectus. This prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, in any state where the offer or sale is
prohibited. Neither the delivery of this prospectus, nor any sale made under
this prospectus shall, under any circumstances, imply that the information in
this prospectus is correct as of any date after the date of this prospectus.
---------------------------------
2
THE COMPANY
Casual Male Retail Group, Inc. (formerly known as Designs, Inc.) is a
publicly traded, Massachusetts-based brand retail operator which has
historically specialized in selling quality branded apparel and accessories in
outlet malls throughout the eastern part of the United States and Puerto Rico.
All references in this prospectus to "Casual Male Retail Group," the "Company,"
"we," "us" and "our" are to Casual Male Retail Group, Inc. and its subsidiaries.
For over 25 years, through a license agreement with Levi Strauss & Co., we owned
and operated retail outlet stores selling exclusively Levi's(R) branded
merchandise.
Expanding upon our core competency of operating retail stores for
branded apparel in the outlet channel of distribution, we recently entered into
the following arrangements with two well-known apparel manufacturers:
o In January 2002, we entered into a license agreement with Candie's,
Inc., a leading designer and marketer of young women's footwear,
apparel and accessories. Under this license agreement, we plan, over
the next five years, to open and operate 75 Candie's(R) branded retail
stores in outlet malls and value centers throughout the United States.
We plan to open 11 Candie's(R) branded stores in outlet malls during
the fiscal year ending February 1, 2003.
o In February 2002, we finalized an exclusive joint venture agreement
with EcKo Complex, LLC, a leading design-driven lifestyle brand
targeting young men and women. EcKo has worldwide annual sales
exceeding $200 million. Under the joint venture agreement, we will
open and operate 75 EcKo(R) branded outlet stores throughout the
United States over a six-year period. We plan to open five EcKo(R)
branded outlet stores during fiscal 2003.
We are continuing discussions with several other manufacturers as we
strive to become a premier operator of branded retail outlet stores. We believe
that manufacturers will find Casual Male Retail Group as their logical solution
for an outlet channel of distribution of their branded merchandise.
As of May 14, 2002, pursuant to an asset purchase agreement entered into
as of May 2, 2002, by the Company, Casual Male Corp. and certain of its
subsidiaries (which we refer to, collectively, as "old Casual Male"), we
completed the acquisition of substantially all of the assets of old Casual Male
for a purchase price of approximately $170 million, plus the assumption of
certain operating liabilities. We were selected as the highest and best bidder
for the old Casual Male assets at a bankruptcy court ordered auction commencing
on May 1, 2002 and concluding on May 2, 2002, and our acquisition of old Casual
Male was approved by the court on May 7, 2002.
Old Casual Male was a leading independent specialty retailer of fashion,
casual and dress apparel for big and tall men with annual sales that exceeded
$350 million. Old Casual Male sold its branded merchandise through various
channels of distribution including full price and outlet retail stores, direct
mail and the internet. Old Casual Male had been operating under the protection
of the U.S. Bankruptcy Court since May 2001.
The Casual Male acquisition, along with the payment of certain related
fees and expenses, was completed with funds provided by: (i) approximately $30.2
million in additional borrowings from our amended three-year $120.0 million
senior secured credit facility with our bank, Fleet Retail Finance, Inc., (ii)
$15.0 million in a three-year term loan with a subsidiary of Fleet Retail
Finance, (iii) proceeds from the private placement in April and May 2002 of
$24.5 million principal amount of 12% senior subordinated notes due 2007
together with detachable warrants to acquire 1,715,000 shares of our common
stock at an exercise price of $0.01 per share and additional detachable warrants
to acquire 1,176,471 shares of our common stock at an exercise price of $8.50
per share, (iv) proceeds from the private placement in April and May 2002 of
$11.0 million principal amount of 5% senior subordinated notes due 2007, (v)
approximately $82.5 million of proceeds from the private placement in April and
May 2002 of approximately 1,379,300 shares of newly issued common stock and
180,162 shares of series B preferred stock, and (vi) the assumption of a
mortgage note in a principal amount of approximately $12.2 million.
Our principle executive offices are located at 555 Turnpike Street,
Canton, Massachusetts 02021, and our telephone number is (781) 828-9300.
3
RECENT DEVELOPMENTS
At the Company's annual meeting of stockholders held on August 8, 2002,
the stockholders of the Company voted in favor of changing the Company's
corporate name from Designs, Inc. to Casual Male Retail Group, Inc. Also at the
annual meeting, the stockholders voted in favor of (i) changing the Company's
state of incorporation from Delaware to Nevada, (ii) increasing the number of
authorized shares of common stock from 50,000,000 shares to 75,000,000 shares
and (iii) issuing additional shares of common stock upon the conversion of the
Company's series B preferred stock and the exercise of certain outstanding
warrants.
On August 7, 2002, the Company announced that due to the continued
erosion of the Levi's brand in the marketplace and Levi Strauss & Co.'s
consistent inability to provide a balanced assortment of product for our
Levi's(R) and Dockers(R) stores, the Company evaluated the current trends of its
Levi's(R)/Dockers(R) outlet stores as a result of the continuing comparable
store sale decreases the business was experiencing. As a result, the Company
plans to close between 34 and 40 Levi's(R)/Dockers(R) stores, combine 6 to 8
other stores and reduce the square footage in another 20 to 25 stores. The
Company expects to close between 15 and 20 Levi's(R) and Dockers(R) outlet
stores over the next twelve to eighteen months, and has already started
negotiations with several landlords to terminate leases on the remaining
underperforming stores. At the same time, the Company is continuing to execute
its integration plan to combine the operations of Designs, Inc. with Casual Male
and is in the process of relocating the Company's distribution facility and
corporate offices to Canton, Massachusetts.
On August 23, 2002, the Company announced its second quarter financial
results. For the second quarter of fiscal 2003, the Company reported a net loss
of $12.9 million, which includes restructuring charges totaling $11.0 million,
primarily related to the previously announced restructuring of the Company's
Levi's(R)/Dockers(R) business and the integration of the Casual Male operations.
This compares to a net income of $0.7 million in the corresponding period of the
prior year. For the six months ended August 3, 2002, the Company reported a net
loss of $14.7 million, of which $11.0 million relates to the aforementioned
restructuring charges recorded in the second quarter of fiscal 2003. This
compares to a net loss of $0.7 million in the corresponding period of the prior
year. As a result of the restructuring charge, the income tax benefit previously
recorded in the first quarter of the current year was reversed in the second
quarter, such that no income tax benefit has been recognized in the year-to-date
results. Without the impact of the $11.0 million restructuring charge, the
Company would have reported a net loss of $0.5 million for the second quarter of
fiscal 2003 and a net loss of $2.3 million for the six months ended August 3,
2002.
RISK FACTORS
Investing in shares of our common stock involves a high degree of risk.
You should carefully consider the following risk factors and all other
information contained in this prospectus before purchasing our common stock. The
risks and uncertainties described below are those that we currently believe may
materially affect our company. Additional risks and uncertainties may also
impair our business operations. If the following risks actually occur, our
business, financial condition and results of operations could be seriously
harmed, the trading price of our common stock could decline and you could lose
all or part of your investment.
Risks Related to the Market in Which We Operate
Our sales will suffer if we fail to accurately predict changing fashion trends
and consumer preferences.
Our business is dependent upon our being able to predict fashion trends,
customer preferences and other fashion-related factors. Customer tastes and
fashion trends are volatile and tend to change rapidly. Our success depends in
large part upon management's ability to effectively predict and respond to
changing fashion tastes and consumer demands and to translate market trends to
appropriate saleable product offerings far in advance. If we are unable to
successfully predict or respond to changing styles or trends and misjudge the
market for our products or any new product lines, our sales will be lower and we
may be faced with a substantial amount of unsold inventory or missed
opportunities. In response, we may be forced to rely on additional markdowns or
promotional sales to dispose of excess, slow-moving inventory, which would
decrease our revenues, profit margins and profits. In addition, the failure to
satisfy consumer demand could have serious longer-term consequences, such as an
adverse impact on our brand recognition and the loss of market share to our
competitors if our customer base comes to believe that other retailers are more
successfully addressing their preferences.
4
Macroeconomic factors adversely affecting the retail industry could also cause a
decrease our retail sales which would negatively impact our profitability.
Our sales could be negatively impacted by a weak retail environment
caused by a decline in consumer confidence and ultimately a reduction in
consumer spending for such discretionary items such as apparel, which become a
lower priority than necessities such as food and housing. Apparel retailers are
subject to general economic conditions and purchases of apparel may decline at
any time, especially during recessionary periods. In addition, our financial
performance is also sensitive to changes in consumer spending trends and
shopping patterns.
We understand that the retail industry can be adversely affected by
certain economic factors outside of our control that would affect our costs as
well as consumer spending behavior. Some of these factors include rising
interest rates, negative consumer sentiment brought about by uncertainty over
economic recovery and national security, inflation, and rising unemployment.
Further, it is well-known in the apparel industry that when economic conditions
worsen, men are more reluctant than women and children to shop for clothes for
themselves. Because over 80% of our sales are attributable to men's apparel, we
would be especially sensitive to such a decline. We have no ability to predict
or control these economic and political variables.
We could lose market share to competitors in the retail industry, which would
cause a decline in our revenues and have a serious adverse impact on our
profitability.
The United States casual apparel market, men's big and tall market and
footwear industry are highly competitive with many national and regional
department stores, specialty apparel retailers and discount stores offering a
broad range of apparel products similar to the products that we sell. Besides
retail competitors, we consider any casual apparel manufacturer operating in
outlet parks throughout the United States to be a competitor in the casual
apparel market. Due to consolidation in the men's apparel industry, it is
possible that another competitor, either a mass merchant or a men's specialty
store or specialty apparel catalog, could gain market share in men's big and
tall apparel due to more favorable pricing, locations, brand and fashion
assortment and size availability. Recently, sales of Levi's(R) brand jeans have
been impacted by the increased competition from private labels as well as
fashion jeans market entrants and by a decrease in national sales trends of
Levi's(R) brand products. Our future Candie's(R) Outlet stores face substantial
competition in each of our product lines from, among other brands, Skechers,
Steve Madden and Esprit. The presence in the marketplace of various fashion
trends and the limited availability of shelf space also can affect competition.
We may not be able to compete successfully with our competitors in the
future and could lose brand recognition and market share. A significant loss of
market share would put the Company's revenues and profitability at risk.
Our advertising and promotion efforts, while increasing costs, may not result in
increased sales.
Our business is directly affected by the success or failure of the
advertising and promotional efforts of the Company and our vendors. Future
advertising efforts of our company, our vendors or our other licensors may be
costly and may not result in increased sales. If a major advertising campaign
were undertaken without success, then the Company's failure to realize any
revenues from its advertising and promotional expenditures, together with the
possible resulting erosion of brand recognition and loss of market share, would
have a negative impact upon the Company's revenues. In either case, increased
costs and decreased margins, accompanied by static or decreased revenues, would
cause a decline in the Company's profitability.
Risks Related to Our Operations
Our business is likely to be damaged if we are unable to keep certain key
personnel.
Our future success is dependent on the personal efforts, performance and
abilities of our key management. Although none of our senior executives is close
to retirement age and we are not currently aware of any tensions between
management and any senior executive, there is always the possibility that a key
member of the management team could become unwilling or unable to continue in
that capacity for other reasons. For example, the loss of the
5
services of the Company's chief executive officer, David Levin, or its chief
financial officer, Dennis Hernreich, both of whom are an integral part of our
daily operations and primary decision makers in all operating matters, could
significantly impact the business, until adequate replacements can be identified
and put in place, by causing a loss of organizational focus, poor operating
execution, or both. In addition, the loss of our chief executive officer and
chief financial officer, each of whom has many years of senior executive
experience in the retail apparel industry, could materially reduce our ability
to identify and execute potential strategic initiatives such as joint venture
and licensing opportunities, the establishment of new store locations, and
possible acquisitions. That could, among other things, reduce potential
revenues, prevent us from diversifying from more limited product lines and
geographic concentrations, and expose us to downturns in those markets. The loss
of those individuals as well as our chairman, who also has many years of
experience in the capital markets, could negatively impact our ability to obtain
additional debt or equity financing for our operations or to refinance existing
indebtedness, or the terms that might be negotiated for such financing or
refinancing. Those circumstances in turn could ultimately result in a
significant decline in profitability and an erosion in the Company's financial
condition. The competition is intense for the type of highly skilled individuals
with relevant industry experience that we require and we may not be able to
attract and retain new employees of the caliber needed to achieve our
objectives.
If we fail to adequately upgrade and enhance our information systems and control
procedures, our systems may not be able to support our requirements.
The Company depends heavily upon technology and information systems to
control inventory, sales, markdowns, merchandise on hand and other critical
information. We periodically review, improve and, under certain circumstances,
replace our technology and management information systems to provide enhanced
support to all operating areas of our company. Currently, the Company is
undergoing a significant effort to replace Casual Male's existing antiquated
legacy systems, as part of the process of integrating the historical Designs,
Inc. and Casual Male operations.
It is critically important to the successful operation of the Company
that the implementation of the systems integration process, which entails the
replacement, enhancement, or upgrade of all Casual Male's vital information
systems, be completed timely without disruption to the daily operations of the
Company. The Company anticipates that the implementation will require
approximately 12 months to complete.
However, we may not be able to successfully implement required
enhancements to our operating systems in the future. If such upgrades and
enhancements are not successfully implemented, then our current systems may not
be able to continue to support adequately our future management information
requirements.
Any significant deficiencies in our management information systems
resulting in less than optimal systems performance could have a negative impact
upon the business. For example, since the information systems provide vital
information with respect to specific merchandise sales at the SKU level,
replenishment requirements to maintain optimum inventory levels, and sell
through data from which markdown requirements are identified to most
productively sell through poor selling SKU's, if that information is not
consistently provided on a timely and accurate basis the Company's sales could
be severely impacted, or its gross margins could easily erode.
If we fail to continue to improve upon and enhance our present
management information systems, then we may not be able to resolve or eliminate
any existing or potential difficulties, which could have a significant impact on
our business and results of operations.
If the third party manufacturers upon which we are dependent are unable or
unwilling to meet our needs, then we may be unable to obtain sufficient products
of adequate quality.
We do not own or operate any manufacturing facilities and are therefore
are entirely dependent on third parties for the manufacture of the products we
sell, which are the core of our business. Without adequate supplies of
merchandise to sell to our customers in the merchandise styles and fashions
demanded by the Company's particular customer base, sales would decrease
materially and the Company's business would be in jeopardy. Furthermore,
approximately 75-80% of our merchandise are private label items made
specifically for Casual Male and its customers. In the event that manufacturers
are unable or unwilling to ship products to us in a timely manner or continue to
manufacture products for us, we would have to rely on other current
manufacturing sources or identify and qualify new manufacturers. We might not be
able to identify
6
or qualify such manufacturers for existing or new products in a timely manner
and such manufacturers might not allocate sufficient capacity to us in order to
meet our requirements. The consequences of not securing adequate and timely
supplies of private label merchandise would negatively impact proper inventory
levels, sales and gross margin rates, and ultimately the profitability of the
Company.
In addition, even if our current manufacturers continue to manufacture
our products, they may not maintain adequate controls with respect to product
specifications and quality and may not continue to produce products that are
consistent with our standards. If we are forced to rely on products of inferior
quality, then our brand recognition and customer satisfaction would be likely to
suffer and the amount of merchandise we sell, or the prices we charge for such
merchandise, or both, would be reduced, decreasing our revenues and our
profitability.
Should we experience significant unanticipated demand, we will be
required to significantly expand our access to manufacturing, both from current
and new manufacturing sources. If such additional manufacturing capacity is not
available on terms as favorable as those obtained from current sources, then our
revenues or profit margins, or both, will suffer.
If our trademarks or licenses are compromised, then the market for our products
could decline.
We own and use a number of trademarks and operate under certain
trademark license agreements. We believe that these trademarks have significant
value and are instrumental in our ability to create and sustain demand for and
market our products. We cannot assure that these trademarks and licensing
agreements will remain in effect or that they will be renewed. In addition, any
future disputes concerning these trademarks and licenses may cause us to incur
significant litigation costs or force us to suspend use of the trademarks. For
additional details about our license agreements, you should refer to our Annual
Report on Form 10-K for the fiscal year ended February 2, 2002 (which we refer
to as the "Form 10-K"), which is incorporated herein by reference.
We may not be able to successfully expand our operations as planned.
We plan to significantly expand our operations in fiscal 2003 by opening
several new stores and we expect to have capital expenditures of approximately
$4.0 million. Our expansion plans are discussed in detail in the Form 10-K. Our
growth strategy depends on our ability to open and operate new retail stores on
a profitable basis. Our operating complexity and management responsibilities
will increase as we continue to grow, and we may face challenges in managing our
future growth. This anticipated growth will require that we continue to expand
and improve our operations, including our distribution infrastructure, and
expand, train and manage our employee base. In addition, we may be unable to
hire a sufficient number of qualified personnel to work in our new stores or to
successfully integrate the stores into our business. Our expansion prospects
also depend on a number of other factors, many of which are beyond our control,
including, among other things: economic conditions, competition, and consumer
preferences. We may not be able to achieve our store expansion goals and, even
if we succeed in opening new stores as planned, our newly opened stores may not
achieve revenue or profitability levels comparable to those of our existing
stores in the time periods estimated by us, or at all.
Acts of terrorism or war could adversely impact our business.
Additional actual or threatened acts of terrorism or war could
negatively impact availability of merchandise or consumer spending trends and
may otherwise adversely impact our business. Depending upon the nature of an
attack or threatened attack, consumers may be unwilling or unable to go to our
retail outlets or may otherwise decrease spending in general. A significant
decrease in consumer spending could have a significant adverse impact on our
revenues.
In addition, approximately 20% of the Company's merchandise is directly
imported from other countries, and most of its remaining merchandise is supplied
by U.S. domestic suppliers which source their goods from other countries. If
imported goods become difficult or impossible to bring into the United States,
and if we cannot obtain such merchandise from other sources at similar costs,
then the Company's sales, gross margins and profit margins would significantly
decline. Furthermore, in the event that commercial transportation is curtailed
or substantially
7
delayed, the Company may not be able to maintain adequate inventory levels of
important merchandise levels on a consistent basis, which would negatively
impact the Company's sales and potentially erode the confidence of its customer
base, leading to further loss of sales and decline in profitability.
In extreme circumstances, it may be necessary to close less productive
stores so as to consolidate important merchandise categories into the Company's
most productive stores which would severely impact the Company's profitability
and cash flow.
Additional issuances of our common stock would cause you to incur immediate
dilution.
In private placement transactions in April and May 2002, we issued
shares of common stock, preferred stock convertible into common stock and
warrants to purchase common stock. The issuance of common stock upon conversion
of the preferred stock and exercise of the warrants and other issuances of
additional common stock by us, from time to time, subjects our common stock to
the dilutive effects of such issuances.
Several provisions of our governing law could discourage, delay or prevent
transactions that stockholders might otherwise consider favorable.
It is possible that certain provisions of the Delaware corporate law or,
if we change our state of incorporation from Delaware to Nevada (as approved at
our annual meeting of stockholders on August 8, 2002), the Nevada corporate law
may make it more difficult to accomplish transactions which stockholders may
otherwise deem to be in their best interests. Such provisions may be deemed to
have an anti-takeover effect and may delay, defer or prevent a tender offer or
takeover attempt that might result in the receipt of a premium over the market
price for the securities held by stockholders.
Risks Relating to Our Acquisition of Casual Male
We may fail to realize the cost savings we anticipated from the Casual Male
acquisition.
We anticipate significant cost savings following our May 2002
acquisition of substantially all the assets of Casual Male, primarily through
headcount reductions, renegotiation of contractual arrangements for supplies and
services associated with the operation for more favorable pricing terms,
elimination of inefficient and costly business processes and costs by
streamlining the Company's management information systems and economies of scale
in purchasing. It is possible that some of the contemplated reductions could
fail to take place on the scale proposed due to unforeseen or underestimated
needs for the employees in question. It is also possible that the cost savings
associated with achieving purchasing economies fail to materialize due to
unsuccessful negotiations with key vendors. There is also a cost to realizing
the potential savings and these costs could potentially be higher than
originally contemplated in management's projections. In such an instance, the
amount of the cost savings would be offset by the higher costs of realizing the
savings, thereby reducing the overall benefit of the acquisition and reducing
our expected profitability. If there are substantial failures to achieve these
cost savings, cash flow and the servicing of debt related to the acquisition
could also be reduced.
We may not be able to successfully integrate the Company's prior operations with
the Casual Male operations.
Following the Casual Male acquisition, we face execution risk on two
fronts: (i) successful post-acquisition integration of Casual Male operations
and (ii) on-schedule store openings as outlined in our licensing and joint
venture agreements with Candie's, Inc. and EcKo Complex, LLC, respectively. It
is possible that unforeseen pitfalls during the post-acquisition integration
effort could adversely affect our historical operation of operating branded
outlet stores as well as our ability to operate the Casual Male stores
effectively. In such an event, the Company's anticipated revenue growth may not
be realized and the expected profit margins may not be achieved, and therefore
the Company may not reach the level of profitability anticipated by management
in connection with the acquisition. In an extreme case, the historical levels of
both sales and profit margins for the different businesses could also be
adversely impacted.
8
We may not succeed in our efforts to manage multiple brands in different
channels of distribution.
Several retailers have had problems executing a corporate strategy aimed
at operating multiple brands in multiple channels. We have expertise in the
outlet channel of distribution, but the Casual Male acquisition introduces
operations in the specialty store and internet channels of distribution. We are
now also responsible for all aspects of brand management with respect to the
Casual Male brand, including advertising and promotion, and the servicing and
merchandising of private label merchandise, which currently represent
approximately 75-80% of Casual Male's merchandise inventory. Under the current
operating model, this function is mostly the responsibility of the branded
manufacturer. If the managing of multiple brands within multiple channels is
poorly executed, the Company will not achieve its expected level of
profitability, and could ultimately be compelled to eliminate the multiple brand
strategy so that the organization may focus on a single brand strategy.
If the size of our target demographic group shrinks, our sales are likely to
decrease.
Research provided to Casual Male by The NPD Group suggests that big and
tall men accounted for approximately 11% of the total men's apparel market for
1999. Casual Male currently targets big and tall men in the 25-54 age group.
However, as more and more food retailers begin to compete on the basis of
providing more healthy menus, and American popular culture becomes more health
conscious, the size of this target demographic could decrease, resulting in
lower sales.
Covenants with our lenders may prevent management from doing things that would
otherwise be in the Company's best interests.
The Third Amended and Restated Loan and Security Agreement that we
entered into with Fleet Retail Finance and other lenders on May 14, 2002
contains numerous operating covenants that will limit the discretion of
management with respect to certain business matters, and which will place
restrictions on, among other things, our ability to incur additional
indebtedness, to create liens or other encumbrances, and to make certain
payments or investments, loans and guarantees. These restrictions can have a
negative impact upon the Company being able to expend funds as it deems
necessary, including for the opening of new store locations or the pursuit of
potential acquisitions, joint ventures or other strategic initiatives, or enter
into important contractual relationships for the improvement of the operation,
which could ultimately negatively impact the Company's financial performance.
Changes in the Company's credit profile following the Casual Male acquisition
could have a detrimental effect on its relationship with its suppliers.
As a result of the additional debt we incurred to finance the Casual
Male acquisition, we have become a highly leveraged company. This will have
several important effects on our future operations including, but not limited
to, (i) a substantial portion of our cash flow from operations must be dedicated
to the payment of interest on our indebtedness and will not be available for
other purposes, (ii) certain restrictions related to our borrowing may limit our
ability to borrow additional funds or dispose of assets and may affect our
flexibility in planning for, and reacting to, changes in it business, including
other possible acquisition activities, and (iii) our ability to obtain
additional financing in the future for working capital, capital expenditures,
acquisitions, general corporate or other purposes may be impaired.
Based on the foregoing, our credit risk profile has changed from that of
a historically unleveraged company to that of a highly leveraged company. As
such, certain suppliers may change the terms under which they are willing to
extend trade credit to us or the amount of such credit they are willing to
extend at any one time. In both cases the amount of trade credit would be
reduced, which would negatively impact the Company's working capital available
for operating purposes, increase the borrowings under its revolving line of
credit, and reduce the liquidity amount available under its revolving line of
credit. In the event that suppliers reduce credit terms or place us on a
cash-on-delivery (C.O.D.) basis, our working capital liquidity could be
substantially reduced and we could have difficulty maintaining inventory levels
or otherwise funding our operating needs.
9
FORWARD-LOOKING STATEMENTS
This prospectus contains forward looking statements, which include
statements based on our current expectations, assumptions, estimates and
projections about our business and our industry. The nature of forward-looking
information is that such information involves assumptions, risks and
uncertainties. Forward-looking information requires our management to make
assumptions, estimates, forecasts and projections regarding our future results
as well as the future effectiveness of our strategic plans and future
operational decisions. Forward-looking statements made by us or on our behalf
are subject to the risk that the forecasts, projections, and expectations of
management, or assumptions underlying such forecasts, projections and
expectations, may become inaccurate. Accordingly, our future financial
positions, the actual results of our operations and the implementation of our
plans and operations may differ materially from forward-looking statements made
by us or on our behalf.
We use words such as "believes," "anticipates," "expects," "intends,"
"plans" and similar expressions to identify forward-looking statements, but
these are not the exclusive means of identifying these statements. Actual
results could differ materially from those projected in any forward-looking
statements for the reasons detailed in "Risk Factors" or elsewhere in this
prospectus. Before you decide to invest in our common stock, you should be aware
that if any of the events described in the "Risk Factors" section and elsewhere
in this prospectus occur, they could have an adverse affect on our business. We
assume no obligation to update any forward-looking statement.
DIVIDENDS
We presently intend to retain earnings for working capital and to fund
capital expenditures. Accordingly, there is no present intention to pay
dividends on any shares of our common stock. In addition, the Third Amended and
Restated Loan and Security Agreement further restricts the payment of dividends.
USE OF PROCEEDS
We will not receive any proceeds from any sales of the shares offered
pursuant to this prospectus.
SELLING STOCKHOLDERS
In May 2002, we issued to certain investors who are selling stockholders
hereunder a total of 180,162 shares of series B preferred stock and 1,379,300
shares of common stock, and we have issued to the placement agent for certain
such transactions warrants to purchase 500,000 shares of common stock at an
exercise price of $4.25 per share. Each share of series B preferred stock was
automatically converted into 100 shares of common stock upon approval by our
stockholders of the proposal to approve the issuance of common stock upon
conversion of the series B preferred stock at the annual meeting of our
stockholders held on August 8, 2002. These transactions and the process of
stockholder approval are described more fully in our Current Report on Form 8-K
filed on May 23, 2002, as amended on May 23, 2002 and June 14, 2002, and our
definitive proxy statement filed on July 8, 2002, all of which are incorporated
herein by reference.
Also in April and May 2002, in connection with the private placement of
our senior subordinated notes, we issued certain purchasers of such notes who
are selling stockholders hereunder detachable warrants to purchase an aggregate
of 2,891,471 shares of common stock with initial exercise prices ranging from
$0.01 to $8.50 per share.
The following table sets forth information as of June 3, 2002, regarding
the beneficial ownership of shares of common stock by the selling stockholders.
The table presents the total number of shares of common stock owned by the
selling stockholders prior to the offering contemplated by this prospectus, the
total number of shares included in the offering and, assuming the selling
stockholders will offer all of the shares listed in the table below pursuant to
the offering contemplated by this prospectus, the total number of shares of
common stock owned by the selling stockholders after completion of the offering.
This prospectus offers, and the registration statement of which this prospectus
forms a part registers, only the shares which are listed in the table below in
the column titled "Number of shares of Offered Common Stock." Selling
stockholders may sell only those shares pursuant to the offering. The
presentation is based on (i) 15,989,343 shares of our common stock that were
reported as outstanding on June 3, 2002, (ii) 18,016,200 shares of our common
stock issued upon conversion of the series B preferred stock on August
10
8, 2002 and (iii) 4,531,471 shares of our common stock anticipated to be issued
or issuable upon exercise of warrants and options.
The following table and notes following the table were prepared based on
information provided to us by the listed selling stockholders. Other than as set
forth in the footnotes to the following table, the selling stockholders have not
had any material relationship with Casual Male Retail Group within the past
three years.
Percentage Percentage
of outstanding
shares Number of
Number of Number of owned shares owned
shares owned shares of subsequent subsequent
prior to the offered common to the to the
Selling Stockholder offering stock offering offering
- ------------------- ------------ --------------- ----------- -----------
300 Plaza Drive Associates 25,000 25,000 -- *
Almarc Trading Corp. Defined Benefit
Plan** 25,000 25,000 -- *
AMT Asset Management, LP** 50,000 50,000 -- *
Barclays Global Investors Ltd. 33,000 33,000 -- *
Baron Asset Fund on behalf of 3,760,353 3,760,353 -- *
the Small Cap Fund Series (1)**
Benchmark Partners, LP 235,300 235,300 -- *
Brahman Bull Fund, L.P. 148,200 148,200 -- *
Brahman C.P.F. Partners, L.P. 66,800 66,800 -- *
Brahman Institutional Partners, L.P. 52,200 52,200 -- *
Brahman Partners II Offshore, Ltd. 94,200 94,200 -- *
Brahman Partners II, L.P. 46,100 46,100 -- *
Brahman Partners III, L.P. 8,600 8,600 -- *
The Branagh Revocable Trust, Peter W 6,500 6,500 -- *
Branagh and Ramona Y. Branagh, Trustees
Bric Retail, L.P. 15,700 10,600 5,100 *
Bric6, LP 225,200 218,400 6,800 *
Bricoleur Enhanced, L.P. 219,400 219,300 100 *
Bricoleur Managed Trust 48,900 48,900 -- *
Bricoleur Offshore, Ltd. 361,900 361,000 900 *
Bricoleur Partners II, L.P. 305,500 304,700 800 *
Bricoleur Partners, L.P. 250,900 238,500 12,400 *
Bricoleur-Plus Fund, Ltd. 13,400 10,600 2,800 *
Allen Brill 47,500 40,000 7,500 *
Brook Road Nominee Trust 50,000 50,000 -- *
Buckingham RAF Int'l Partners, L.P.** 110,600 110,600 -- *
Buckingham RAF Partners II, L.P.** 55,600 51,800 3,800 *
Buckingham RAF Partners, L.P.** 720,900 661,200 59,700 *
BY Partners, L.P. 289,800 289,800 -- *
Carafe Investment Co. Ltd. 397,000 100,000 297,000 *
Clark Partners I, L.P. (2) 2,346,359 2,346,359 -- *
Stewart L. Cohen 23,500 23,500 -- *
Cragswood, Ltd. 18,900 18,900 -- *
Kenneth C. Cummins (3) 69,100 30,000 39,100 *
Walter Fischer 60,000 50,000 10,000 *
Glenhill Capital, LP 1,129,500 1,129,500 -- *
Glenhill Capital Overseas Partners Ltd. 282,400 282,400 -- *
Howard Gonchar 31,500 23,500 8,000 *
Richard W. Greene IRA 25,000 25,000 -- *
Jon D. Gruber & Linda W. Gruber 61,900 58,900 3,000 *
11
Percentage Percentage
of outstanding
shares Number of
Number of Number of owned shares owned
shares owned shares of subsequent subsequent
prior to the offered common to the to the
Selling Stockholder offering stock offering offering
- ------------------- ------------ --------------- ----------- -----------
Gruber & McBaine International 125,800 121,800 4,000 *
Patrick M. Guarini 23,500 23,500 -- *
Guerrilla IRA Partners 14,000 14,000 -- *
Guerrilla Partners 33,100 33,100 -- *
Halpern Capital DBA UVEST Investment
Services (4) 500,000 500,000 -- *
Dennis R. Hernreich (5) 109,268 60,000 49,268 *
Hocky Capital, LP 227,100 227,100 -- *
Hocky Capital QP LP 224,800 224,800 -- *
Allison Holtzman IRA, Bear Stearns
Securities Corp. Custodian 7,800 7,800 -- *
Marc L. Holtzman 23,500 23,500 -- *
Marc L. Holtzman, Trustee for Allison
Holtzman 3,500 3,500 -- *
Marc L. Holtzman, Trustee for Olivia
Garcia 7,600 7,600 -- *
Marc L. Holtzman, Trustee for Percy
Holtzman 2,000 2,000 -- *
Marc L. Holtzman, Trustee for Rivers
Holtzman 1,100 1,100 -- *
Marc L. Holtzman, Trustee for Sterling
Garcia 7,200 7,200 -- *
Marc L. Holtzman, Trustee for Temple
Holtzman 1,100 1,100 -- *
Steven Holtzman 23,500 23,500 -- *
Seymour Holtzman (6) 4,050,739 300,000 2,148,280 5.6%
Interstate Properties 235,300 235,300 -- *
Jewelcor Management, Inc. (7) 3,682,974 1,602,459 2,080,515 5.4%
JLF Offshore Fund, Ltd. 795,000 795,000 -- *
JLF Partners I, LP 616,800 616,800 -- *
Warren B. Kanders 235,300 235,300 -- *
Burton I. Koffman 50,000 50,000 -- *
Milton Koffman 50,000 50,000 -- *
Ruthanne Koffman 10,000 10,000 -- *
Lagunitas Partners LP 422,700 407,700 15,000 *
David A. Levin (8) 497,667 465,500 32,167 *
Carl M. Lieberman 50,000 5,000 45,000 *
Lynch Childrens Trust FBO Anne Lynch** 16,800 4,800 12,000 *
Lynch Childrens Trust FBO Elizabeth Lynch** 16,800 4,800 12,000 *
Lynch Childrens Trust FBO Mary Lynch** 16,800 4,800 12,000 *
Peter and Carolyn Lynch JWROS** 132,700 37,700 95,000 *
The Lynch Foundation** 54,500 29,500 25,000 *
Peter S. Lynch Charitable Lead Annuity
Trust** 7,900 5,900 2,000 *
Peter S. Lynch Charitable Remainder
Trust** 60,100 47,100 13,000 *
Peter S. Lynch Charitable Unitrust** 9,100 7,100 2,000 *
Allan R. Lyons 25,000 25,000 -- *
Paul R. Mancia 365,000 25,000 340,000 *
Peter R. McMullin 40,000 40,000 -- *
Metrowest Ent. 401(K) Profit Sharing 16,500 1,500 15,000 *
Plan FBO Carl M. Lieberman
Jeremiah P. Murphy, Jr. (9) 94,326 25,000 69,326 *
New Valu, Inc. 40,000 40,000 -- *
Robert Patron (10) 30,000 30,000 -- *
Joseph Pennacchio (11) 121,212 50,000 71,212 *
12
Percentage Percentage
of outstanding
shares Number of
Number of Number of owned shares owned
shares owned shares of subsequent subsequent
prior to the offered common to the to the
Selling Stockholder offering stock offering offering
- ------------------- ------------ --------------- ----------- -----------
Permal U.S. Opportunities Fund, Ltd. 565,000 565,000 -- *
Pollack Investment Partnership, LP 16,500 16,500 -- *
Pollat, Evans & Co. Inc. 7,500 7,500 -- *
George T. Porter, Jr. (12) 92,906 55,000 37,906 *
Prism Partners I, L.P. 250,000 250,000 -- *
Prism Partners II Offshore Fund 250,000 250,000 -- *
Putnam Investment Funds- Putnam Small
Cap Value Fund** 989,600 989,600 -- *
Putnam Variable Trust- Putnam VT Small
Cap Value Fund** 377,000 377,000 -- *
Putnam World Trust II: Putnam U.S. Small
Cap Value Equity Fund (Dublin)** 12,700 12,700 -- *
Reservoir Capital Master Fund, L.P. 67,600 67,600 -- *
Reservoir Capital Partners, L.P. 403,100 403,100 -- *
Eugene Roth 111,500 50,000 61,500 *
Estate of Marvin Roth 50,000 50,000 -- *
Phillip W. Roth 140,000 80,000 60,000 *
Sonia Seidman 16,500 16,500 -- *
Seidman & Associates, LLC 34,000 34,000 -- *
Seidman Investment Partnership II, LP 16,500 16,500 -- *
Seidman Investment Partnership, LP 16,500 16,500 -- *
John J. Sweeney (13) 20,668 3,500 17,168 *
Tucker Anthony Incorporated (14) 50,000 50,000 -- *
Hugh Sheldon Unger, Lincoln Trust TTEE
IRA 18,600 12,500 6,100 *
Jeffrey and Sheryl Unger (15) 43,650 10,000 33,650 *
Michael H. Weiss 55,800 50,000 5,800 *
Weiss, Peck & Greer, L.L.C 1,529,500 1,529,500 -- *
Whiffletree Partners LP** 235,300 235,300 -- *
Willow Creek Capital Partners, LP 235,300 235,300 -- *
Willow Creek Offshore Fund 235,300 235,300 -- *
WPG Tudor Fund** 235,300 235,300 -- *
Wynnefield Partners Small Cap Value, LP 126,300 126,300 -- *
Wynnefield Partners Small Cap Value, LP I 181,800 181,800 -- *
Wynnefield Small Cap Value Offshore
Fund, Ltd. 92,000 92,000 -- *
Zaxis Equity Neutral, L.P. 78,500 78,500 -- *
Zaxis Offshore Limited 571,500 571,500 -- *
Zaxis Partners, L.P. 138,000 138,000 -- *
* Less than 1%.
** Affiliate of registered broker-dealer.
(1) Includes 1,407,353 shares of common stock issuable upon exercise of
warrants.
(2) Includes 934,559 shares of common stock issuable upon exercise of warrants.
Stephen M. Duff, who is Treasurer of Ninth Floor Corporation, the general
partner of Clark Partners I, L.P., and Senior Investment
13
Manager at The Clark Estates, Inc., has been a member of the Board of
Directors of the Company since May 14, 2002.
(3) Kenneth C. Cummins has been a legal consultant to the Company since
November 12, 1996. Includes 20,000 shares of common stock issuable upon
exercise of stock options exercisable within 60 days.
(4) Includes 500,000 shares of common stock issuable upon exercise of warrants.
(5) Dennis R. Hernreich has been Senior Vice President, Chief Financial Officer
and Treasurer of the Company since September 5, 2000. Includes 61,668
shares of common stock issuable upon exercise of options exercisable within
60 days.
(6) Seymour Holtzman was appointed a director of the Company on April 7, 2000
and Chairman of the Board on April 11, 2000. On May 25, 2001, the Company
hired Mr. Holtzman as an executive officer of the Company. Mr. Holtzman may
be deemed to have shared voting and investment power over 4,050,739 shares
of common stock, which includes 3,682,974 shares (including 549,559 shares
issuable upon exercise of warrants) beneficially owned by Jewelcor
Management, Inc., of which Mr. Holtzman is the Chairman, President and
Chief Executive Officer and indirectly, with his wife, the primary
shareholder; 337,765 shares owned individually, which includes 300,000
shares being offered pursuant to this prospectus subject to options and
25,000 shares subject to options exercisable within 60 days; and 30,000
shares owned by Mr. Holtzman's grandchildren as to which he disclaims
beneficial ownership. The number of shares owned subsequent to the offering
excludes 1,681,926 shares being offered by Jewelcor Management, Inc.
pursuant to this prospectus.
(7) Jewelcor Management, Inc. has provided consulting services to the Company
since October 1999. This consulting arrangement and other related
transactions are described more fully in the Company's definitive proxy
statement filed on July 8, 2002, which is incorporated herein by reference.
Includes 549,559 shares of common stock issuable upon exercise of warrants.
Excludes 337,765 shares, including 300,000 shares being offered pursuant to
this prospectus subject to options and 25,000 shares subject to options
exercisable within 60 days, owned individually by Seymour Holtzman and
30,000 shares owned by Mr. Holtzman's grandchildren. Includes 60,659 shares
of common stock issued to Jewelcor Management, Inc. pursuant to a
consulting agreement with the Company, which agreement was extended
effective April 29, 2002.
(8) David A. Levin has been President and Chief Executive Officer of the
Company since April 10, 2000 and a director of the Company since April 11,
2000. Includes 241,667 shares of common stock issuable upon exercise of
options exercisable within 60 days.
(9) Jeremiah P. Murphy, Jr. has been a director of the Company since October 8,
1999. Includes 35,000 shares of common stock issuable upon exercise of
options exercisable within 60 days.
(10) Robert Patron had been a director of the Company since October 1999 until
his resignation effective March 11, 2002. Includes 30,000 shares of common
stock issuable upon exercise of options.
(11) Joseph Pennacchio has been a director of the Company since October 8, 1999.
Includes 35,000 shares of common stock issuable upon exercise of options
exercisable within 60 days.
(12) George T. Porter, Jr. has been a director of the Company since October 28,
1999. Includes 65,000 shares of common stock issuable upon exercise of
options exercisable within 60 days.
(13) John J. Sweeney has been an employee of the Company since April 7, 1997.
Includes 5,334 shares of common stock issuable upon exercise of options
exercisable within 60 days.
(14) Represents shares of common stock issuable upon exercise of options granted
in connection with professional services rendered to the Company.
14
(15) Jeffrey Unger was an employee of the Company from October 1999 through July
2000. Mr. Unger has been a investor relations consultant to the Company
since July 2000. Includes 20,000 shares of common stock issuable upon
exercise of options exercisable within 60 days.
The aggregate proceeds to the selling stockholders from the sale of the
shares listed in this prospectus offered by them pursuant to this prospectus
will be the sale price of the shares less discounts and commissions, if any.
PLAN OF DISTRIBUTION
The selling stockholders, which term includes their successors,
transferees, pledgees or donees or their successors, may sell the shares offered
pursuant to this prospectus directly to purchasers or through underwriters,
broker-dealers or agents, who may receive compensation in the form of discounts,
concessions or commissions from the selling stockholders or the purchasers,
which discounts, concessions or commissions as to any particular underwriter,
broker-dealer or agent may be in excess of those customary in the types of
transactions involved.
The shares offered pursuant to this prospectus may be sold by any
selling stockholder in one or more transactions at fixed prices, at prevailing
market prices at the time of sale, at prices related to such prevailing market
prices, at varying prices determined at the time of sale, or at negotiated
prices. Such sales may be effected in transactions, which may involve crosses or
block transactions (1) on any national securities exchange or quotation service
on which our common stock may be listed or quoted at the time of sale, (2) in
the over-the-counter market, (3) in transactions otherwise than on such
exchanges or services or in the over-the-counter market, (4) through the writing
of options, whether such options are listed on an options exchange or otherwise,
or (5) through the settlement of short sales. In connection with the sale of the
shares offered pursuant to this prospectus or otherwise, any selling stockholder
may enter into hedging transactions with broker-dealers or other financial
institutions which may in turn engage in short sales of the common stock and
deliver these securities to close out such short positions, or loan or pledge
the common stock to broker-dealers that in turn may sell these securities.
Each selling stockholder reserves the right to accept and, together with
its agents from time to time, to reject, in whole or in part, any proposed
purchase of common stock to be made directly or through agents.
At the time of the private placement of our series B preferred stock and
the issuance of our detachable warrants (converted into or exercisable for
shares of common stock offered pursuant to this prospectus), each investor,
including any registered broker-dealer or affiliate of a broker-dealer (whose
purchases are understood by the Company to be in the ordinary course of
business), represented to the Company, among other things, that such investor
was not acquiring the securities with a view to any distribution thereof, and
each such investor in our series B preferred stock represented that such
investor had no agreement, undertaking, arrangement, obligation or commitment
providing for the disposition of the securities. The following selling
stockholders which are registered broker-dealers are identified as
"underwriters" (within the meaning of Section 2(11) of the Securities Act of
1933, as amended) with respect to the shares offered for sale by them pursuant
to this prospectus: Halpern Capital DBA UVEST Investment Services; Tucker
Anthony Incorporated; and Weiss, Peck & Greer, L.L.C. All selling stockholders
which are affiliates of registered broker-dealers are identified by a double
asterisk (**) in the table of selling stockholders appearing on pages 11 to 13
of this prospectus. The Company also understands that any underwriters,
broker-dealers or agents that participate in the sale of the shares offered
pursuant to this prospectus on behalf of the selling stockholders may be
considered "underwriters" within the meaning of such statute. Any discounts,
commissions, concessions or profit they earn on any resale of the shares may be
underwriting discounts and commissions under the Securities Act.
To the extent required, the common stock to be sold, the name of each
selling stockholder, the respective purchase prices and the public offering
prices, the name of any agent, dealer or underwriter, and any applicable
commissions or discounts with respect to a particular offer will be set forth in
an accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement of which this prospectus forms a part.
15
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedules as of February 2, 2002 and February 3, 2001
and the years then ended included in our Annual Report on Form 10-K for the year
ended February 2, 2002, as set forth in their report, which is incorporated by
reference in this prospectus and elsewhere in the registration statement. Our
fiscal 2002 and fiscal 2001 financial statements and schedules are incorporated
by reference in reliance on Ernst & Young LLP's report, given on their authority
as experts in accounting and auditing.
The consolidated statements of operations, stockholders' equity, and
cash flows for the year ended January 29, 2000 and the related financial
statement schedule for the year ended January 29, 2000, incorporated in this
prospectus by reference from Designs, Inc.'s Annual Report on Form 10-K for the
year ended February 2, 2002, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report, which is incorporated herein by
reference, and has been so incorporated in reliance upon the report of such firm
given upon their authority as experts in accounting and auditing.
The consolidated financial statements of Casual Male Corp.,
debtor-in-possession, as of February 2, 2002 and February 3, 2001, and for each
of the years in the three-years ended February 2, 2002, February 3, 2001 and
January 29, 2000, have been incorporated by reference herein in reliance upon
the report of KPMG LLP, independent accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing.
The audit report covering the February 2, 2002 financial statements
contains an explanatory paragraph that states that most of the assets of Casual
Male Corp. have been sold. Casual Male Corp. will continue operations primarily
to liquidate any remaining assets and settle Casual Male Corp.'s remaining
liabilities, including liabilities subject to compromise, to the extent
possible. After the settlements have occurred, it is expected that Casual Male
Corp. will cease operations. The consolidated financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
16
WHERE YOU CAN FIND MORE INFORMATION
This prospectus constitutes a part of a registration statement on Form
S-3 that we filed with the Securities and Exchange Commission under the
Securities Act, including amendments thereto, relating to the shares offered
pursuant to this prospectus. This prospectus does not contain all of the
information set forth in the registration statement. You should rely only on the
information contained in this prospectus or incorporated herein by reference. We
have not authorized anyone else to provide you with different information. We
are not making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information in this prospectus is
accurate as of any date other than the date on the front page of this
prospectus, regardless of the time of delivery of this prospectus or any sale of
common stock.
We are subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and in accordance therewith, file reports,
proxy statements and other information with the Commission. Such reports, proxy
statements and other information filed by us may be inspected and copied at the
Commission's Public Reference Section located at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of such material also can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Please call the Commission at
1-800-SEC-0330 for more information about the operation of the public reference
rooms. The Commission also makes electronic filings publicly available on the
Internet. The Commission's Internet address is http://www.sec.gov. The
Commission's web site also contains reports, proxy statements and other
information regarding us that has been filed with the Commission. Our common
stock is quoted under the symbol "CMRG" on the Nasdaq National Market. Reports,
proxy statements and other information concerning us may be inspected at the
National Association of Securities Dealers, Inc. at 1735 K Street, N.W.,
Washington, D.C. 20006.
The Commission allows us to "incorporate by reference" information that
we file with them, which means that we can disclose important information to you
by referring you to those documents. The information incorporated by reference
is an important part of this prospectus, and information that we file later with
the Commission will automatically update and supersede this information.
Further, all filings we make under the Exchange Act after the date of the
initial registration statement and prior to effectiveness of the registration
statement shall be deemed to be incorporated by reference into this prospectus.
We incorporate by reference the documents listed below and any future filings we
will make with the Commission under Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act:
o our definitive Proxy Statement, filed on July 8, 2002;
o our Annual Report on Form 10-K for the fiscal year ended February 2,
2002;
o our Quarterly Report on Form 10-Q for the fiscal quarter ended May 4,
2002;
o our Current Report on Form 8-K filed on May 23, 2002, as amended on
May 23, 2002 and June 14, 2002;
o the description of our capital stock set forth in our Registration
Statement on Form S-1 (Registration No. 33-13402), filed with the SEC
on April 22, 1987;
o all other reports filed by us pursuant to Section 13(a) or 15(d) of
the Exchange Act since the end of the fiscal year covered by the
annual report referred to above; and
o all documents and reports subsequently filed by us pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the
termination of the offering.
We will furnish to any person to whom this prospectus is delivered,
without charge, a copy of these documents upon written or oral request to
Secretary, Casual Male Retail Group, Inc., 555 Turnpike Street, Canton,
Massachusetts 02021. Our telephone number is (781) 828-9300. A copy of any
exhibits to these documents will be furnished at no cost to any stockholder upon
written or oral request.
17
Disclosure of Commission Position on Indemnification for Securities
Act Liabilities.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of Casual
Male Retail Group pursuant to the provisions of Item 510 of Regulation S-K, or
otherwise, we have been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Casual Male Retail Group of
expenses incurred or paid by a director, officer or controlling person of Casual
Male Retail Group in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with
the securities being registered, we will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
18
No dealer, salesman or other person has been authorized to give any information
or to make representations other than those contained in this prospectus, and if
given or made, such information or representations must not be relied upon as
having been authorized by us or the selling stockholders. Neither the delivery
of this prospectus nor any sale hereunder will, under any circumstances, create
an implication that the information herein is correct as of any time subsequent
to its date. This prospectus does not constitute an offer to or solicitation of
offers by anyone in any jurisdiction in which such an offer or solicitation is
not authorized or in which the person making such an offer is not qualified to
do so or to anyone to whom it is unlawful to make such an offer or solicitation.
24,809,338 SHARES
CASUAL MALE RETAIL GROUP, INC.
COMMON STOCK
-----------------------
PROSPECTUS
-----------------------
_________, 2002
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The Registrant will pay all of the expenses payable in connection with
the offering described in this Registration Statement, which we estimate will be
as follows:
Total
SEC registration fee (actual) ..........................................$ 11,625
Accounting fees and expenses ...........................................$ 40,000
Legal fees and expenses.................................................$ 50,000
Printing and engraving expenses........................................ $ 2,500
Miscellaneous expenses................................................. $ 5,000
---------
Total...............................................................$109,125
The selling stockholders will be responsible for any and all expenses
associated solely with the execution of the sale or sales of their shares.
Item 15. Indemnification of Directors and Officers
The Registrant's Restated Certificate of Incorporation, as amended (the
"Certificate of Incorporation"), provides that no director of the Registrant
shall be personally liable to the Registrant or to any of its stockholders for
monetary damages arising out of such director's breach of fiduciary duty, except
to the extent that the elimination or limitation of liability is not permitted
by the Delaware General Corporation Law. The Delaware General Corporation Law,
as currently in effect, permits charter provisions eliminating the liability of
directors for breach of fiduciary duty, except that directors remain liable for
(i) any breach of the directors' duty of loyalty to a company or its
stockholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) any payment of a
dividend or approval of a stock repurchase that is illegal under Section 174 of
the Delaware General Corporation Law, or (iv) any transaction from which the
directors derived an improper personal benefit. The effect of this provision of
the Certificate of Incorporation is that directors cannot be held liable for
monetary damages arising from breaches of their duty of care, unless the breach
involves one of the four exceptions described in the preceding sentence. The
provision does not prevent stockholders from obtaining injunctive or other
equitable relief against directors, nor does it shield directors from liability
under federal or state securities laws.
The Certificate of Incorporation and the Registrant's By-Laws further
provide for indemnification of the Registrant's directors and officers to the
fullest extent permitted by Section 145 of the Delaware General Corporation Law,
including circumstances in which indemnification is otherwise discretionary.
Item 16. Exhibits
Exhibit No. Description
- ----------- -----------
5.1*...........Opinion of Kramer Levin Naftalis & Frankel LLP.
23.1**.........Consent of Independent Auditors - Ernst & Young LLP.
23.2**.........Independent Auditors' Consent - Deloitte & Touche LLP.
23.3**.........Independent Auditors' Consent - KPMG LLP.
23.4*..........Consent of Kramer Levin Naftalis & Frankel LLP (included in
Exhibit 5.1).
24.1**.........Power of Attorney.
- ---------------
* Filed herewith.
** Previously filed.
19
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
i. To include any prospectus required by Section 10(a)(3) of the
Securities Act;
ii. To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement; and
iii. To include any material information with respect to the plan of
distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that clauses (i) and (ii) do not apply if the
Registration Statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by
such clauses is contained in periodic reports filed with or furnished to
the Commission by the Registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in
the Registration Statement;
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Canton, Massachusetts, on September 9, 2002.
By: /s/ David A. Levin
-----------------------------
David A. Levin
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ David A. Levin President, Chief Executive September 9, 2002
- ------------------------
David A. Levin Officer and Director
(Principal Executive Officer)
/s/ Dennis R. Hernreich Senior Vice President, Chief September 9, 2002
- ------------------------
Dennis R. Hernreich Financial Officer and Treasurer
(Principal Financial and
Accounting Officer)
* Chairman of the Board of
- ------------------------ Directors
Seymour Holtzman
* Director
- ------------------------
Jesse H. Choper
Director
Alan Cohen
Director
Stephen M. Duff
* Director
- ------------------------
Jeremiah P. Murphy, Jr.
* Director
- ------------------------
Joseph Pennacchio
* Director
- ------------------------
George T. Porter, Jr.
*By: /s/ Dennis R. Hernreich September 9, 2002
--------------------
Dennis R. Hernreich
Attorney-in-Fact
II-3
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
5.1* Opinion of Kramer Levin Naftalis & Frankel LLP.
23.1** Consent of Independent Auditors - Ernst & Young LLP.
23.2** Independent Auditors' Consent - Deloitte & Touche LLP.
23.3** Independent Auditors' Consent - KPMG LLP.
23.4* Consent of Kramer Levin Naftalis & Frankel LLP (included
in Exhibit 5.1).
24.1** Power of Attorney.
- -------------------
* Filed herewith.
** Previously filed.
Exhibit 5.1
KRAMER LEVIN NAFTALIS & FRANKEL LLP
919 THIRD AVENUE
NEW YORK, N.Y. 10022 - 3852
TEL (212) 715-9100 47, Avenue Hoche
FAX (212) 715-8000 75008 Paris
France
September 9, 2002
Casual Male Retail Group, Inc.
555 Turnpike Street
Canton, Massachusetts 02021
Registration Statement on Form S-3
----------------------------------
Ladies and Gentlemen:
We are rendering this opinion in connection with the Registration
Statement on Form S-3 (File No. 333-90742) (the "Registration Statement") filed
by Casual Male Retail Group, Inc. (formerly known as Designs, Inc.), a Delaware
corporation (the "Company"), with the Securities and Exchange Commission under
the Securities Act of 1933, as amended (the "Securities Act"). The Registration
Statement relates to 20,277,867 shares (the "Shares") of the Company's common
stock, par value $0.01 per share ("Common Stock"), and 4,531,471 shares of
Common Stock (the "Additional Shares") issuable upon the exercise of certain
outstanding warrants or options.
We have examined such documents and records as we have deemed
necessary to enable us to express an opinion on the matters covered hereby. In
rendering this opinion, we have (a) assumed (i) the genuineness of all
signatures on all documents examined by us, (ii) the authenticity of all
documents submitted to us as originals and (iii) the conformity to original
documents of all documents submitted to us as photostatic or conformed copies
and the authenticity of the originals of such copies; and (b) relied on (i)
certificates of public officials and (ii) as to matters of fact,
representations, statements and certificates of officers and representatives of
the Company. In giving the opinion set forth below, we have also assumed that
the Additional Shares will be issued in accordance with the terms of the
respective instruments governing such issuance.
Based upon the foregoing, we are of the opinion that the Shares
are validly issued, fully paid and non-assessable and that, upon issuance of the
Additional Shares in accordance with terms of the respective instruments
governing such issuance, the Additional Shares will be validly issued, fully
paid and non-assessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement. In giving the foregoing consent, we do not thereby admit
that we are in the category of persons whose consent is required under Section 7
of the Securities Act or the rules and regulations of the Commission thereunder.
We do not express any opinion herein as to any laws other than
the General Corporation Law of the State of Delaware.
Very truly yours,
/s/ Kramer Levin Naftalis & Frankel LLP
