Pre-Effective Amendment to Registration Statement for Securities Offered Pursuant to a Transaction — Form S-3
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-3/A The Men's Wearhouse, Inc.-Amend. #1 to 333-111227 65 355K
2: EX-5.1 Opinion of Fulbright & Jaworski L.L.P. 2 10K
3: EX-23.1 Consent of Deloitte & Touche LLP 1 6K
S-3/A — The Men’s Wearhouse, Inc.-Amend. #1 to 333-111227
Document Table of Contents
As filed with the Securities and Exchange Commission on March 15, 2004
Registration No. 333-111227
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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THE MEN'S WEARHOUSE, INC.
(Exact name of registrant as specified in its charter)
TEXAS 74-1790172
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5803 GLENMONT DRIVE
HOUSTON, TEXAS 77081
(713) 592-7200
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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NEILL P. DAVIS
5803 GLENMONT DRIVE
HOUSTON, TEXAS 77081
(713) 592-7200
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copy to:
MICHAEL W. CONLON
FULBRIGHT & JAWORSKI L.L.P.
1301 MCKINNEY, SUITE 5100
HOUSTON, TX 77010
(713) 651-5151
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after this registration statement becomes effective, subject to
market conditions and other factors.
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, other than securities offered only in connection with
dividend or interest reinvestment plans, 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 of 1933, 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 delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
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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 OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
SUBJECT TO COMPLETION, DATED MARCH 15, 2004
PROSPECTUS
$130,000,000
(MEN'S WEARHOUSE LOGO)
3.125% CONVERTIBLE SENIOR NOTES DUE 2023 AND
THE COMMON STOCK ISSUABLE UPON CONVERSION OF THE NOTES
We issued the notes in a private placement in October 2003. The
securities to be offered and sold using this prospectus will be offered and sold
by the selling security holders named in this prospectus or in any supplement to
this prospectus. See "Selling Security Holders" beginning on page 14. We will
not receive any of the proceeds from the sale by the selling security holders of
the securities offered by this prospectus.
We will pay cash interest on the notes on October 15 and April 15 of
each year, beginning on April 15, 2004. The notes will mature on October 15,
2023. We will pay additional contingent interest to the holders of the notes
during any six-month period from October 15 to April 14 and from April 15 to
October 14, beginning with the six-month period commencing October 15, 2008, if
the trading price of the notes for each of the five trading days ending on the
second trading day immediately preceding the first day of the applicable
six-month period equals or exceeds 120% of the principal amount of the notes.
We may redeem all or a portion of the notes on or after October 20,
2008, at 100% of the principal amount of the notes plus any accrued and unpaid
interest, contingent interest and additional amounts, if any. We also have the
right to redeem the notes between October 20, 2006 and October 19, 2008, if, on
each of at least 20 trading days within any period of 30 consecutive trading
days ending on or after October 20, 2006 but prior to October 20, 2008, the
closing sale price of our common stock exceeds 140% of the conversion price in
effect on the 30th trading day of that period.
The notes are convertible by holders into shares of our common stock
initially at a conversion rate of 23.3187 shares of common stock per $1,000
principal amount of notes, which is equivalent to an initial conversion price of
$42.88 per share of common stock (subject to adjustment), under the following
circumstances:
(1) during any conversion period if, on each of at least 20
trading days in the 30 consecutive trading day period ending
on the first trading day of the conversion period, the closing
sale price of our common stock exceeds 120% of the conversion
price in effect on that 30th trading day of such period ( a
"conversion period" will be the period from and including the
third Friday (or, if that day is not a trading day, then the
next trading day) in a fiscal quarter to, but not including,
the third Friday (or, if that day is not a trading day, then
the next trading day) in the immediately following fiscal
quarter);
(2) if we call the notes for redemption;
(3) if we distribute to all holders of our common stock rights or
warrants entitling them to subscribe for or purchase, for a
period expiring within 60 days, common stock at less than the
closing sale price of the common stock on the business day
immediately preceding the announcement of such distribution;
(4) if we elect to distribute to all holders of our common stock,
cash or other assets, debt securities or rights or warrants to
purchase our securities, including the declaration of any cash
dividends, payable quarterly or otherwise, which distribution
has a per share value exceeding 5% of the closing sale price
of the common stock on the business day immediately preceding
the declaration date for the distribution; or
(5) upon the occurrence of a designated event (as described in the
paragraph below).
Upon conversion of the notes, in lieu of delivering common stock we
may, in our discretion, deliver cash or a combination of cash and common stock.
The notes are general senior unsecured obligations, ranking on a parity
in right of payment with all our existing and future unsecured senior
indebtedness and our other general unsecured obligations, and senior in right of
payment with all our future subordinated indebtedness. The notes will be
effectively subordinated to all of our senior secured indebtedness, and all
indebtedness and liabilities of our subsidiaries. Holders may require us to
purchase all or part of the notes, for cash, at a purchase price of 100% of the
principal amount per note plus accrued and unpaid interest on October 15, 2008,
October 15, 2013 and October 15, 2018 or upon a designated event (including, any
person or group becoming the beneficial owner of more than 50% of our
outstanding common stock, change of a majority of our directors, merger,
disposition of substantially all of the our assets, or dissolution or
liquidation), as described in this prospectus.
Our common stock is listed on the New York Stock Exchange under the symbol
"MW." On March 11, 2004, the last reported sale price of our common stock on the
New York Stock Exchange was $25.88 per share.
There is no established market for the notes. The selling security holders
may sell the securities offered by this prospectus from time to time on any
exchange on which the securities are listed on terms to be negotiated with
buyers. They may also sell the securities in private sales or through dealers or
agents. The selling security holders may sell the securities at prevailing
market prices or at prices negotiated with buyers. The selling security holders
will be responsible for any commissions due to brokers, dealers or agents. We
will be responsible for all other offering expenses. We will not receive any of
the proceeds from the sale by the selling security holders of the securities
offered by this prospectus.
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THIS INVESTMENT INVOLVES SIGNIFICANT RISKS. SEE THE "RISK FACTORS"
SECTION BEGINNING ON PAGE 8.
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PRICE: 100% OF THE PRINCIPAL AMOUNT AT ISSUANCE
PLUS ACCRUED INTEREST, IF ANY, FROM OCTOBER 21, 2003
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is March 15, 2004
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TABLE OF CONTENTS
PAGE
ABOUT THIS PROSPECTUS.............................................................................................i
SUMMARY...........................................................................................................1
THE OFFERING......................................................................................................3
RISK FACTORS......................................................................................................8
RATIO OF EARNINGS TO FIXED CHARGES...............................................................................13
NO PROCEEDS......................................................................................................13
SELLING SECURITY HOLDERS.........................................................................................13
OUR BUSINESS.....................................................................................................17
DESCRIPTION OF NOTES.............................................................................................21
DESCRIPTION OF CAPITAL STOCK.....................................................................................45
MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS..................................................................45
CERTAIN ERISA CONSIDERATIONS.....................................................................................52
PLAN OF DISTRIBUTION.............................................................................................54
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND OTHER FACTORS..............................................55
WHERE YOU CAN FIND MORE INFORMATION..............................................................................55
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE..................................................................55
LEGAL MATTERS....................................................................................................56
EXPERTS..........................................................................................................56
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we have filed
with the Securities and Exchange Commission using a "shelf" registration
process. This means the securities described in this prospectus may be offered
and sold using this prospectus from time to time as described in the "Plan of
Distribution". You should carefully read this prospectus and the information
described under the heading "Where You Can Find More Information". Under no
circumstances should the delivery to you of this prospectus or any offering or
sales made pursuant to this prospectus create any implication that the
information contained in this prospectus is correct as of any time after the
date of this prospectus.
SUMMARY
This summary highlights information contained elsewhere in, or
incorporated by reference into, this prospectus about our company. Because it is
a summary, it does not contain all of the information that you should consider
before buying the notes offered hereby. You should read the entire prospectus,
including the Risk Factors section beginning on page 8, and the financial data
and related notes and the documents to which we have referred you, before
deciding to invest in the notes. In this prospectus, unless otherwise specified,
the "Company," "we," "us" and "our" refer to The Men's Wearhouse, Inc., a Texas
corporation, and its wholly owned or controlled subsidiaries.
THE MEN'S WEARHOUSE, INC.
OUR BUSINESS
We are one of the largest specialty retailers of menswear in the United
States and Canada. At November 1, 2003, our U.S. operations included 575 stores
in 44 states and the District of Columbia, primarily operating under the brand
names of Men's Wearhouse and K&G, with approximately 25% of our locations in
Texas and California. At November 1, 2003, our Canadian operations included 114
stores in 10 provinces operating under the brand name of Moores Clothing for
Men. Our net sales and operating income for the fiscal year ended February 1,
2003 were $1,295.0 million and $69.4 million, respectively. Below is a brief
description of our brands:
Men's Wearhouse
Under the Men's Wearhouse brand, we target middle and upper-middle
income men by offering quality merchandise at everyday low prices. In addition
to value, we believe we provide a superior level of customer service. Men's
Wearhouse stores offer a broad selection of designer, brand name and private
label merchandise at prices we believe are typically 20% to 30% below the
regular prices found at traditional department and specialty stores. Our
merchandise includes suits, sport coats, slacks, business casual, sportswear,
outerwear, dress shirts, shoes and accessories. We concentrate on business
attire that is characterized by infrequent and more predictable fashion changes.
Therefore, we believe we are not as exposed to trends typical of more
fashion-forward apparel retailers, where significant markdowns and promotional
pricing are more common. At November 1, 2003, we operated 504 Men's Wearhouse
stores in 44 states and the District of Columbia.
We also began a tuxedo rental program in selected Men's Wearhouse
stores during 1999. We believe this program generates incremental business for
us without significant incremental personnel or real estate costs and broadens
our customer base by drawing first-time and younger customers into our stores.
We completed the rollout of this program to our Men's Wearhouse stores during
the first quarter of fiscal 2002 and, as of November 1, 2003, offered tuxedo
rentals in substantially all of our Men's Wearhouse stores.
K&G
Under the K&G brand, we target the more price sensitive customer. The
K&G brand was acquired as a result of our combination with K&G Men's Center,
Inc. in June 1999. At November 1, 2003, we operated 71 K&G stores in 23 states,
which includes five stores operating under the name The Suit Warehouse (four in
metropolitan Detroit and one in Ohio). Thirty of the K&G stores offer ladies'
career apparel that is also targeted to the more price sensitive customer.
We believe that K&G's more basic, value-oriented superstore approach
appeals to certain customers in the apparel market. K&G offers first-quality,
current-season apparel and accessories comparable in quality to that of
traditional department and specialty stores, at everyday low prices we believe
are typically 30% to 70% below the regular prices charged by such stores. K&G's
merchandising strategy emphasizes broad assortments across all major categories,
including tailored clothing, casual sportswear, dress furnishings, footwear and
accessories. This merchandise selection, which includes brand name as well as
private label merchandise, positions K&G to attract a wide range of customers in
each of its markets. As with the Men's Wearhouse brand, K&G's philosophy of
delivering everyday value distinguishes K&G from other retailers that adopt a
more promotional pricing strategy.
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Moores
Under the Moores brand, we target middle and upper-middle income men in
Canada by offering quality merchandise at everyday low prices. Moores, which was
acquired as a result of our combination with Moores Retail Group Inc. in
February 1999, is one of Canada's leading specialty retailers of menswear, with
114 stores in 10 Canadian provinces at November 1, 2003. Similar to the Men's
Wearhouse stores, Moores stores offer a broad selection of quality merchandise
at prices we believe are typically 20% to 30% below the regular prices charged
by traditional Canadian department and specialty stores. Moores focuses on
conservative, basic tailored apparel that we believe limits exposure to changes
in fashion trends and the need for significant markdowns. Moores' merchandise
consists of suits, sport coats, slacks, business casual, dress shirts,
sportswear, outerwear, shoes and accessories.
In October 2003, we extended our tuxedo rental program to 48 Moores
stores and expect to further extend the program to the remainder of the Moores
stores during the next fiscal year.
Moores distinguishes itself from other Canadian retailers of menswear
by manufacturing a significant portion of the tailored clothing for sale in its
stores. Moores conducts its manufacturing operations through its wholly owned
subsidiary, Golden Brand Clothing (Canada) Ltd., which is the second largest
manufacturer of men's suits and sport coats in Canada. Golden Brand's
manufacturing facility in Montreal, Quebec, includes a cutting room, fusing
department, pant shop and coat shop. At full capacity, the coat shop can produce
13,000 units per week and the pant shop can produce 23,000 units per week. As a
result of the vertical integration and the related cost savings, Moores is able
to provide greater value to its customer by offering a broad selection of
quality merchandise at everyday low prices, which the Company believes typically
range from 20% to 30% below the regular prices charged by traditional Canadian
department and specialty stores. Beginning in 1999, Golden Brand also
manufactures product for Men's Wearhouse stores.
OUR EXPANSION STRATEGY
Our expansion strategy includes:
- opening additional Men's Wearhouse and K&G stores in new and
existing markets,
- expanding our tuxedo rental program to Moores stores,
- testing opportunities to market complementary products and
services,
- testing expanded, more fashion-oriented merchandise concepts,
and
- identifying strategic acquisition opportunities, including but
not limited to international opportunities.
OUR CORPORATE INFORMATION
The Men's Wearhouse began operations in 1973 as a partnership and was
incorporated under the laws of Texas in May 1974. Our principal corporate and
executive offices are located at 5803 Glenmont Drive, Houston, Texas 77081-1701
(telephone number 713/592-7200), and at 40650 Encyclopedia Circle, Fremont,
California 94538-2453 (telephone number 510/657-9821), respectively. Our
internet address is www.menswearhouse.com. The information on our website is
not, and you must not consider such information to be, a part of this
prospectus.
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THE OFFERING
This prospectus covers the resale of up to $130,000,000 aggregate
principal amount of the notes and the 3,031,431 shares of our common stock
issuable upon conversion of the notes plus an indeterminate number of shares of
our common stock issuable upon conversion of the notes by means of adjustment of
the conversion price pursuant to the terms of the notes. We issued and sold a
total of $130,000,000 aggregate principal amount of the notes on October 21,
2003 in private placements to Bear, Stearns & Co. Inc., Wachovia Capital
Markets, LLC, J.P. Morgan Securities Inc. and Fleet Securities, Inc. (the
"initial purchasers"). The following summary contains basic information about
the notes and is not intended to be complete. It does not contain all the
information that is important to holders of the notes. For a more complete
understanding of the notes, please refer to the section of this document
entitled "Description of Notes." For purposes of the description of the notes
included in this prospectus, references to "the Company", "Issuer", "us", "we"
and "our" refer only to The Men's Wearhouse, Inc.
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Issuer........................ The Men's Wearhouse, Inc., a Texas corporation.
Selling Security Holders...... The securities to be offered and sold using this prospectus
will be offered and sold by the selling security holders
named in this prospectus or in any supplement to this
prospectus. See "Selling Security Holders".
Securities Offered............ $130,000,000 principal amount at maturity of 3.125%
Convertible Senior Notes due 2023.
Issue Price................... The notes were issued at a price of 100% of their principal
amount, which is $1,000 per note, plus accrued interest, if
any, from October 21, 2003.
Maturity Date................. October 15, 2023, unless earlier repurchased, redeemed, or
converted.
Ranking....................... The notes are our general senior unsecured obligations,
ranking on parity in right of payment with all our existing
and future unsecured senior indebtedness, and senior in
right of payment with all our future subordinated
indebtedness. The notes are effectively subordinated to any
of our secured senior indebtedness to the extent of the
assets securing such indebtedness and to the claims of all
creditors of our subsidiaries. We have a $100.0 million
secured credit facility, and as of November 1, 2003, there
were no loans outstanding, under this facility, but there
was $11.4 million of letters of credit outstanding. One of
our subsidiaries has a $10.0 million letter of credit
facility, and as of November 1, 2003 there was $0.3 million
of letters of credit outstanding under this facility. In
addition, as of November 1, 2003, our subsidiaries have
approximately $99.2 million in accounts payable and other
unsecured obligations.
Interest...................... 3.125% per annum on the principal amount, from October 21,
2003, payable semi-annually in arrears in cash on October
15 and April 15 of each year, beginning April 15, 2004.
Interest will be computed semi-annually on the basis of a
360-day year comprised of twelve 30-day months.
Contingent Interest........... We will pay contingent interest to the holders of the notes
during any six-month period from October 15 to April 14
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and from April 15 to October 14, beginning
with the six-month period commencing October
15, 2008, if the trading price of the notes
for each of the five trading days ending on
the second trading day immediately preceding
the first day of the applicable six-month
period equals or exceeds 120% of the
principal amount of the notes. The amount of
contingent interest payable per note in
respect of any six-month period in which
contingent interest is payable will equal
0.25% per annum of the average trading price
of $1,000 principal amount of notes during
the five trading days ending on the second
trading day immediately preceding the first
day of the applicable six-month interest
period.
Conversion Rights................ Holders may convert the notes into shares of
our common stock at an initial conversion
rate of 23.3187 shares of common stock per
$1,000 principal amount of notes
(representing a conversion price of
approximately $42.88 per share), subject to
adjustment, prior to the close of business
on the final maturity date only under the
following circumstances:
(i) during any conversion period commencing
after October 21, 2003, and only during such
conversion period if, on each of at least 20
trading days in the 30 consecutive trading
day period ending on the first trading day
of the conversion period, the closing sale
price of our common stock exceeds 120% of
the conversion price in effect on that 30th
trading day of such period; a "conversion
period" will be the period from and
including the third Friday (or, if that day
is not a trading day, then the next trading
day) in a fiscal quarter to, but not
including, the third Friday (or, if that day
is not a trading day, then the next trading
day) in the immediately following fiscal
quarter; or
(ii) if the notes have been called for
redemption; or
(iii) upon the occurrence of specified
corporate transactions described under
"Description of Notes -- Conversion Rights
-- Conversion Upon Specified Corporate
Transactions."
Upon conversion, we will have the right to
deliver, in lieu of shares of our common
stock, cash or a combination of cash and
shares of our common stock. If we elect to
pay cash in lieu of shares, the payment
amount will be based on the average closing
sale price of our common stock over a 20
consecutive trading day measurement period
beginning on the third trading day following
the conversion date.
On the first date the notes become
convertible under the above circumstances,
we will notify holders in writing of our
method for settling the principal portion of
the notes upon conversion ("principal
conversion settlement election"). This
notification once provided to a holder on
the first date the notes become convertible,
regardless of a holder's decision to
convert, is irrevocable and legally binding
with regard to
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any conversion of the notes. As such, the
conversion settlement election made with
respect to the principal amount on that date
remains effective if the notes cease to be
convertible for any period but subsequently
become convertible again.
Until the notes are surrendered for
conversion, we will not be required to
notify holders of our method for settling
the excess amount of our conversion
obligation relating to the amount of the
conversion value above the principal amount,
if any.
Sinking Fund.................. None.
Provisional Redemption........ On or after October 20, 2006 but prior to
October 20, 2008, upon at least 20 days
notice, we may, at our option and subject to
conditions, redeem for cash, in whole or in
part, the notes at any time at a redemption
price equal to $1,000 per $1,000 principal
amount of notes to be redeemed, plus accrued
and unpaid interest, and additional amounts,
if any, to but excluding the redemption
date. We may exercise this provisional
redemption right only if, on each of at
least 20 trading days within any period of
30 consecutive trading days ending on or
after October 20, 2006 but prior to October
20, 2008, the closing sale price of our
common stock exceeds 140% of the conversion
price in effect on the 30th trading day of
such period. See "Description of Notes--
Provisional Redemption."
Optional Redemption........... On or after October 20, 2008, upon at least
20 days notice, we may redeem for cash, in
whole or in part, the notes at any time at a
redemption price equal to 100% of the
principal amount of notes to be redeemed,
plus accrued and unpaid interest, contingent
interest and additional amounts, if any, to
but excluding the redemption date. See
"Description of Notes-- Optional
Redemption."
Purchase of Notes at
Holder's Option................ Holders may require us to repurchase the
notes for cash on October 15, 2008, October
15, 2013 and October 15, 2018, each of which
we refer to as a "purchase date". In each
case, upon at least five business days'
prior notice we will pay a purchase price
equal to 100% of the principal amount of the
notes plus accrued and unpaid interest,
contingent interest and additional amounts,
if any, to but excluding the purchase date.
See "Description of Notes-- Purchase of
Notes at a Holder's Option" and "Risk
Factors-- We may be unable to repay or
purchase the principal amount of the notes."
Designated Event................ Upon the occurrence of a designated event,
as described in this prospectus, and before
the maturity or redemption of the notes, a
holder may require us to purchase for cash
all or part of its notes at a price equal to
100% of their principal amount plus accrued
and unpaid interest, contingent interest and
additional amounts, if any, to but excluding
the designated event purchase date. See
"Description of the
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Notes-- Purchase of Notes at a Holder's
Option Upon a Designated Event" and "Risk
Factors-- We may be unable to repay or
purchase the principal amount of the notes."
No Proceeds.................... We will not receive any proceeds from the
sale by any selling security holder of the
notes or our common stock issuable upon
conversion of the notes.
Absence of a Public Market..... The notes are new securities and there is
currently no established market for the
notes. We cannot assure holders of the notes
that any active or liquid market will
develop for the notes. See "Plan of
Distribution."
Trading......................... The notes will not be listed on any
securities exchange or included in any
automated quotation system. However, the
notes issued in the private placements are
eligible for trading in the Private
Offerings, Resale and Trading through
Automated Linkages Market, commonly referred
to as the PORTAL Market. The notes sold
using this prospectus, however, will no
longer be eligible for trading in the Portal
Market
Guarantees..................... None.
Material U.S. Federal Income
Tax Considerations............. Under the indenture governing the notes, we
have agreed, and by acceptance of a
beneficial interest in a note, each holder
of a note will be deemed to have agreed, to
treat the notes as indebtedness for United
States federal income tax purposes that is
subject to the Treasury regulations
governing contingent payment debt
instruments. For United States federal
income tax purposes, interest income on the
notes will accrue at the rate of 8.0% per
year, compounded semi-annually, which rate
represents our determination of the yield at
which we would have issued, as of the issue
date, a comparable noncontingent,
nonconvertible, fixed-rate debt instrument
with terms and conditions otherwise similar
to the notes. A United States Holder will be
required to accrue interest income on a
constant yield to maturity basis at this
rate (subject to certain adjustments), with
the result that a United States Holder
generally will recognize taxable income
significantly in excess of interest payments
received while the notes are outstanding.
A United States Holder will also recognize
gain or loss on the sale, conversion,
exchange, redemption or retirement of a note
in an amount equal to the difference between
the amount realized on the sale, conversion,
exchange, redemption or retirement of a
note, including the fair market value of our
common stock received, and the United States
Holder's adjusted tax basis in the note. Any
gain recognized on the sale, conversion,
exchange, redemption or retirement of a note
generally will be ordinary interest income;
any loss will be ordinary loss to the extent
of the interest previously included in
income, and thereafter, capital loss. See
"Material U.S. Federal Income Tax
Considerations."
6
Book-Entry Form............. The notes were issued in book-entry form and
are represented by permanent global
certificates deposited with, or on behalf
of, The Depositary Trust Company, or DTC,
and registered in the name of a nominee of
DTC. Beneficial interests in any of the
notes will be shown on, and transfers will
be effected only through, records maintained
by DTC or its nominee and any such interest
may not be exchanged for certificated
securities, except in limited circumstances.
See "Description of Notes-- Form,
Denomination and Registration."
New York Stock Exchange Symbol
for our Common Stock........ Our common stock is listed on the New York
Stock Exchange under the symbol "MW."
RISK FACTORS
Investing in the notes involves a number of material risks. For a
discussion of certain risks that should be considered in connection with an
investment in the notes, see "Risk Factors" beginning on page 8 of this
prospectus.
RATIO OF EARNINGS TO FIXED CHARGES
We have computed the ratio of earnings to fixed charges for each of the
following periods on a consolidated basis. References herein to years are to the
Company's 52-week or 53-week fiscal year, which ends on the Saturday nearest
January 31 in the following calendar year. For example, references to "2003"
mean the fiscal year ending January 31, 2004. All fiscal years for which
information is included below had 52 weeks, except 2000 which had 53 weeks.
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FISCAL YEAR NINE MONTHS
ENDED
NOVEMBER 1,
2003
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1998 1999 2000 2001 2002
---- ---- ---- ---- ----
Ratio of earnings to fixed charges 4.0 4.3 6.2 3.4 3.2 3.0
See "Ratio of Earnings to Fixed Charges" beginning on
page 14 of this prospectus.
7
RISK FACTORS
In deciding whether to purchase the notes, you should carefully
consider the risks described below, which could cause our operating results and
financial condition to be materially adversely affected, as well as other
information and data included or incorporated by reference in this prospectus.
RISKS RELATED TO OUR COMPANY
OUR ABILITY TO CONTINUE TO EXPAND OUR MEN'S WEARHOUSE STORES MAY BE LIMITED.
A large part of our growth has resulted from the addition of new
traditional Men's Wearhouse stores and the increased sales volume and
profitability provided by these stores. For example, in fiscal years 2000, 2001,
and 2002, the Men's Wearhouse stores that were opened contributed 1.49%, 1.13%
and 0.96%, respectively, of the total sales for each of these years. We will
continue to depend on adding new stores to increase our sales volume and
profitability. As of November 1, 2003, we operate 504 Men's Wearhouse stores.
However, we believe that our ability to increase the number of traditional Men's
Wearhouse stores in the United States above 550 will be limited. Therefore, we
can not assure you that we will continue to experience the same rate of growth
as we have historically.
EXPANSION INTO NEW MARKETS MAY NOT BE PROFITABLE.
When we enter new markets, we have to:
- obtain suitable store locations,
- hire personnel,
- establish distribution methods, and
- advertise our brand names and our distinguishing
characteristics to consumers who may not be familiar with
them.
We cannot assure you that we will be able to open and operate new
stores on a timely and profitable basis. The costs associated with opening new
stores may negatively affect our profitability. Conditions in the commercial
real estate market existing at the time we seek to expand could cause us to
postpone our expansion plans.
CERTAIN OF OUR EXPANSION STRATEGIES MAY PRESENT GREATER RISKS.
Expansion into more fashion-oriented merchandise categories or into
complementary products and services may present greater risks. We are
continuously assessing opportunities to expand complementary products and
services related to our traditional business, such as corporate apparel sales
and retail dry cleaning establishments, as well as concepts that include more
fashion-oriented merchandise. We may expend both capital and personnel resources
on such business opportunities which may or may not be successful.
OUR BUSINESS IS SEASONAL.
Historically, over 30% of our net sales and approximately 45% of our
net earnings have been made during November, December and January. Accordingly,
our results for the first, second and third quarters of our fiscal year are not
necessarily indicative of our annual profitability. Therefore, any decrease in
sales during these months could have a significant adverse effect on our net
earnings.
OUR BUSINESS IS PARTICULARLY SENSITIVE TO ECONOMIC CONDITIONS AND CONSUMER
CONFIDENCE.
Consumer confidence is often adversely impacted by many factors
including local, regional or national economic conditions, continued threats of
terrorism, acts of war and other uncertainties. We believe that a decrease in
consumer spending will affect us more than other retailers because men's
discretionary spending for items like
8
tailored apparel tends to slow faster than other retail purchases.
SALES IN THE MEN'S TAILORED CLOTHING MARKET GENERALLY HAVE DECLINED OVER THE
PAST SEVERAL YEARS.
According to industry sources, sales in the men's tailored clothing
market generally have declined over the past several years. We believe that this
decline is attributable primarily to: (1) men allocating less of their income to
tailored clothing and (2) certain employers relaxing their dress codes. We
believe that this decrease in sales has contributed, and will continue to
contribute, to a consolidation among retailers of men's tailored clothing. We
cannot assure you that we will continue to be able to expand our sales volume or
maintain our profitability within our segment of the retailing industry.
THE LOSS OF, OR DISRUPTION IN, OUR CENTRALIZED DISTRIBUTION CENTER COULD RESULT
IN DELAYS IN THE DELIVERY OF MERCHANDISE TO OUR STORES.
All merchandise for Men's Wearhouse stores is received into our centralized
distribution center in Houston, Texas, where the inventory is then processed,
sorted and shipped to our stores. We depend in large part on the orderly
operation of this receiving and distribution process, which depends, in turn, on
adherence to shipping schedules and effective management of the distribution
center. Events, such as disruptions in operations due to fire or other
catastrophic events, employee matters or shipping problems, may result in delays
in the delivery of merchandise to our stores.
Although we maintain business interruption and property insurance, we cannot
assure you that our insurance will be sufficient, or that insurance proceeds
will be timely paid to us, in the event our distribution center is shut down for
any reason or if we incur higher costs and longer lead times in connection with
a disruption at our distribution center.
OUR STOCK PRICE HAS BEEN AND MAY CONTINUE TO BE VOLATILE DUE TO MANY FACTORS.
The market price of our common stock has fluctuated in the past and may
change rapidly in the future depending on news announcements and changes in
general market conditions. In the twelve month period from January 1, 2003 to
December 31, 2003, the market price of our common stock was between $11.76 and
$31.25. In the three year period from January 1, 2000 to December 31, 2003, the
market price of our common stock was between $9.61 and $34.00. The following
factors, among others, may cause significant fluctuations in our stock price:
- news announcements regarding quarterly or annual results of
operations,
- monthly comparable store sales,
- acquisitions,
- competitive developments,
- litigation affecting the Company, or
- market views as to the prospects of the retail industry
generally.
RIGHTS OF OUR SHAREHOLDERS MAY BE NEGATIVELY AFFECTED IF WE ISSUE ANY OF THE
SHARES OF PREFERRED STOCK WHICH OUR BOARD OF DIRECTORS HAS AUTHORIZED FOR
ISSUANCE.
We have available for issuance 2,000,000 shares of preferred stock, par
value $.01 per share. Our board of directors is authorized to issue any or all
of this preferred stock, in one or more series, without any further action on
the part of shareholders. The rights of our shareholders may be negatively
affected if we issue a series of preferred stock in the future that has
preference over our common stock with respect to the payment of dividends or
distribution upon our liquidation, dissolution or winding up. See "Description
of Capital Stock -- Preferred Stock" on page 46.
9
OUR SUCCESS SIGNIFICANTLY DEPENDS ON OUR KEY PERSONNEL AND OUR ABILITY TO
ATTRACT AND RETAIN ADDITIONAL PERSONNEL.
Mr. George Zimmer has been very important to our success. Mr. Zimmer is
the Company's Chairman of the Board, Chief Executive Officer and primary
advertising spokesman. The loss of Mr. Zimmer's services could have a material
adverse effect on the securities markets' view of our prospects.
Also, our continued success and the achievement of our expansion goals
are dependent upon our ability to attract and retain additional qualified
employees as we expand.
FLUCTUATIONS IN EXCHANGE RATES MAY CAUSE US TO EXPERIENCE CURRENCY EXCHANGE
LOSSES.
Moores conducts most of its business in Canadian dollars. The exchange
rate between Canadian dollars and U.S. dollars has fluctuated historically. If
the value of the Canadian dollar against the U.S. dollar weakens, then the
revenues and earnings of our Canadian operations will be reduced when they are
translated to U.S. dollars. Also, the value of our Canadian net assets in U.S.
dollars may decline.
In connection with our direct sourcing program, we may enter into
purchase commitments that are denominated in a foreign currency (primarily the
Euro), which also create currency exchange risks. If the value of a foreign
currency strengthens, then the cost in U.S. dollars to purchase such goods would
increase.
A LABOR UNION DISPUTE COULD CAUSE INTERRUPTIONS IN THE MOORES MANUFACTURING
BUSINESS.
Moores, through its wholly owned subsidiary, Golden Brand Clothing
(Canada) Ltd., manufactures a significant portion of the tailored clothing
offered for sale by our Moores stores. Approximately 1,032 of our employees at
Golden Brand belong to the Union of Needletrades, Industrial and Textile
Employees. We could experience shortages in men's tailored clothing to sell in
our Moores stores if Golden Brand fails to meet its production goals due to
labor disputes.
ANY SIGNIFICANT INTERRUPTION IN FABRIC SUPPLY COULD CAUSE INTERRUPTIONS IN THE
MOORES MANUFACTURING BUSINESS.
Golden Brand's principal raw material is fabric. Most of Golden
Brand's supply arrangements are seasonal. There could be a negative effect on
the ability of Golden Brand to meet its production goals if there is an
unexpected loss of a supplier of fabric or a long interruption in shipments from
any fabric supplier. The negative effect would be particularly noticeable with
regard to Golden Brand's seasonal or time-sensitive products.
RISKS RELATED TO THE NOTES AND THE OFFERING
WE WILL INCREASE OUR LEVERAGE AS A RESULT OF THE SALE OF THE NOTES.
In connection with the sale of the notes, we have incurred $130.0
million of indebtedness. As a result of this indebtedness, our interest payment
obligations will increase. Our interest payment obligation for the notes is
expected to be $4,062,500 annually. The degree to which we will be leveraged
could adversely affect our ability to obtain further financing for working
capital, acquisitions or other purposes and could make us more vulnerable to
industry downturns and competitive pressures. Our ability to meet our debt
service obligations will be dependent upon our future performance, which will be
subject to the financial, business and other factors affecting our operations,
many of which are beyond our control. Our revolving credit agreement requires
that we maintain a certain leverage ratio.
Advances under our revolving credit agreement bear interest at a rate
per annum equal to, at our option, the agent's prime rate or the reserve
adjusted LIBOR rate plus a varying interest rate margin. As of November 1, 2003,
there were no loans outstanding under this facility, but there was $11.4 million
of letters of credit outstanding. The credit agreement also provides for fees
applicable to unused commitments. These fees vary, but are not expected to
exceed $500,000 per year.
10
THERE ARE NO RESTRICTIVE COVENANTS IN THE NOTES INDENTURE RELATING TO OUR
ABILITY TO INCUR FUTURE INDEBTEDNESS OR COMPLETE OTHER FINANCIAL TRANSACTIONS.
The indenture governing the notes does not contain any financial or
operating covenants or restrictions on the payment of dividends, the incurrence
of indebtedness, transactions with affiliates, incurrence of liens or the
issuance or repurchase of securities by us or any of our subsidiaries. We
therefore may incur additional debt, including secured indebtedness senior to
the notes, or indebtedness at the subsidiary level to which the notes would be
structurally subordinated. As part of our strategy, we may use proceeds from the
initial sale of the notes to finance potential acquisitions, which may cause us
to incur significant indebtedness to which the notes would be subordinate.
A higher level of indebtedness increases the risk that we may default
on our debt obligations. We cannot assure you that we will be able to generate
sufficient cash flow to pay the interest on our debt or that future working
capital, borrowings or equity financing will be available to pay or refinance
such debt. The indenture contains no covenants or other provisions to afford
protection to holders of the notes upon the occurrence of a designated event
except to the extent described under "Description of Notes -- Purchase of Notes
at a Holder's Option Upon a Designated Event."
WE MAY BE UNABLE TO GENERATE SUFFICIENT CASH FLOW TO SATISFY OUR DEBT SERVICE
OBLIGATIONS.
Our ability to generate cash flow from operations to make interest
payments on the notes will depend on our future performance, which will be
affected by a range of economic, competitive and business factors. We cannot
control many of these factors, including general economic conditions and the
health of the retail industry. If our operations do not generate sufficient cash
flow from operations to satisfy our debt service obligations, we may need to
borrow additional funds to make these payments or undertake alternative
financing plans, such as refinancing or restructuring our debt, or reducing or
delaying capital investments and acquisitions. Additional funds or alternative
financing may not be available to us on favorable terms, or at all. Our
inability to generate sufficient cash flow from operations or obtain additional
funds or alternative financing on acceptable terms could have a material adverse
effect on our business, financial condition and results of operations.
WE CANNOT ASSURE YOU THAT AN ACTIVE TRADING MARKET WILL DEVELOP FOR THE NOTES.
There is no established trading market for the notes. We have no plans
to list the notes on a securities exchange. Any market-making activity, if
initiated, may be discontinued at any time, for any reason or for no reason,
without notice. If the initial purchasers cease to act as the market makers for
the notes, we cannot assure you another firm or person will make a market in the
notes. If a market were to develop, the notes could trade at prices that may be
lower than their initial offering price depending on many factors, including the
market price of our common stock into which the notes are convertible,
prevailing interest rates, our operating results and the market for similar
securities. The liquidity of any market for the notes will depend upon the
number of holders of the notes, our results of operations and financial
condition, the market for similar securities, the interest of securities dealers
in making a market in the notes and other factors.
WE EXPECT THAT THE TRADING VALUE OF THE NOTES WILL BE SIGNIFICANTLY AFFECTED BY
THE PRICE OF OUR COMMON STOCK.
The market price of the notes is expected to be significantly affected
by the market price of our common stock. This may result in greater volatility
in the trading value of the notes than would be expected for any non-convertible
debt securities we may issue.
THE NOTES WILL BE EFFECTIVELY SUBORDINATED TO ALL OF OUR SECURED INDEBTEDNESS
AND ALL INDEBTEDNESS OF OUR SUBSIDIARIES.
The notes are our unsecured senior obligations and are not be
guaranteed by any of our subsidiaries. Accordingly, the notes are effectively
subordinated to all of our current and future secured indebtedness to the extent
of the assets securing the indebtedness.
Our right to receive any distribution of assets of any subsidiary upon
that subsidiary's liquidation, reorganization
11
or otherwise, is subject to the prior claims of creditors of that subsidiary,
except to the extent we are also recognized as a creditor of that subsidiary. As
a result, the notes are effectively subordinated to the claims of such
creditors. We have pledged some or all of the stock of our subsidiaries to
secure our credit agreement. Therefore, the notes are effectively subordinated
to the credit agreement to the extent of such pledged stock.
As of November 1, 2003, there were no loans outstanding under our
credit facility, but there was $11.4 million of letters of credit outstanding.
One of our subsidiaries has a $10.0 million letter of credit facility, and as of
November 1, 2003 there was $0.3 million of letters of credit outstanding under
this facility. In addition, as of November 1, 2003, our subsidiaries have
approximately $99.2 million in accounts payable and other unsecured obligations.
THE CONDITIONAL CONVERSION FEATURE OF THE NOTES COULD RESULT IN YOUR RECEIVING
LESS THAN THE VALUE OF THE COMMON STOCK INTO WHICH A NOTE IS CONVERTIBLE.
The notes are convertible into shares of our common stock only if
specified conditions are met. If the specific conditions for conversion are not
met, you will not be able to convert your notes, and you may not be able to
receive the value of the common stock into which the notes would otherwise be
convertible.
OUR REPORTED EARNINGS PER SHARE MAY BE MORE VOLATILE BECAUSE OF THE CONTINGENT
CONVERSION PROVISION OF THE NOTES.
Holders of the notes are entitled to convert the notes into our common
stock (or, at our election, cash or a combination of cash and common stock),
among other circumstances, if the closing sale price of our common stock on each
of at least 20 trading days in the 30 consecutive trading day period ending on
the first trading day of the conversion period exceeds 120% of the then
prevailing conversion price in effect on that 30th trading day. Until this
contingency or another conversion contingency is met, the shares underlying the
notes are not included in the calculation of our basic or diluted earnings per
share. Should any of these contingencies be met, diluted earnings per share
would be expected to decrease as a result of the inclusion of the underlying
shares in our diluted earnings per share calculation. Volatility in our stock
price could cause this common stock price condition to be met in one quarter and
not in a subsequent quarter, increasing the volatility of our diluted earnings
per share.
THE NOTES MAY NOT BE RATED OR MAY RECEIVE A LOWER RATING THAN ANTICIPATED.
We did not seek a rating on the notes and we believe it is unlikely
that the notes will be rated. However, if one or more rating agencies rates the
notes and assigns the notes a rating lower than the rating expected by
investors, or reduces their rating in the future, the market price of the notes
and our common stock could be adversely affected.
YOU SHOULD CONSIDER THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF OWNING NOTES.
Under the indenture governing the notes, we agreed, and by acceptance
of a beneficial interest in a note, each holder of a note will be deemed to have
agreed, to treat the notes as indebtedness for United States federal income tax
purposes that is subject to the Treasury regulations governing contingent
payment debt instruments. For United States federal income tax purposes,
interest income on the notes will accrue at the rate of 8.0% per year,
compounded semi-annually, which rate represents our determination of the yield
at which we would have issued, as of the issue date, a comparable noncontingent,
nonconvertible, fixed-rate debt instrument with terms and conditions otherwise
similar to the notes. A United States Holder will be required to accrue interest
income on a constant yield to maturity basis at this rate (subject to certain
adjustments), with the result that a United States Holder generally will
recognize taxable income significantly in excess of interest payments received
while the notes are outstanding.
A United States Holder will also recognize gain or loss on the sale,
conversion, exchange, redemption or retirement of a note in an amount equal to
the difference between the amount realized on the sale, conversion, exchange,
redemption or retirement of a note, including the fair market value of our
common stock received, and the United States Holder's adjusted tax basis in the
note. Any gain recognized on the sale, conversion, exchange, redemption or
retirement of a note generally will be ordinary interest income; any loss will
be ordinary loss to the extent of the interest previously included in income,
and thereafter, capital loss. The material U.S. federal income tax consequences
relevant to persons holding the notes are summarized in this prospectus under
the heading "Material U.S. Federal Income Tax Considerations".
12
RATIO OF EARNINGS TO FIXED CHARGES
We have computed the ratio of earnings to fixed charges for each of the
following periods on a consolidated basis. References herein to years are to the
Company's 52-week or 53-week fiscal year, which ends on the Saturday nearest
January 31 in the following calendar year. For example, references to "2003"
mean the fiscal year ending January 31, 2004. All fiscal years for which
information is included below had 52 weeks, except 2000 which had 53 weeks.
[Enlarge/Download Table]
FISCAL YEAR NINE MONTHS
ENDED
NOVEMBER 1,
2003
---------------------------------------------- -----------
1998 1999 2000 2001 2002
---- ---- ---- ---- ----
Ratio of earnings to fixed charges 4.0 4.3 6.2 3.4 3.2 3.0
For purposes of computing the ratio of earnings to fixed charges, "
earnings" consist of pretax income from continuing operations plus fixed charges
(excluding capitalized interest). "Fixed charges" represent interest incurred
(whether expensed or capitalized), amortization of debt expense, that portion of
rental expense on operating leases deemed to be the equivalent of interest and
dividends on preferred stock.
NO PROCEEDS
The securities to be offered and sold using this prospectus will be
offered and sold by the selling security holders named in this prospectus or in
any supplement to this prospectus. We will not receive any proceeds from the
sale of the securities or conversion of the notes. The shares of our common
stock offered by this prospectus are issuable upon conversion of the notes.
SELLING SECURITY HOLDERS
On October 21, 2003, we issued and sold a total of $130,000,000
aggregate principal amount of the notes in private placements to Bear, Stearns &
Co. Inc., Wachovia Capital Markets, LLC, J.P. Morgan Securities Inc. and Fleet
Securities, Inc. (which we refer to as the initial purchasers in this
prospectus). The initial purchasers have advised us that they resold the notes
in transactions exempt from the registration requirements of the Securities Act
of 1933, as amended, to "qualified institutional buyers" (as defined in Rule
144A under the Securities Act) in compliance with Rule 144A. The selling
security holders, which term includes their transferees, pledgees, donees and
successors, may from time to time offer and sell pursuant to this prospectus any
and all of the notes and the shares of our common stock issuable upon conversion
of the notes.
The notes and our shares of common stock to be issued upon conversion
of the notes are being registered pursuant to a registration rights agreement
between us and the initial purchasers. In that agreement, we undertook to file a
registration statement with regard to the notes and our shares of common stock
issuable upon conversion of the notes and, subject to certain exceptions, to
keep that registration statement effective for up to two years. The registration
statement to which this prospectus relates is intended to satisfy our
obligations under that agreement.
The selling security holders named below have advised us that they
currently intend to sell the notes and our shares of common stock set forth
below pursuant to this prospectus. Additional selling security holders may
choose to sell notes and our shares of common stock from time to time upon
notice to us. None of the selling security holders named below, has, within the
past three years, held any position, office or other material relationship with
us or any of our predecessors or affiliates, except as noted below in "Plan of
Distribution".
Unless the securities were purchased pursuant to this registration
statement, before a security holder not named below may use this prospectus in
connection with an offering of securities, this prospectus will be supplemented
to include the name and amount of notes and common stock beneficially owned by
the selling security holder and the amount of notes and common stock to be
offered. Any prospectus supplement will also disclose whether any selling
security holder selling in connection with that prospectus supplement has held
any position, office or other material relationship with us or any of our
predecessors or affiliates during the three years prior to the date of the
prospectus supplement.
13
The following table is based solely on information provided by the
selling security holders. This information represents the most current
information provided to us by selling security holders. The total principal
amount of notes and shares of common stock issuable upon exchange of notes
listed in the table may be more than $130,000,000 and 3,031,431 shares,
respectively, because certain of the selling security holders may have sold,
transferred or otherwise disposed of all or a portion of their notes in
transactions exempt from the registration requirements of the Securities Act
since the date on which they provided information regarding their notes for
inclusion in this table. The purchasers of such notes may have thereafter
provided information to us indicating their ownership of notes that may already
be represented in the table below. In no case will the maximum principal amount
of notes and number of shares of common stock issuable upon exchange of the
notes that may be sold under this prospectus exceed $130,000,000 and 3,031,431
shares, respectively.
[Enlarge/Download Table]
NUMBER OF
NUMBER OF NUMBER OF SHARES OF
PERCENTAGE SHARES OF SHARES OF COMMON
AMOUNT OF OF AMOUNT OF COMMON COMMON STOCK UPON
NOTES NOTES NOTES TO STOCK STOCK THAT COMPLETION
BENEFICIALLY BENEFICIALLY BE SOLD ($) BENEFICIALLY MAY BE OF OFFERING
SELLING SECURITY HOLDER OWNED ($) OWNED (1) OWNED (2)(3) SOLD (1)(3) (1)
----------------------- ------------- ------------ ------------ ------------- ------------ -----------
McMahan Securities Co. L.P.(5) $1,000,000 * $1,000,000 23,319 23,319 0
S.A.C. Capital Associates, LLC 1,000,000 * 1,000,000 200,719 23,319 177,400
Clinton Riverside Convertible 4,180,000 3.22% 4,180,000 97,472 97,472 0
Portfolio Limited(6)
Clinton Multistrategy Master Fund, 1,320,000 1.02% 1,320,000 30,781 30,781 0
Ltd.(6)
KBC Financial Products USA Inc.(5) 500,000 * 500,000 11,659 11,659 0
Man Convertible Bond Master Fund, 3,951,000 3.04% 3,951,000 92,132 92,132 0
Ltd
St. Thomas Trading, Ltd(4) 10,049,000 7.73% 10,049,000 234,330 234,330 0
Wachovia Capital Markets LLC(5) 2,445,000 1.88% 2,445,000 57,014 57,014 0
Durango Investments L.P. 6,250,000 4.81% 6,250,000 145,742 145,742 0
SG Cowen Securities Corp(5) 12,185,000 9.37% 12,185,000 284,138 284,138 0
National Bank of Canada c/o Putnam 1,500,000 1.15% 1,500,000 34,978 34,978 0
Lovell NBF Securities Inc.(4)
Pacific Life Insurance Company(6) 500,000 * 500,000 11,659 11,659 0
Deutsche Bank Securities Inc.(6) 1,000,000 * 1,000,000 23,319 23,319 0
Van Kampen Harbor Fund(5) 1,200,000 * 1,200,000 27,982 27,982 0
DaimlerChrysler Corp Emp. #1 3,365,000 2.59% 3,365,000 78,467 78,467 0
Pension Plan dtd 4/1/89
State Street Bank Custodian for GE 1,655,000 1.27% 1,655,000 38,592 38,592 0
Pension Trust
Franklin and Marshall College 190,000 * 190,000 4,431 4,431 0
US Bancorp Piper Jaffray(5) 2,000,000 1.54% 2,000,000 46,637 46,637 0
Morgan Stanley Convertible 1,200,000 * 1,200,000 27,982 27,982 0
Securities Trust(4)
Morgan Stanley Asset Allocator 390,000 * 390,000 9,094 9,094 0
Fund(4)
Victus Capital, LP(4) 5,000,000 3.85% 5,000,000 116,594 116,594 0
Pyramid Equity Strategies Fund 100,000 * 100,000 2,332 2,332 0
DB Equity Opportunities Master 400,000 * 400,000 9,327 9,327 0
Portfolio Ltd
Convertible Securities Fund(6) 67,000 * 67,000 1,562 1,562 0
Nations Convertible Securities 6,683,000 5.14% 6,683,000 155,839 155,839 0
Fund(6)
UBS AG London Branch(4) 34,500,000 26.54% 34,500,000 804,495 804,495 0
UBS Securities LLC(5) 50,000 * 50,000 1,166 1,166 0
14
[Enlarge/Download Table]
NUMBER OF
NUMBER OF NUMBER OF SHARES OF
PERCENTAGE SHARES OF SHARES OF COMMON
AMOUNT OF OF AMOUNT OF COMMON COMMON STOCK UPON
NOTES NOTES NOTES TO STOCK STOCK THAT COMPLETION
BENEFICIALLY BENEFICIALLY BE SOLD ($) BENEFICIALLY MAY BE OF OFFERING
SELLING SECURITY HOLDER OWNED ($) OWNED (1) OWNED (2)(3) SOLD (1)(3) (1)
----------------------- ------------ ------------ ---------- ------------- ----------- -----------
DKR SoundShare Opportunity Holding 1,750,000 1.35% 1,750,000 40,808 40,808 0
Fund Ltd.
DKR SoundShare Strategic Holding 6,000,000 4.62% 6,000,000 139,912 139,912 0
Fund Ltd.
Bear, Stearns & Co. Inc.(5) 5,405,000 4.16% 5,405,000 126,038 126,038 0
HFR CA Select Fund 900,000 * 900,000 20,987 20,987 0
San Diego County Employee 1,400,000 1.08% 1,400,000 32,646 32,646 0
Retirement Association
Zazove Convertible Arbitrage Fund, 4,500,000 3.46% 4,500,000 104,934 104,934 0
L.P.
Zazove Hedged Convertible Fund, L.P. 2,900,000 2.23% 2,900,000 67,624 67,624 0
Zurich Institutional Benchmarks 1,500,000 1.15% 1,500,000 34,978 34,978 0
Master Fund Ltd.
Grace Convertible Arbitrage Fund, 4,750,000 3.65% 4,750,000 110,764 110,764 0
Ltd.(4)
FrontPoint Convertible Arbitrage 3,000,000 2.31% 3,000,000 69,956 69,956 0
Fund, L.P.
-----------------------------------------------------------------------------------------
TOTAL $ 134,785,000 103.68% $ 134,785,000 3,320,411 3,143,011 177,400
---------------------
* Less than 1%
(1) Because a selling security holder may sell all or a portion of
the notes and common stock issuable upon conversion of the
notes pursuant to this prospectus, an estimate can not be
given as to the number or percentage of notes and common stock
that the selling security holder will hold upon termination of
any sales. The information presented assumes that all of the
selling security holders will fully exchange the notes for
shares of our common stock and that the selling security
holders will sell all shares of our common stock that they
received pursuant to such exchange.
(2) Includes shares of common stock issuable upon conversion of
the notes.
(3) The number of shares of our common stock issuable upon
conversion of the notes is calculated assuming the conversion
of the full amount of notes held by such holder at the initial
conversion price of $42.88, which equals a conversion rate of
the initial conversion rate of 23.3187 shares per $1,000
principal amount of the notes. This conversion rate is subject
to adjustment as described under "Description of Notes -
Conversion Price Adjustments". Accordingly, the number of
shares of our common stock to be sold may increase or decrease
from time to time. Fractional shares will not be issued upon
conversion of the notes. Cash will be paid instead of
fractional shares, if any.
(4) With respect to selling securityholders that are affiliates of
broker-dealers, such entities have represented to us that they
acquired their notes or underlying common stock in the
ordinary course of business and, at the time of the purchase
of the notes or the underlying common stock, such selling
securityholders had no agreements or understandings, directly
or indirectly, with any person to distribute the notes or
underlying common stock. To the extent that we become aware
that such entities did not acquire their notes or underlying
common stock in the ordinary course of business or did have
such an agreement or understanding, we will file a
post-effective amendment to the registration statement of
which this prospectus forms a part to designate such affiliate
as an "underwriter" within the meaning of the Securities Act
of 1933.
(5) This selling securityholder has identified itself as a
registered broker-dealer and, accordingly, it is deemed to be,
under the interpretations of the Securities and Exchange
Commission, an "underwriter" within the meaning of the
Securities Act of 1933. Please see "Plan of Distribution" for
required disclosure regarding these selling securityholders.
15
(6) This selling securityholder has not indicated whether it is a
registered broker-dealer or an affiliate of a broker-dealer,
therefore, this security holder may be an "underwriter" within
the meaning of the Securities Act of 1933. Please see "Plan of
Distribution" for required disclosure regarding selling
securityholders who are deemed "underwriters".
Selling securityholders who are registered broker-dealers or affiliates
of registered broker-dealers may be deemed to be "underwriters" within the
meaning of the Securities Act. To our knowledge, no selling securityholder who
is a registered broker-dealer or an affiliate of a registered broker-dealer
received any securities as underwriting compensation.
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OUR BUSINESS
THE COMPANY
We are one of the largest specialty retailers of menswear in the United
States and Canada. At November 1, 2003, our U.S. operations included 575 stores
in 44 states and the District of Columbia, primarily operating under the brand
names of Men's Wearhouse and K&G, with approximately 25% of our locations in
Texas and California. At November 1, 2003, our Canadian operations included 114
stores in 10 provinces operating under the brand name of Moores Clothing for
Men.
EXPANSION STRATEGY
Our expansion strategy includes:
- opening additional Men's Wearhouse and K&G stores in new and
existing markets,
- expanding our tuxedo rental program to Moores stores,
- testing opportunities to market complementary products and
services,
- testing expanded, more fashion-oriented merchandise concepts,
and
- identifying strategic acquisition opportunities, including but
not limited to international opportunities.
In general terms, we consider a geographic area served by a common
group of television stations as a single market.
On a limited basis, we have acquired store locations, inventories,
customer lists, trademarks and tradenames from existing menswear retailers in
both new and existing markets. We may do so again in the future. In the fourth
fiscal quarter of 2003, we plan to open an additional 5 new Men's Wearhouse
stores and 2 new K&G stores, to expand and relocate up to 4 existing Men's
Wearhouse stores and to continue expansion in subsequent years. We believe that
our ability to increase the number of Men's Wearhouse stores in the United
States above 550 will be limited. However, we believe that additional growth
opportunities exist through improving and diversifying the merchandise mix,
relocating stores, expanding our K&G brand and adding complementary products and
services.
MERCHANDISING
Our stores offer a broad selection of designer, brand name and private
label men's business attire, including a consistent stock of core items (such as
navy blazers, tuxedos and basic suits). Although basic styles are emphasized,
each season's merchandise reflects current fabric and color trends, and a small
percentage of inventory, accessories in particular, are usually more fashion
oriented. The broad merchandise selection creates increased sales opportunities
by permitting a customer to purchase substantially all of his tailored wardrobe
and accessory requirements, including shoes, at our stores. Within our tailored
clothing, we offer an assortment of styles from a variety of manufacturers and
maintain a broad selection of fabrics, colors and sizes. We believe that the
depth of selection offered provides us with an advantage over most of our
competitors. During fiscal 2002, we also shifted our merchandise mix in order to
increase our offering of opening price point product in our Men's Wearhouse
stores. We believe this shift better aligns our product selection with the
everyday low price value proposition we want to offer our Men's Wearhouse brand
customers.
The Company's inventory mix includes "business casual" merchandise
designed to meet demand for such products resulting from more relaxed dress
codes in the workplace. This merchandise consists of tailored and non-tailored
clothing (sport coats, casual slacks, knits and woven sports shirts, sweaters
and casual shoes) that complements the existing product mix and provides
opportunity for enhanced sales without significant inventory risk.
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We do not purchase significant quantities of merchandise overruns or
close-outs. We provide recognizable quality merchandise at consistent prices
that assist the customer in identifying the value available at our stores. We
believe that the merchandise at Men's Wearhouse and Moores stores is generally
offered 20% to 30% below traditional department and specialty store regular
prices and that merchandise at K&G stores is generally 30% to 70% below regular
retail prices charged by such stores. A ticket is affixed to each item, which
displays our selling price alongside the price we regard as the regular price of
the item at traditional department and specialty stores.
By targeting men's business attire, a category of men's clothing
characterized by infrequent and more predictable fashion changes, we believe we
are not as exposed to trends typical of more fashion-forward apparel retailers.
This allows us to carry basic merchandise over to the following season and
reduces the need for markdowns; for example, a navy blazer or gray business suit
may be carried over to the next season. Our Men's Wearhouse and Moores stores
have an annual sale that starts around Christmas and runs through the month of
January, during which prices on many items are reduced 20% to 50% off the
everyday low prices. This sale reduces stock at year-end and prepares for the
arrival of the new season's merchandise. We also have a similar event in
mid-summer; however, the level of advertising for promotion of the summer event
is lower than that for the year-end event.
During 2000, 2001 and 2002, 59.3%, 56.8% and 56.5%, respectively, of
our total net merchandise sales were attributable to tailored clothing (suits,
sport coats and slacks) and 40.7%, 43.2% and 43.5%, respectively, were
attributable to casual attire, sportswear, shoes, shirts, ties, outerwear and
other.
In addition to accepting cash, checks or nationally recognized credit
cards, we offer our own private label credit card to Men's Wearhouse customers
and, in May 2002, we introduced a private label credit card to our Moores
customers. We have contracted with a third-party vendor to provide all necessary
servicing and processing and to assume all credit risks associated with our
private label credit card program. We believe that the private label credit card
provides us with an important tool for targeted marketing and presents an
excellent opportunity to communicate with our customers. During 2002, our
customers used the private label credit card for approximately 18% of our sales
at the Men's Wearhouse brand and approximately 8% of our sales at the Moores
brand.
CUSTOMER SERVICE AND MARKETING
The Men's Wearhouse and Moores sales personnel are trained as clothing
consultants to provide customers with assistance and advice on their apparel
needs, including product style, color coordination, fabric and garment fit. For
example, clothing consultants at Men's Wearhouse stores attend an intensive
training program at our training facility in Fremont, California, which is
further supplemented with weekly store meetings, periodic merchandise meetings
and frequent interaction with multi-unit managers.
We encourage our clothing consultants to be friendly and knowledgeable
and to promptly greet each customer entering the store. Consultants are
encouraged to offer guidance to the customer at each stage of the
decision-making process, making every effort to earn the customer's confidence
and to create a professional relationship that will continue beyond the initial
visit. Clothing consultants are also encouraged to contact customers after the
purchase or pick-up of tailored clothing to determine whether customers are
satisfied with their purchases and, if necessary, to take corrective action.
Store personnel have full authority to respond to customer complaints and
reasonable requests, including the approval of returns, exchanges, refunds,
re-alterations and other special requests, all of which we believe helps promote
customer satisfaction and loyalty.
K&G stores are designed to allow customers to select and purchase
apparel by themselves. For example, each merchandise category is clearly marked
and organized by size, and suits are specifically tagged "Athletic Fit,"
"Double-Breasted," "Three Button," etc., as a means of further assisting
customers to easily select their styles and sizes. K&G employees assist
customers with merchandise selection, including correct sizing.
Each of our stores provides on-site tailoring services to facilitate
timely alterations at a reasonable cost to customers. Tailored clothing
purchased at a Men's Wearhouse store will be pressed and re-altered (if the
alterations were performed at a Men's Wearhouse store) free of charge for the
life of the garment.
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Because management believes that men prefer direct and easy store
access, we attempt to locate our stores in regional strip and specialty retail
centers or in freestanding buildings to enable customers to park near the
entrance of the store.
Our total annual advertising expenditures, which were $69.7 million,
$61.2 million and $60.1 million in 2000, 2001 and 2002, respectively, are
significant. The Company advertises principally on television and radio, which
we consider the most effective means of attracting and reaching potential
customers, and our advertising campaign is designed to reinforce our various
brands.
PURCHASING AND DISTRIBUTION
We purchase merchandise from approximately 700 vendors. In 2002, no
vendor accounted for 10% or more of purchases. Management does not believe that
the loss of any vendor would significantly impact us. While we have no material
long-term contracts with our vendors, we believe that we have developed an
excellent relationship with our vendors, which is supported by consistent
purchasing practices.
We believe we obtain favorable buying opportunities relative to many of
our competitors. We do not request cooperative advertising support from
manufacturers, which reduces the manufacturers' costs of doing business with us
and enables them to offer us lower prices. Further, we believe we obtain better
discounts by entering into purchase arrangements that provide for limited return
policies, although we always retain the right to return goods that are damaged
upon receipt or determined to be improperly manufactured. Finally, volume
purchasing of specifically planned quantities purchased well in advance of the
season enables more efficient production runs by manufacturers who, in turn,
generally pass some of the cost savings back to us.
We purchase a significant portion of our inventory through a direct
sourcing program. In addition to finished product, we purchase fabric from mills
and contract with certain factories for the assembly of the finished product to
be sold in our U.S. and Canadian stores. Arrangements for fabric and assembly
have been with both domestic and foreign mills and factories. During 2000, 2001
and 2002, product procured through the direct sourcing program represented
approximately 28%, 28% and 27%, respectively, of total inventory purchases for
stores operating in the U.S. We expect that purchases through the direct
sourcing program will represent approximately 30% of total U.S. purchases in
2003. During 2000, 2001 and 2002, our manufacturing operations at Golden Brand
provided 45%, 47% and 43%, respectively, of inventory purchases for Moores
stores and 6%, 5% and 8% during 2000, 2001 and 2002, respectively, of inventory
purchases for Men's Wearhouse stores.
To protect against currency exchange risks associated with certain
firmly committed and certain other probable, but not firmly committed, inventory
transactions denominated in a foreign currency (primarily the Euro), we enter
into forward exchange contracts. In addition, many of the purchases from foreign
vendors are financed by letters of credit.
We have entered into license agreements with a limited number of
parties under which we are entitled to use designer labels such as "Gary
Player(R)" and nationally recognized brand labels such as "Botany(R)" and
"Botany 500(R)" in return for royalties paid to the licensor based on the costs
of the relevant product. These license agreements generally limit the use of the
individual label to products of a specific nature (such as men's suits, men's
formal wear or men's shirts). The labels licensed under these agreements will
continue to be used in connection with a portion of the purchases under the
direct sourcing program described above, as well as purchases from other
vendors. We monitor the performance of these licensed labels compared to their
cost and may elect to selectively terminate any license, as provided in the
respective agreement. We have also purchased several trademarks, including
"Cricketeer(R)," "Joseph & Feiss(R)," "Baracuta(R)," and "Pronto Uomo(R)," which
are used similarly to our licensed labels. Because of the continued
consolidation in the men's tailored clothing industry, we may be presented with
opportunities to acquire or license other designer or nationally recognized
brand labels.
All merchandise for Men's Wearhouse stores is received into our central
warehouse located in Houston, Texas. Merchandise for a store is picked and then
moved to the appropriate staging area for shipping. In addition to the central
distribution center in Houston, we have space within certain Men's Wearhouse
stores or separate hub warehouse facilities in the majority of our markets,
which function as redistribution facilities for their respective areas. Most
purchased merchandise for Moores and K&G stores is direct shipped by vendors to
the stores.
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We lease and operate 29 long-haul tractors and 62 trailers, which,
together with common carriers, are used to transport merchandise from the
vendors to our distribution facilities and from the distribution facilities to
Men's Wearhouse stores within each market. We also lease or own 80 smaller
van-like trucks, which are used to deliver merchandise locally or within a given
geographic region.
COMPETITION
We believe that the unit demand for men's tailored clothing has
generally declined over the past decade. Our primary competitors include
specialty men's clothing stores, traditional department stores, off-price
retailers and manufacturer-owned and independently owned outlet stores. Over the
past several years market conditions have resulted in consolidation of the
industry. We believe that the principal competitive factors in the menswear
market are merchandise assortment, quality, price, garment fit, merchandise
presentation, store location and customer service.
We believe that strong vendor relationships, our direct sourcing
program and our buying volumes and patterns are the principal factors enabling
us to obtain quality merchandise at attractive prices. We believe that our
vendors rely on our predictable payment record and history of honoring promises,
including our promise not to advertise names of labeled and unlabeled designer
merchandise when requested. Certain of our competitors (principally department
stores) may be larger and may have substantially greater financial, marketing
and other resources than we have and therefore may have certain competitive
advantages.
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DESCRIPTION OF NOTES
The notes were issued under an indenture dated October 21, 2003,
between The Men's Wearhouse, Inc., as issuer, and JPMorgan Chase Bank, a New
York state banking organization, as trustee. JPMorgan Chase Bank is also the
paying agent, conversion agent and bid solicitation agent. The notes and the
shares of common stock issuable upon conversion of the notes will be covered by
a registration rights agreement. You may request a copy of the notes and the
registration rights agreement from the trustee.
The following description is a summary of the material provisions of
the notes, the indenture and the registration rights agreement. It does not
purport to be complete. This summary is subject to and is qualified by reference
to all the provisions of the indenture, including the definitions of certain
terms used in the indenture, and to all provisions of the registration rights
agreement. We urge you to read the indenture because it, and not this
description, defines your rights as a holder of the notes.
As used in this "Description of Notes" section, references to "The
Men's Wearhouse," "we," "our" or "us" refer solely to The Men's Wearhouse, Inc.
and not to our subsidiaries, unless the context otherwise requires.
GENERAL
The notes are senior unsecured indebtedness of The Men's Wearhouse and
rank on a parity with all of our other existing and future senior unsecured
debt. The notes are convertible into common stock in the circumstances described
under "-- Conversion Rights." This conversion right is subject to our right to
deliver, in lieu of our common stock, cash or a combination of cash and common
stock as described under "-- Conversion Procedures -- Payment Upon Conversion."
The notes are limited to $130,000,000 aggregate principal amount as the
initial purchaser's option was fully exercised. The notes were issued only in
denominations of $1,000 and multiples of $1,000. We use the term "note" in this
prospectus to refer to each $1,000 principal amount of notes. The notes will
mature on October 15, 2023 unless earlier converted, redeemed or repurchased.
Neither we nor any of our subsidiaries are subject to any financial
covenants under the indenture. In addition, neither we nor any of our
subsidiaries are restricted under the indenture from paying dividends, incurring
debt or issuing or repurchasing our securities.
You are not afforded protection under the indenture in the event of a
highly leveraged transaction or a change in control of The Men's Wearhouse
except to the extent described below under "-- Purchase of Notes at a Holder's
Option" and "-- Purchase of Notes at a Holder's Option Upon a Designated Event."
The notes bear interest at a rate of 3.125% per annum. Interest is
calculated on the basis of a 360-day year consisting of twelve 30-day months and
will accrue from October 21, 2003, or from the most recent date to which
interest has been paid or duly provided for. We will pay contingent interest
under certain circumstances as described under "-- Contingent Interest." We will
pay interest, including contingent interest, if any, on October 15 and April 15
of each year, beginning April 15, 2004, to record holders at the close of
business on the preceding October 1 and April 1, as the case may be.
The notes will be redeemable by us on or after October 20, 2006, but
prior to October 20, 2008, in the circumstances described below under "--
Provisional Redemption" and by us at any time on or after October 20, 2008, as
described in "-- Optional Redemption."
Holders may require us to purchase the notes on October 15, 2008,
October 15, 2013, and October 15, 2018, as described under "-- Purchase of Notes
at a Holder's Option," or at any time upon the occurrence of a designated event
as described under "-- Purchase of Notes at a Holder's Option Upon a Designated
Event."
Under the indenture governing the notes, we agreed, and by acceptance
of a beneficial interest in a note, each holder of a note will be deemed to have
agreed, to treat the notes as indebtedness for United States federal income tax
purposes that is subject to the Treasury regulations governing contingent
payment debt instruments, and
21
to treat the fair market value of any stock beneficially received by a holder of
a note upon any conversion or repurchase of the notes as a contingent payment.
For United States federal income tax purposes, interest income on the notes will
accrue at the rate of 8.0% per year, compounded semi-annually, which rate
represents our determination of the yield at which we would have issued, as of
the issue date, a comparable noncontingent, nonconvertible, fixed rate debt
instrument with terms and conditions otherwise similar to the notes. A United
States Holder will be required to accrue interest income on a constant yield to
maturity basis at this rate (subject to certain adjustments), with the result
that a United States Holder generally will recognize taxable income
significantly in excess of interest payments received while the notes are
outstanding. See "Material U.S. Federal Income Tax Considerations."
We will maintain an office in the Borough of Manhattan, the city of New
York, where we will pay the principal and premium, if any, on the notes and you
may present the notes for conversion, registration of transfer or exchange for
other denominations, which shall initially be an office or agency of the
trustee. We may pay interest by check mailed to your address as it appears in
the note register, provided that if you are a holder with an aggregate principal
amount in excess of $5 million you will be paid, at your written election, by
wire transfer in immediately available funds.
However, payments to The Depository Trust Company, New York, New York,
which we refer to as DTC, will be made by wire transfer of immediately available
funds to the account of DTC or its nominee.
INTEREST
The notes will bear interest at an annual rate of 3.125% per year from
October 21, 2003. We will pay interest semi-annually in arrears in cash on
October 15 and April 15 of each year, beginning April 15, 2004, to the holders
of record at 5:00 p.m., New York city time, on the preceding October 1 and April
1, respectively. Interest generally will be computed semi-annually on the basis
of a 360-day year comprised of twelve 30-day months.
There are certain exceptions to the preceding sentence:
- In general, we will not pay accrued interest (including
contingent interest) on any notes that are converted into our
common stock. See "-- Conversion Rights." If a holder of notes
converts after a record date for an interest payment but prior
to the corresponding interest payment date, the holder on the
record date will receive on that interest payment date accrued
interest on those notes, notwithstanding the conversion of
those notes prior to that interest payment date, because that
holder will have been the holder of record on the
corresponding record date. However, at the time that holder
surrenders notes for conversion, the holder must pay to us an
amount equal to the interest that has accrued and that will be
paid on the related interest payment date. The preceding
sentence does not apply, however, to a holder that converts
notes that are called by us for redemption after a record date
for an interest payment but prior to the corresponding
interest payment date. Accordingly, if we elect to redeem
notes on a date that is after a record date but prior to the
corresponding interest payment date and a holder of notes
chooses to convert those notes, the holder will not be
required to pay us, at the time that holder surrenders those
notes for conversion, the amount of interest it will receive
on the interest payment date.
- We will pay interest to a person other than the holder of
record on the record date if we elect to redeem the notes on a
date that is after a record date but on or prior to the
corresponding interest payment date. In this instance, we will
pay accrued and unpaid interest, contingent interest and
additional amounts, if any, on the notes being redeemed to,
but not including, the redemption date to the same person to
whom we will pay the principal of those notes.
- We will pay interest to a person other than the holder of
record on the record date if, in connection with a designated
event, we elect a designated event purchase date that is after
a record date but on or prior to the corresponding interest
payment date. In this instance, we will pay accrued and unpaid
interest, contingent interest and additional amounts, if any,
on the notes being purchased to, but not including, the
designated event purchase date to the same person to whom we
will pay the principal of those notes.
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At maturity, interest on the definitive notes will be payable at the
principal corporate trust office of the trustee presently located at 4 New York
Plaza, Floor 15, New York, New York 10004.
We will also pay additional amounts of interest on the notes under
certain circumstances described below under " -- Registration Rights" and " --
Contingent Interest."
Interest otherwise payable will cease to accrue on a note upon its
maturity, conversion or purchase by us (including upon a designated event).
Additional amounts may continue to accrue even after conversion if we fail to
comply with certain obligations set forth under " -- Registration Rights."
Except as provided below, we will pay interest on:
- global notes to DTC in immediately available funds;
- any definitive notes having an aggregate principal amount of
$5 million or less by check mailed to the holders of those
notes; and
- any definitive notes having an aggregate principal amount of
more than $5 million by wire transfer in immediately available
funds if requested in writing by the holders of those notes,
otherwise by check mailed to the holders of these notes.
We will not be required to make any payment on the notes due on any day
which is not a business day until the next succeeding business day. The payment
made on the next business day will be treated as though it were paid on the
original due date and no interest will be payable on the payment date for the
additional period of time.
CONTINGENT INTEREST
Subject to the accrual and record date provisions described above, we
will pay contingent interest to the holders of the notes during any six-month
period from October 15 to April 14 and from April 15 to October 14, beginning
with the six-month period commencing October 15, 2008, if the trading price of
the notes for each of the five trading days ending on the second trading day
immediately preceding the first day of the applicable six-month period equals or
exceeds 120% of the principal amount of the notes.
The amount of contingent interest payable per note in respect of any
six-month period in which contingent interest is payable will equal 0.25% per
annum of the average trading price of $1,000 principal amount of notes during
the five trading days ending on the second trading day immediately preceding the
first day of the applicable six-month interest period.
A "trading day" means a day during which trading in securities
generally occurs on the New York Stock Exchange or, if our common stock is not
listed on the New York Stock Exchange, on the principal other U.S. national or
regional securities exchange on which our common stock is then listed or, if our
common stock is not listed on a U.S. national or regional securities exchange,
on the Nasdaq National Market or, if our common stock is not reported by the
Nasdaq National Market, on the principal other market on which our common stock
is then traded.
The "trading price" of a note on any date of determination means the
average of the secondary market bid quotations per note obtained by the bid
solicitation agent for $5 million principal amount at maturity of notes at
approximately 4:00 p.m., New York city time, on such determination date from
three independent nationally recognized securities dealers we select, provided
that if at least three such bids are not obtained by the bid solicitation agent,
but two bids are obtained by the bid solicitation agent, then the average of the
two bids shall be used, and if only one such bid can reasonably be obtained by
the bid solicitation agent, this one bid shall be used; provided, however, that
if, in our reasonable judgment, the bid quotations are not indicative of the
secondary market value of the notes, then the trading price of a note will equal
(a) the then applicable conversion rate of a note multiplied by (b) the average
closing sale price of our common stock on the five trading days ending on such
determination date, appropriately adjusted.
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The "conversion rate" is the number of shares of common stock into
which each note is then convertible (assuming that the note was convertible as
of such date).
The bid solicitation agent will initially be the trustee. We may change
the bid solicitation agent, but the bid solicitation agent will not be our
affiliate. The bid solicitation agent will solicit bids from securities dealers
that are believed by us to be willing to bid for the notes.
Upon determination that note holders will be entitled to receive
contingent interest during a relevant six-month period, we will issue a press
release, publish such information on our website or through such other public
medium as we may use at that time and notify the trustee.
The record date and payment date for contingent interest, if any, will
be the same as the regular record date and payment date, respectively, for the
semi-annual interest payments on the notes.
We may unilaterally increase the amount of contingent interest we may
pay or pay interest or other amounts we are not obligated to pay, but we will
have no obligation to do so.
RANKING
The notes are our general senior unsecured obligations, ranking on a
parity in right of payment with all our existing and future unsecured senior
indebtedness, and senior in right of payment with all our future subordinated
indebtedness. The notes are effectively subordinated to any of our secured
senior indebtedness to the extent of the assets securing such indebtedness and
to the claims of all creditors of our subsidiaries.
In January 2003, we replaced our existing $125.0 million revolving
credit facility which was scheduled to mature in February 2004 with a new
revolving credit agreement with a group of banks (the "Credit Agreement") that
provides for borrowing of up to $100.0 million through February 4, 2006 (with
extensions for up to two years under certain conditions). Advances under the new
Credit Agreement bear interest at a rate per annum equal to, at our option, the
agent's prime rate or the reserve adjusted LIBOR rate plus a varying interest
rate margin. The Credit Agreement also provides for fees applicable to unused
commitments. In addition, in January 2003, we entered into a new credit facility
under which we borrowed Can$62.0 million (US$40.7 million). We used a portion of
the net proceeds from the private placements of the notes to repay all of our
existing indebtedness under the Canadian term credit facility.
The Credit Agreement contains certain restrictive and financial
covenants, including the requirement to maintain a minimum level of net worth
and certain financial ratios. The Credit Agreement also prohibits payment of
cash dividends on our common stock. We are in compliance with the covenants in
the Credit Agreement. We have pledged some or all of the stock of our
subsidiaries to secure the Credit Agreement. Therefore, as noted above, the
notes are effectively subordinated to the Credit Agreement to the extent of such
pledged stock.
As of November 1, 2003, there were no loans outstanding under the
Credit Agreement, but there was $11.4 million of letters of credit outstanding.
One of our subsidiaries has a $10.0 million letter of credit facility, and as of
November 1, 2003 there was $0.3 million of letters of credit outstanding under
this facility. In addition, as of November 1, 2003, our subsidiaries have
approximately $99.2 million in accounts payable and other unsecured obligations.
CONVERSION RIGHTS
General
A holder may convert all or any portion of such holder's outstanding
notes, subject to the conditions described below, initially at a conversion rate
of 23.3187 shares of common stock per $1,000 principal amount of the notes. This
reflects an initial conversion price of $42.88. The conversion rate, and thus
the conversion price, is subject to adjustment as described below. A holder may
convert notes only in denominations of $1,000 principal amount and integral
multiples thereof.
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A holder may surrender notes for conversion prior to the stated
maturity only under the following circumstances:
- during any conversion period commencing after October 21,
2003, and only during such conversion period, if on each of at
least 20 trading days in the period of 30 consecutive trading
days ending on the first trading day of the conversion period,
the closing sale price of our common stock exceeds 120% of the
conversion price in effect on that 30th trading day of such
period; a "conversion period" will be the period from and
including the third Friday (or, if that day is not a trading
day, then the next trading day) in a fiscal quarter to, but
not including, the third Friday (or, if that day is not a
trading day, then the next trading day) in the immediately
following fiscal quarter;
- if we have called those notes for redemption; or
- upon the occurrence of the specified corporate transactions
discussed below.
Upon conversion, we will have the right to deliver, in lieu of shares
of our common stock, cash or a combination of cash and shares of our common
stock, as described below under "-- Conversion Procedures -- Payment Upon
Conversion." For a discussion of the U.S. federal income tax consequences of
conversion to a holder, see "Material U.S. Federal Income Tax Considerations."
The conversion agent will, on our behalf, determine if the notes are
convertible and notify the trustee and us accordingly. If a holder has exercised
its right to require us to purchase its notes as described under "-- Purchase of
Notes at a Holder's Option Upon a Designated Event," the holder may convert its
notes only if it withdraws its designated event purchase notice prior to 5:00
p.m., New York city time, on the business day immediately preceding the
applicable purchase date.
We will not issue fractional shares of our common stock upon the
conversion of the notes. Instead, we will pay the cash value of such fractional
shares based upon the closing sale price of our common stock on the trading day
immediately prior to the conversion date.
Conversion Upon Satisfaction of Common Stock Price Condition
A holder will have the right to convert any of its notes during any
conversion period commencing after October 21, 2003, and only during such
conversion period, if the closing sale price of our common stock on each of at
least 20 trading days in the 30 consecutive trading day period ending on the
first trading day of the conversion period is greater than or equal to 120% of
the conversion price in effect on that 30th trading day of such period.
The initial conversion trigger price per share of our common stock is
$51.46. The conversion trigger price reflects the initial conversion price per
share of our common stock multiplied by 120%.
The "closing sale price" of any share of common stock on any date means
the closing sale price of a share of common stock (or if no closing sale price
is reported, the average of the bid and ask prices or, if there is more than one
bid or ask price, the average of the average bid and the average ask prices) on
that date as reported on a national securities exchange or, if the common stock
is not listed on a national securities exchange, as reported by the Nasdaq
National Market system. If our common stock is not listed for trading on a
national securities exchange and not reported by the Nasdaq National Market on
the relevant date, the "closing sale price" will be the last quoted bid for our
common stock in the over-the-counter market on the relevant date as reported by
the National Quotation Bureau or similar organization. If our common stock is
not so quoted, the "closing sale price" will be the average of the midpoint of
the last bid and ask prices for our common stock on the relevant date from each
of at least three nationally recognized independent investment banking firms
selected by us for this purpose.
Conversion Upon Notice of Redemption
A holder will have the right to convert any of its notes that we have
called for redemption at any time prior to 5:00 p.m., New York city time, on the
day that is two business days prior to the redemption date, even if the notes
are not otherwise convertible at such time. If a holder already has delivered a
designated event purchase notice with
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respect to a note, however, the holder may not surrender that note for
conversion until the holder has withdrawn the notice in accordance with the
indenture.
Conversion Upon Specified Corporate Transactions
A holder will have the right to convert any of its notes in the event:
- we distribute to all holders of our common stock certain
rights or warrants entitling them to subscribe for or
purchase, for a period expiring within 60 days, common stock
at less than the closing sale price of the common stock on the
business day immediately preceding the announcement of such
distribution;
- we elect to distribute to all holders of our common stock,
cash or other assets, debt securities or certain rights or
warrants to purchase our securities, including the declaration
of any cash dividends, payable quarterly or otherwise, which
distribution has a per share value exceeding 5% of the closing
sale price of the common stock on the business day immediately
preceding the declaration date for the distribution; or
- a designated event (as defined under "-- Purchase of Notes at
a Holder's Option Upon a Designated Event") occurs.
In any such event, a holder may convert any of its notes at any time
after we notify holders of such event:
- in the case of a distribution, until the earlier of 5:00 p.m.,
New York city time, on the business day immediately preceding
the ex-dividend date or the date of our announcement that the
distribution will not take place; or
- in the case of a designated event, within 35 business days of
the designated event notice.
We will notify holders at least 20 business days prior to the
ex-dividend date for the distribution or within 20 business days following the
occurrence of the designated event, as the case may be. In the case of a
distribution, a holder of notes may not convert any of its notes if, as a holder
of notes, the holder will otherwise participate in the distribution without
conversion.
In addition, if we are party to a consolidation, merger or binding
share exchange pursuant to which our common stock would be converted into cash,
securities or other property, a holder may surrender notes for conversion at any
time from and after the date which is 15 calendar days prior to date announced
by us as the anticipated effective date of the transaction until 15 calendar
days after the actual date of the transaction. If we are a party to a
consolidation, merger or binding share exchange pursuant to which our common
stock is converted into cash, securities or other property, then at the
effective time of the transaction, the right to convert a note into common stock
will be changed into a right to convert the notes into the kind and amount of
cash, securities or other property which the holder would have received if the
holder had converted such notes immediately prior to the transaction. If the
transaction also constitutes a designated event, the holder can require us to
purchase all or a portion of its notes as described under "-- Purchase of Notes
at a Holder's Option Upon a Designated Event."
CONVERSION PROCEDURES
General
We will not issue fractional shares of common stock upon conversion of
the notes. Instead, we will pay the cash value of such fractional shares based
upon the closing sale price of our common stock on the trading day immediately
prior to the conversion date.
Except as provided in the next paragraph, upon conversion, we will not
make any payment or other adjustment for accrued and unpaid interest, contingent
interest and additional amounts, if any, on the notes.
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If a holder converts after a record date for an interest payment but
prior to the corresponding interest payment date, that holder will receive on
the interest payment date interest, contingent interest and additional amounts,
if any, accrued and unpaid on those notes, notwithstanding the conversion of
notes prior to the interest payment date, assuming it was the holder of record
on the corresponding record date. However, at the time the holder surrenders any
notes for conversion, it must pay us an amount equal to the interest, contingent
interest and additional amounts, if any, that has accrued and will be paid on
the notes being converted on the interest payment date. The preceding sentence
does not apply to notes that are converted after being called by us for
redemption after a record date for an interest payment date but prior to the
corresponding interest payment. If in such case prior to the redemption date a
holder chooses to convert its notes, the holder will not be required to pay us
at the time it surrenders its notes for conversion the amount of interest,
contingent interest and additional amounts, if any, on the notes it would have
received, but for the conversion, on the date that has been fixed for
redemption.
Except as described under "-- Conversion Rate Adjustments," we will not
make any payment or other adjustment for dividends on any common stock issued
upon conversion of the notes.
A holder will not be required to pay any taxes or duties relating to
the issuance or delivery of our common stock if that holder exercises its
conversion rights, but it will be required to pay any tax or duty which may be
payable relating to any transfer involved in the issuance or delivery of the
common stock in a name other than its own. Certificates representing shares of
common stock will be issued or delivered only after all applicable taxes and
duties, if any, payable by such holder have been paid.
Procedures
To convert interests in a global note, a holder must deliver to DTC the
appropriate instruction form for conversion pursuant to DTC's conversion
program.
To convert a definitive note, a holder must:
- complete and manually sign the conversion notice on the back
of the note (or a facsimile thereof);
- deliver the completed conversion notice and the note to be
converted to the specified office of the conversion agent;
- if required by the conversion agent, furnish appropriate
endorsements and transfer documents;
- pay all funds required, if any, relating to interest on the
note to be converted to which it is not entitled; and
- pay all taxes or duties, if any, as described in the preceding
paragraph.
The conversion date will be the date on which all of the foregoing
requirements have been satisfied. The notes will be deemed to have been
converted immediately prior to 5:00 p.m., New York city time, on the conversion
date.
If we elect to settle in common stock only, a certificate for the
number of full shares of common stock into which the notes are converted (and
cash in lieu of fractional shares) will be delivered to such holder, assuming
all of the other requirements have been satisfied by such holder, as soon as
practicable after we issue our notification of our chosen method of settlement,
which we must issue on the date that is three trading days following receipt of
the conversion notice. If we elect to settle in cash or a combination of cash
and common stock, the cash and, if applicable, a certificate for the number of
full-shares of common stock into which the notes are converted (and cash in lieu
of fractional shares) will be delivered to such holder, assuming all of the
other requirements have been satisfied by such holder, on the 31st trading day
following receipt of the conversion notice, unless the holder submits its
conversion notice within 30 trading days prior to maturity.
In the event of a designated event, if a holder has submitted any or
all of its notes for repurchase, a holder's conversion rights on the notes so
subject to repurchase will expire at 5:00 p.m., New York city time, on the
business day immediately preceding the repurchase date, unless we default in the
payment of the repurchase price. If a holder
27
has submitted any note for repurchase, such note may be converted only if a
holder submits a notice of withdrawal, and if the note is a global note,
complies with appropriate DTC procedures.
To the extent that we have a rights plan in effect upon conversion of
the notes into common stock, a holder will receive, in addition to the common
stock, the rights under the rights plan whether or not the rights have separated
from the common stock at the time of applicable conversion, subject to limited
exceptions. The Company does not currently have a rights plan.
Payment Upon Conversion
In lieu of delivery of shares of our common stock, and pursuant to the
procedures described below, we may elect to deliver to holders surrendering
notes either cash, or a combination of cash and shares of our common stock.
On the first date the notes become convertible under the circumstances
described above in "-- Conversion Rights," we will notify holders in writing of
our method for settling the principal amount of the notes upon conversion
("principal conversion settlement election"). This notification, once provided
to holders on the date the notes first become convertible, regardless of any
holder's decision to convert, is irrevocable and legally binding with regard to
any conversion of the notes. As such, the conversion settlement election made on
the first date the notes become convertible remains in force if the notes cease
to be convertible but subsequently become convertible again.
Until the notes are surrendered for conversion, we will not be required
to notify holders of our method for settling the excess amount ("excess amount")
of our conversion obligation relating to the amount of the conversion value (the
product of the closing sale price for our common stock on a given day multiplied
by the then current conversion rate) above the principal amount, if any ("excess
conversion obligation").
Conversion On or Prior to 31 Trading Days Prior to Maturity. If we
receive a holder's conversion notice on or prior to the day that is 31 trading
days prior to the stated maturity of the notes (the "final notice date"), the
following procedures will apply:
Settlement of our conversion obligation relating to the principal
amount of the notes will be according to the principal conversion settlement
election we will have already made.
- We will notify the holder through the trustee, at any time on
the date that is three trading days following receipt of the
holder's conversion notice (the "settlement notice period"),
of the method we choose to settle the excess conversion
obligation, as applicable. Specifically we will indicate
whether settlement of the excess conversion obligation will be
100% in common stock, 100% in cash or in a combination of cash
and common stock. If we elect to settle the excess conversion
obligation in a combination of cash and common stock, we will
specify the percentage of each obligation to be settled in
cash. We will treat all holders converting on the same trading
day in the same manner. We will not, however, have any
obligation to settle the excess conversion obligation arising
on different trading days in the same manner. That is, we may
choose on one trading day to settle in common stock only and
choose on another trading day to settle in cash or a
combination of common stock and cash.
- Settlement of 100% in common stock of our conversion
obligation with respect to the principal amount of the notes
and the excess conversion obligation, will occur as soon as
practicable after we notify the holders that we have chosen
this method of settlement. Settlement of any portion of our
conversion obligation, including the principal amount and/or
excess amount, in cash or in a combination of common stock and
cash will occur on the third trading day following the final
trading day of the 20 trading day period beginning on the
final trading day following the settlement notice period (the
"cash settlement averaging period").
- Settlement amounts will be computed as follows:
1. If we elect to satisfy our entire conversion
obligation, including principal amount and excess amount, in shares of
common stock (other than with respect to fractional shares), we will
deliver to a holder a number of shares of common stock, for each $1,000
original principal amount of notes, equal to the applicable conversion
rate.
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2. If we elect to satisfy our entire conversion
obligation in cash, including principal amount and excess amount, we
will deliver to a holder, for each $1,000 original principal amount of
notes, cash in an amount equal to the product of (i) the applicable
conversion rate multiplied by (ii) the average closing sale price of
our common stock during the cash settlement averaging period.
3. If we elect to satisfy our conversion obligation,
including principal amount and excess amount, in a combination of cash
and stock, we will deliver to a holder, for each $1,000 original
principal amount of notes:
(a) a cash amount ("cash amount") (excluding any cash in lieu
of fraction shares) equal to the sum of:
- the product of (i) $1,000 multiplied by (ii) the
percentage of such principal amount of a note to be
satisfied in cash; plus
- if greater than zero, the product of (i) the amount
of cash that would be paid pursuant to paragraph
number 2 above minus the aggregate principal amount
of the notes surrendered for conversion, multiplied
by (ii) the percentage of the excess amount to be
satisfied in cash;
and
(b) a number of shares of common stock equal to the difference
between:
- the number of shares that would be issued pursuant to
paragraph number 1 above; minus
- the number of shares equal to the quotient of (i) the
cash amount divided by (ii) the average closing sale
price of our common stock during the cash settlement
averaging period.
Conversion During 30 Trading Days Prior to Maturity. If we receive a
holder's conversion notice after the "final notice date", the following
procedure will apply:
- Settlement of our conversion obligation relating to
the principal amount of the notes will be according
to the principal conversion settlement election we
will have already made.
- We will notify the holder through the trustee of the
method we choose to settle the excess conversion
obligation in the same manner as set forth above
under "-- Conversion On or Prior to 31 Trading Days
Prior to Maturity," except that we will settle all of
our conversion obligations arising during the 30
trading day period prior to maturity in the same
manner.
- Settlement of 100% in common stock of our conversion
obligation of the principal amount and the excess
amount will occur as soon as practicable after we
notify the holder that we have chosen this method of
settlement. Settlement of any portion of the
conversion obligation, including any portion of the
principal amount or the excess amount, in cash or in
a combination of common stock and cash will occur on
the third trading day following the final trading day
of the cash settlement averaging period described in
the next bullet point.
- The settlement amount will be computed in the same
manner as set forth above under "-- Conversion On or
Prior to 31 Trading Day Prior to Maturity," except
that the "cash settlement averaging period" will be
the 20 trading day period beginning on the date that
is the 23rd trading day prior to the maturity date.
Conversion Rate Adjustments
We will adjust the conversion rate if any of the following events
occur:
1. we issue shares of common stock as a dividend or distribution
to all or substantially all holders of our common stock;
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2. we subdivide, combine or reclassify our common stock;
3. we issue to all or substantially all holders of our common
stock certain rights or warrants to purchase our common stock, or securities
convertible into or exchangeable or exercisable for our common stock, for a
period expiring within 60 days at less than the closing sale price of our common
stock on the business day immediately preceding the date of the announcement of
such issuance, provided that the conversion rate will be readjusted to the
extent that such rights or warrants are not exercised prior to the expiration;
4. we distribute to all or substantially all holders of our
common stock shares of our capital stock (other than common stock) or evidences
of our indebtedness or assets, including securities, but excluding:
- dividends or distributions listed in (1) above;
- rights or warrants listed in (3) above;
- dividends and distributions in connection with
reclassification, change, consolidation, merger, combination,
sale or convergence resulting in a change in the conversion
consideration pursuant to the next succeeding paragraph; and
- cash distributions listed in (6) below;
5. we distribute shares of capital stock of one of our
subsidiaries, with such adjustment, if any, based on the market value of the
subsidiary stock so distributed relative to the market value of our common
stock, in each case over a measurement period following the distribution;
6. we distribute to all or substantially all holders of our
common stock,
(a) on or prior to October 15, 2008, any cash, including
quarterly cash dividends; or
(b) after October 15, 2008, cash, to the extent that the
aggregate cash dividends per share of our common stock in any twelve
month period exceeds the greater of:
- the annualized amount per share of our common stock
of the immediately preceding quarterly cash dividend
on such common stock to the extent that the preceding
quarterly dividend did not require an adjustment of
the conversion rate pursuant to this clause, as
adjusted to reflect subdivisions or combinations of
our common stock; and
- 5% of the average of the closing sale price of our
common stock during the ten trading days immediately
prior to the declaration of the dividend;
provided, that if an adjustment is required to be made under
this clause (b) as a result of a distribution that is a quarterly
dividend, the adjustment would be based on the amount by which the
distribution exceeds the amount of the quarterly cash dividend
permitted to be excluded pursuant to this clause (b); or
7. we or one of our subsidiaries make purchases of our common
stock pursuant to a tender offer or exchange offer for our common stock.
In the event of any:
- reclassification or change of our common stock;
- consolidation, merger or binding share exchange involving us;
or
- sale or conveyance to another person or entity of all or
substantially all of our property or assets;
in which holders of common stock would be entitled to receive stock,
other securities, other property, assets or cash for their common stock, upon
conversion of a noteholder's notes, such noteholder will be entitled to receive
30
the same type of consideration which such noteholder would have been entitled to
receive if such noteholder had converted the notes into our common stock
immediately prior to any of these events.
A holder of notes may, in certain circumstances, be deemed to have
received a distribution or dividend subject to U.S. federal income tax as a
result of an adjustment or the nonoccurrence of an adjustment to the conversion
price. See "Material U.S. Federal Income Tax Considerations -- Tax Consequences
to United States Holders -- Constructive Dividends."
To the extent permitted by law, we may, from time to time, increase the
conversion rate for a period of at least 20 days if our board of directors
determines that this increase would be in our best interests. Any such
determination by our board will be conclusive. We would give holders at least 15
days' notice of any increase in the conversion rate. In addition, we may
increase the conversion rate if our board of directors deems it advisable to
avoid or diminish any income tax to holders of common stock resulting from any
distribution of common stock or similar event. We will not be required to make
an adjustment in the conversion rate unless the adjustment would require a
change of at least one percent in the conversion rate. However, we will carry
forward any adjustments that are less than one percent of the conversion rate.
Except as described above in this section, we will not adjust the conversion
rate for any issuance of our common stock or convertible, exchangeable or
exercisable securities or rights to purchase our common stock or convertible,
exchangeable or exercisable securities.
PAYMENT AT MATURITY
At the maturity date, each holder of $1,000 principal amount of the
notes shall be entitled to receive $1,000, and accrued and unpaid interest,
contingent interest and additional amounts, if any, in cash to, but not
including, the maturity date.
SINKING FUND
No sinking fund is provided for the notes.
PROVISIONAL REDEMPTION
On or after October 20, 2006 but prior to October 20, 2008, we may, at
our option and subject to conditions, redeem for cash, in whole or in part, the
notes at any time at a redemption price equal to 100% of the principal amount of
notes to be redeemed, plus accrued and unpaid interest and additional amounts,
if any, to but excluding the redemption date. We may exercise this provisional
redemption right only if, on each of at least 20 trading days within any period
of 30 consecutive trading days ending on or after October 20, 2006 but prior to
October 20, 2008, the closing sale price of our common stock exceeds 140% of the
conversion price of the notes on the 30th trading day of such period. We will
provide not less than 20 nor more than 60 days' notice mailed to each holder of
the notes to be redeemed. If the redemption notice is given and the funds
deposited as required, then interest will cease to accrue on and after the
redemption date on the notes or portions of such notes called for redemption.
OPTIONAL REDEMPTION
On or after October 20, 2008, we may redeem for cash all or a portion
of the notes at any time for a price equal to 100% of the principal amount of
the notes to be redeemed plus accrued and unpaid interest, contingent interest
and additional amounts, if any, to but excluding the redemption date. We will
provide not less than 20 nor more than 60 days' notice mailed to each holder of
the notes to be redeemed. If the redemption notice is given and funds deposited
as required, then interest will cease to accrue on and after the redemption date
on the notes or portions of such notes called for redemption.
PARTIAL REDEMPTION
If we decide to redeem fewer than all of the outstanding notes
(pursuant to either a provisional or optional redemption), the trustee will
select the notes to be redeemed by lot, or on a pro rata basis or by another
method the trustee considers fair and appropriate.
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If the trustee selects a portion of a holder's notes for partial
redemption and such holder converts a portion of its notes, the converted
portion will be deemed to be from the portion selected for redemption.
PURCHASE OF NOTES AT A HOLDER'S OPTION
Holders have the right to require us to purchase all or a portion of
their notes for cash on October 15, 2008, October 15, 2013 and October 15, 2018
(each, a "purchase date"). Any note purchased by us on a purchase date will be
paid for in cash. We will be required to purchase any outstanding notes for
which a holder delivers a written purchase notice to the paying agent. This
notice must be delivered during the period beginning at any time from the
opening of business on the date that is 20 business days prior to the relevant
purchase date until the close of business on the fifth business day prior to the
purchase date. If the purchase notice is given and withdrawn during such period,
we will not be obligated to purchase the related notes. Also, as described in
the "Risk Factors" section of this prospectus under the caption "We may be
unable to repay or purchase the principal amount of the notes," we may not have
funds sufficient to purchase notes when we are required to do so.
The purchase price payable will be equal to 100% of the principal
amount of the notes to be purchased plus accrued and unpaid interest, contingent
interest and additional amounts, if any, to, but excluding, the purchase date.
On or before the 20th business day prior to each purchase date, we will
provide to the trustee, the paying agent and to all holders of the notes at
their addresses shown in the register of the registrar, and to beneficial owners
as required by applicable law, a notice stating, among other things:
- the purchase price;
- the name and address of the paying agent and the conversion
agent; and
- the procedures that holders must follow to require us to
purchase their notes.
Simultaneously with providing such notice, we will publish a notice
containing this information in a newspaper of general circulation in the city of
New York or publish the information on our web site or through such other public
medium as we may use at that time.
A notice electing to require us to purchase a holder's notes must
state:
- the relevant purchase date;
- if certificated notes have been issued, the certificate
numbers of the notes;
- the portion of the principal amount of notes to be purchased,
in integral multiples of $1,000; and
- that the notes are to be purchased by us pursuant to the
applicable provisions of the notes and the indenture.
If the notes are not in certificated form, a holder's notice must
comply with appropriate DTC procedures.
No notes may be purchased at the option of holders if there has
occurred and is continuing an event of default other than an event of default
that is cured by the payment of the purchase price of the notes.
A holder may withdraw any purchase notice in whole or in part by a
written notice of withdrawal delivered to the paying agent prior to the close of
business on the business day prior to the purchase date. The notice of
withdrawal must state:
- the principal amount of the withdrawn notes;
- if certificated notes have been issued, the certificate
numbers of the withdrawn notes; and
- the principal amount, if any, which remains subject to the
purchase notice.
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If the notes are not in certificated form, a holder's notice must
comply with appropriate DTC procedures.
A holder must either effect book-entry transfer or deliver the notes,
together with necessary endorsements, to the office of the paying agent after
delivery of the purchase notice to receive payment of the purchase price. A
holder will receive payment promptly following the later of the purchase date or
the time of book-entry transfer or the delivery of the notes. If the paying
agent holds money sufficient to pay the purchase price of the notes on the
business day following the purchase date, then:
- the notes will cease to be outstanding and interest will cease
to accrue (whether or not book-entry transfer of the notes is
made or whether or not the note is delivered to the paying
agent); and
- all other rights of the holder will terminate (other than the
right to receive the purchase price upon delivery or transfer
of the notes).
PURCHASE OF NOTES AT A HOLDER'S OPTION UPON A DESIGNATED EVENT
In the event of a designated event, a holder will have the right to
require us to purchase for cash all or any part of the notes after the
occurrence of a designated event at a purchase price equal to 100% of the
principal amount at issuance plus accrued and unpaid interest, contingent
interest and additional amounts, if any, up to, but excluding, the designated
event purchase date. Notes submitted for purchase must be $1,000 or an integral
multiple thereof.
On or before the 20th calendar day after the occurrence of a designated
event, we will provide to all holders of the notes and the trustee and paying
agent a notice of the occurrence of the designated event and of the resulting
purchase right. Such notice shall state, among other things, the procedures that
holders must follow to require us to purchase the notes and the date of the
designated event.
Simultaneously with providing such notice, we will publish a notice
containing this information in a newspaper of general circulation in the city of
New York or publish the information on our website or through such other public
medium as we may use at that time.
To exercise the purchase right, a holder must deliver, on or before the
30th business day after the date of our notice of a designated event, subject to
extension to comply with applicable law, the notes to be purchased, duly
endorsed for transfer, together with a written purchase notice and the form
entitled "Form of Designated Event Purchase Notice" on the reverse side of the
notes duly completed, to the paying agent. The purchase notice must state:
- if certificated notes have been issued, the certificate
numbers of the notes;
- the portion of the principal amount of notes to be purchased,
in integral multiples of $1,000; and
- that the notes are to be purchased by us pursuant to the
applicable provisions of the notes and the indenture.
If the notes are not in certificated form, a holder's notice must
comply with appropriate DTC procedures.
A holder may withdraw any purchase notice (in whole or in part) by a
written notice of withdrawal delivered to the paying agent prior to the close of
business on the business day prior to the designated event purchase date. The
notice of withdrawal shall state:
- the principal amount of the withdrawn notes;
- if certificated notes have been issued, the certificate
numbers of the withdrawn notes; and
- the principal amount, if any, which remains subject to the
purchase notice.
We will be required to purchase the notes no later than 35 business
days after the date of our notice of the occurrence of the relevant designated
event subject to extension to comply with applicable law. A holder will
33
receive payment of the designated event purchase price promptly following the
later of the designated event purchase date or the time of book-entry transfer
or the delivery of the notes. If the paying agent holds cash sufficient to pay
the designated event purchase price of the notes on the business day following
the designated event purchase date, then:
- the notes will cease to be outstanding and interest,
contingent interest and additional amounts, if any, will cease
to accrue (whether or not book-entry transfer of the notes is
made or whether or not the note is delivered to the paying
agent); and
- all other rights of the holder will terminate (other than the
right to receive the designated event purchase price and any
previously accrued and unpaid interest, contingent interest
and additional amounts, if any, upon delivery or transfer of
the notes).
A designated event will be deemed to have occurred if any of the
following occurs:
- any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 of the
Exchange Act, except that a person shall be deemed to have
beneficial ownership of all shares that such person has the
right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or
indirectly, of more than 50% of our total outstanding voting
stock;
- during any period of two consecutive years, individuals who at
the beginning of such period constituted our board of
directors (together with any new directors whose election to
such board or whose nomination for election by our
stockholders, was approved by a vote of at least 66 2/3% of
the directors then still in office who were either directors
at the beginning of such period or whose election or
nomination for election was previously so approved) cease for
any reason to constitute a majority of such board of directors
then in office;
- we consolidate with or merge with or into any person or
convey, transfer, sell, or otherwise dispose of or lease all
or substantially all of our assets to any person, or any
corporation consolidates with or merges into or with us, in
any such event pursuant to a transaction in which our
outstanding voting stock is changed into or exchanged for
cash, securities or other property, other than any such
transaction where our outstanding voting stock is not changed
or exchanged at all (except to the extent necessary to reflect
a change in our jurisdiction of incorporation), or where (A)
our outstanding voting stock is changed into or exchanged for
(x) voting stock of the surviving corporation which is not
"disqualified equity interests" or (y) cash, securities and
other property (other than equity interests of the surviving
corporation) and (B) no "person" or "group" owns immediately
after such transaction, directly or indirectly, more than 50%
of the total outstanding voting stock of the surviving
corporations;
- we are liquidated or dissolved or adopt a plan of liquidation
or dissolution other than in a transaction which complies with
the provisions described under "-- Consolidation, Merger and
Sale of Assets"; or
- our common stock ceases to be listed on the New York Stock
Exchange or another established national securities exchange
or automated over-the-counter trading market in the United
States.
However, a designated event will not be deemed to have occurred if
either:
(1) the closing sale price of our common stock for each of at least
five trading days within:
- the period of ten consecutive trading days immediately after
the later of the designated event or the public announcement
of the designated event, in the case of a designated event
resulting solely from a designated event under the first
bullet point above; or
- the period of ten consecutive trading days immediately
preceding the designated event, in the case of a designated
event under the second, third and fourth bullet points above;
34
is at least equal to 105% of the quotient where the numerator is the
principal amount and the denominator is the conversion rate in effect on each of
those five trading days; or
(2) in the case of a merger or consolidation, at least 95% of the
consideration, excluding cash payments for fractional shares, in the merger or
consolidation constituting the designated event, consists of common stock traded
on a United States national securities exchange or quoted on the Nasdaq National
Market system (or which will be so traded or quoted when issued or exchanged in
connection with such designated event) and as a result of such transaction or
transactions the notes become convertible solely into such common stock.
For purposes of this designated event definition, "voting stock" means
stock of the class or classes pursuant to which the holders thereof have the
general voting power under ordinary circumstances to elect at least a majority
of the board of directors, managers or trustees of a corporation (irrespective
of whether or not at the time stock of any other class or classes shall have or
might have voting power by reason of the happening of any contingency).
The definition of designated event includes a phrase relating to the
conveyance, transfer, sale, lease or other disposition of "all or substantially
all" of our assets. There is no precise, established definition of the phrase
"substantially all" under New York law, which governs the indenture and the
notes, or under the laws of Texas, our state of incorporation. Accordingly, a
holder's ability to require us to repurchase its notes as a result of a
conveyance, transfer, sale, lease or other disposition of less than all of our
assets may be uncertain.
Pursuant to the indenture, we will:
- comply with the provisions of Rule 13e-4 and Rule 14e-1, if
applicable, under the Exchange Act;
- file a Schedule TO or any successor or similar schedule if
required under the Exchange Act; and
- otherwise comply with all federal and state securities laws in
connection with any offer by us to purchase the notes upon a
designated event.
This designated event purchase feature may make more difficult or
discourage a takeover of us and the removal of incumbent management. However, we
are not aware of any specific effort to accumulate shares of our capital stock
with the intent to obtain control of us by means of a merger, tender offer,
solicitation or otherwise. In addition, the designated event purchase feature is
not part of a plan by management to adopt a series of anti-takeover provisions.
Instead, the designated event purchase feature is a result of negotiations
between us and the initial purchasers.
We could, in the future, enter into certain transactions, including
recapitalizations, that would not constitute a designated event but would
increase the amount of debt outstanding or otherwise adversely affect a holder.
Neither we nor our subsidiaries are prohibited under the indenture from
incurring additional debt. The incurrence of significant amounts of additional
debt could adversely affect our ability to service our debt, including the
notes.
If a designated event were to occur, we may not have sufficient funds
to pay the designated event purchase price for the notes tendered by holders. In
addition, we currently have outstanding indebtedness and we may in the future
incur debt that has similar designated event provisions that permit holders of
this debt to accelerate or require us to purchase this debt upon the occurrence
of events similar to a designated event. Our failure to repurchase the notes
upon a designated event will result in an event of default under the indenture.
CONSOLIDATION, MERGER AND SALES OF ASSETS
The indenture provides that we may not consolidate with or merge into
any other person or convey, transfer, sell, lease or otherwise dispose of all or
substantially all of our properties and assets to another person unless, among
other things:
- the resulting, surviving or transferee person is organized and
existing under the laws of the United States, any state
thereof or the District of Columbia;
35
- such person assumes all of our obligations under the notes and
the indenture under a supplemental indenture in a form
reasonably satisfactory to the trustee;
- we or such successor is not then or immediately thereafter in
default under the indenture; and
- if a supplemental indenture is to be executed in connection
with such consolidation, merger or disposition, we have
delivered to the trustee an officers' certificate and an
opinion of counsel with respect thereto as provided for in the
indenture.
Upon any such consolidation, merger or disposition in accordance with
the foregoing, the successor corporation formed by such consolidation or share
exchange or into which we are merged or which such person formed by such
consolidation or share exchange or to which such conveyance, sale, lease,
transfer or other disposition is made will succeed to, and be substituted for,
and may exercise our right and power, under the indenture with the same effect
as if such successor had been named as us in the indenture, and thereafter
(except in the case of a sale, transfer, lease, conveyance or other disposition)
the predecessor corporation will be relieved of all further obligations and
covenants under the indenture and the notes.
EVENTS OF DEFAULT
Each of the following constitutes an event of default under the
indenture:
- our failure to pay principal amount of the notes when due and
payable, whether at maturity or upon acceleration;
- our failure to pay any accrued unpaid interest, contingent
interest and additional amounts on the notes, if any, when due
and payable, and continuance of such default for a period of
30 days;
- our failure to convert notes upon exercise of a holder's
conversion right in accordance with the terms of the
indenture;
- our failure to redeem notes after we have exercised either our
provisional or optional redemption option;
- our failure to purchase all or any part of the notes in
accordance with the provisions of "-- Purchase of Notes at a
Holder's Option" or "-- Purchase of Notes at a Holder's Option
Upon a Designated Event";
- our failure to provide notice in the event of a designated
event;
- our failure to perform or observe any other term, covenant or
agreement contained in the notes or the indenture for a period
of 30 days after written notice of such failure, provided that
such notice requiring us to remedy the same shall have been
given to us by the trustee or to us and the trustee by the
holders of at least 25% in aggregate principal amount of the
notes then outstanding;
- our default under any credit agreement, mortgage, indenture or
instrument under which there may be issued or by which there
may be secured or evidenced any indebtedness of us or any of
our subsidiaries for money borrowed whether such indebtedness
now exists, or is created after the date of the indenture,
which default:
1. involves the failure to pay the principal of or any premium or
interest on such indebtedness when such indebtedness becomes due and payable at
the stated maturity thereof, and such default continues after any applicable
grace period, or
2. results in the acceleration of such indebtedness prior to its
stated maturity, and
in each case, the principal amount of any such indebtedness, together
with the principal amount of any other such indebtedness so unpaid at its stated
maturity or the stated maturity of which has been so accelerated, aggregates $10
million or more;
36
- there is a failure by us or any of our subsidiaries to pay
final judgments not covered by insurance aggregating in excess
of $5.0 million, which judgments are not paid, discharged or
stayed for a period of 60 days; and
- certain events of bankruptcy, insolvency, liquidation or
similar reorganization with respect to us or any of our
significant subsidiaries.
The indenture provides that the trustee shall, within 90 days of the
occurrence of a default known to the trustee (or within 15 days after it is
known to the trustee, if later), give to the registered holders of the notes
notice of all uncured defaults known to it, but the trustee shall be protected
in withholding such notice if it, in good faith, determines that the withholding
of such notice is in the best interest of such registered holders, except in the
case of a default under the first, second, fourth or fifth bullets above.
If certain events of default specified in the last bullet point above
shall occur with respect to us and be continuing, then automatically the
principal amount of the notes plus accrued and unpaid interest, contingent
interest and additional amounts, if any, through such date shall become
immediately due and payable. If any other event of default shall occur and be
continuing (the default not having been cured or waived as provided under "--
Modification and Waiver" below), the trustee or the holders of at least 25% in
aggregate principal amount of the notes then outstanding may declare the notes
due and payable at the principal amount of the notes plus accrued and unpaid
interest, contingent interest and additional amounts, if any, and thereupon the
trustee may, at its discretion, proceed to protect and enforce the rights of the
holders of notes by appropriate judicial proceedings. Such declaration
accelerating the notes and the amounts due thereunder may be rescinded or
annulled with the written consent of the holders of a majority in aggregate
principal amount of the notes then outstanding upon the conditions provided in
the indenture.
The indenture contains a provision entitling the trustee, subject to
the duty of the trustee during default to act with the required standard of
care, to be indemnified by the holders of notes before proceeding to exercise
any right or power under the indenture at the request of such holders. The
indenture provides that the holders of a majority in aggregate principal amount
of the notes then outstanding, through their written consent, may direct the
time, method and place of conducting any proceeding for any remedy available to
the trustee or exercising any trust or power conferred upon the trustee.
Except with respect to a default in the payment of the principal of,
premium, if any, or any accrued and unpaid interest, contingent interest and
additional amounts, if any, on any note, redemption price or designated event
purchase price of any note, or in respect of a failure to convert any note into
common stock as required, or in respect of a covenant or provision which under
the indenture cannot be modified or amended without the consent of the holder of
each note outstanding, the holders of not less than a majority in aggregate
principal amount of the notes outstanding may on behalf of the holders of all
the notes waive any past default under the indenture and rescind any
acceleration with respect to the notes and its consequences if (1) rescission
would not conflict with any judgment or decree of a court of competent
jurisdiction and (2) all existing events of default, other than the nonpayment
of the principal of and interest on the notes that have become due solely by
such declaration of acceleration, have been cured or waived.
We will be required to furnish annually to the trustee a statement as
to the fulfillment of our obligations under the indenture and as to any default
in the performance of such obligations.
MODIFICATION AND WAIVER
Changes Requiring Approval of Each Affected Holder
The indenture (including the terms and conditions of the notes) cannot
be modified or amended without the written consent or the affirmative vote of
the holder of each note affected by such change (in addition to the written
consent or the affirmative vote of the holders of at least a majority in
aggregate principal amount of the notes at the time outstanding) to:
- change the maturity of any note or the payment date of any
installment of interest, contingent interest or additional
amounts, if any, payable on any notes;
37
- reduce the principal amount, redemption price or purchase
price of, or interest, contingent interest, or additional
amounts, if any, on, any note;
- change the currency of payment of principal, redemption price
or purchase price of, or interest, contingent interest or
additional amounts, if any, on, any note;
- impair or adversely effect the manner of calculation or rate
of accrual of interest or additional amounts, if any, on any
note;
- impair the right to institute suit for the enforcement of any
payment on or with respect to, or conversion of, any note;
- modify our obligation to maintain a paying agent in the city
of New York;
- impair or adversely affect the conversion rights or purchase
rights of any holders of notes;
- modify the redemption provisions of the indenture in a manner
adverse to the holders of notes;
- reduce the percentage in aggregate principal amount of notes
outstanding necessary to modify or amend the indenture; or
- reduce the percentage in aggregate principal amount of notes
outstanding necessary to waive past defaults.
Changes Requiring Majority Approval
The indenture (including the terms and conditions of the notes) may be
modified or amended, subject to the provisions described above, with the written
consent of the holders of at least a majority in aggregate principal amount of
the notes at the time outstanding.
Changes Requiring No Approval
The indenture (including the terms and conditions of the notes) may be
modified or amended by us and the trustee, without the consent of the holder of
any note, to, among other things:
- add to our covenants for the benefit of the holders of notes;
- surrender any right or power conferred upon us;
- provide for conversion rights of holders of notes if any
reclassification or change of our common stock or any
consolidation, merger or sale of all or substantially all of
our assets occurs;
- provide for the assumption of our obligations to the holders
of notes in the case of a merger, consolidation, conveyance,
transfer, sale, lease or other disposition;
- increase the conversion rate, provided that the increase will
not adversely affect the interests of the holders of notes;
- comply with the requirements of the SEC in order to effect or
maintain the qualification of the indenture under the Trust
Indenture Act of 1939, as amended;
- make any changes or modifications necessary in connection with
the registration of the notes under the Securities Act as
contemplated in the registration rights agreement; provided
that such change or modification does not, in the good faith
opinion of our board of directors, adversely affect the
interests of the holders of notes in any material respect;
- cure any ambiguity or correct or supplement any inconsistent
or otherwise defective provision contained in the indenture or
make any other provision with respect to matters or questions
arising
38
under the indenture which we may deem necessary or desirable
and which shall not be inconsistent with provisions of the
indenture; provided that such modification or amendment does
not, in the good faith opinion of our board of directors,
adversely affect the interests of the holders of notes in any
material respect;
- to evidence the succession of another person to us or any
other obligor upon the notes, and the assumption by any such
successor of the covenant of us or such other obligor under
the indenture and in the notes, in each case in compliance
with the provisions of the indenture;
- to evidence and provide the acceptance of the appointment of a
successor trustee under the indenture; or
- add or modify any other provisions with respect to matters or
questions arising under the indenture which we and the trustee
may deem necessary or desirable and which will not adversely
affect the interests of the holders of notes.
The holders of a majority in aggregate principal amount of the notes
outstanding may waive compliance with certain provisions of the indenture
relating to the notes, unless (1) we fail to pay principal or interest,
contingent interest and any other additional amounts, if any, or on any note
when due, (2) we fail to convert any note into common stock as required by the
indenture, or (3) we fail to comply with any of the provisions of the indenture
that would require the consent of the holder of each outstanding note.
Any notes held by us or by any person directly or indirectly
controlling or controlled by or under direct or indirect common control with us
shall be disregarded (from both the numerator and denominator) for purposes of
determining whether the holders of a majority in principal amount of the
outstanding notes have consented to a modification, amendment or waiver of the
terms of the indenture.
REGISTRATION RIGHTS
We and the initial purchasers entered into a registration rights
agreement for the benefit of the holders of the notes. Pursuant to the
registration rights agreement, we will, at our expense use our reasonable best
efforts to keep the shelf registration statement of which this prospectus is a
part effective until the earliest of:
- two years after the last date of original issuance of any of
the notes;
- the date on which the holders of the notes and common stock
issuable upon conversion of the notes are able to sell all
such securities immediately without restriction in accordance
with provisions of Rule 144(k) under the Securities Act;
- the date when all of the notes and common stock issuable upon
conversion of the notes of those holders that complete and
deliver the selling security holder election and questionnaire
described below are registered under the shelf registration
statement of which this prospectus is a part and disposed of
in accordance with such shelf registration statement; and
- the date when all of the notes and common stock issuable upon
conversion of the notes have ceased to be outstanding (whether
as a result of repurchase and cancellation, conversion or
otherwise).
We have filed the registration statement of which this prospectus is a
part to meet our obligations under the registration rights agreement. We
delivered a notice and questionnaire to each holder on October 30, 2003, which
was to be completed and delivered by each holder interested in selling their
notes and conversion shares pursuant to the initial registration statement of
which this prospectus is a part. In order to sell the notes and conversion
shares upon effectiveness of the initial registration statement, of which this
prospectus is a part, a holder must have completed and delivered the
questionnaire to us by the 20th day after receipt of the questionnaire. We
agreed in the registration rights agreement to give notice to all holders of the
filing and effectiveness of the registration statement.
After effectiveness of the initial shelf registration statement, of
which this prospectus is a part, upon our receipt of a completed and signed
election and questionnaire from a holder, we will prepare and file (a) a
prospectus
39
supplement as soon as practicable or (b) if required, a post-effective amendment
to the shelf registration statement, of which this prospectus is a part, or an
additional shelf registration statement as soon as reasonably practicable after
the end of each fiscal quarter. Accordingly, each holder that submits a
completed and signed election and questionnaire after the initial deadline may
be named as a selling security holder in the registration statement of which
this prospectus is a part and may deliver a prospectus in connection with the
resale of such holder's notes or common stock issued upon conversion of the
notes. If a holder does not complete and deliver a questionnaire or provide the
additional information we may reasonably request as a result of an SEC request
or requirement, such holder will not be named as a selling security holder in
the prospectus and will not be permitted to sell its notes and conversion shares
pursuant to the registration statement.
We cannot assure the holders of the notes that we will be able to
maintain an effective and current registration statement as required. The
absence of such a registration statement may limit the holder's ability to sell
such notes and/or shares of common stock issuable upon conversion of such notes
or adversely affect the price at which such securities can be sold.
We will:
- provide to each holder for whom a shelf registration statement
was filed copies of the prospectus that is a part of such
shelf registration statement;
- notify each such holder when a shelf registration statement
has become effective; and
- take certain other actions as are required to permit
unrestricted resales of the notes and common stock issuable
upon conversion of the notes.
Each holder who sells securities pursuant to the shelf registration
statement generally will be:
- required to be named as a selling security holder in the
related prospectus;
- required to deliver a prospectus to the purchaser;
- subject to certain of the civil liability provisions under the
Securities Act in connection with the holder's sales; and
- bound by the provisions of the registration rights agreement
that are applicable to the holder (including certain
indemnification rights and obligations).
We may suspend the holders' use of the prospectus for a period not to
exceed 30 calendar days (subject, in certain circumstances to an extension to 45
days) in any 90 calendar day period, and not to exceed an aggregate of 120
calendar days in any 360 calendar day period, if:
- the prospectus would, in our judgment, contain a material
misstatement or omission as a result of an event that has
occurred and is continuing; and
- we determine in good faith that the disclosure of this
material non-public information would have a material adverse
effect on us and our subsidiaries taken as a whole.
However, if the disclosure relates to a previously undisclosed proposed
or pending material business transaction, the disclosure of which would impede
our ability to consummate such transaction, we may extend the suspension period
from 30 calendar days to 45 calendar days. We need not specify the nature of the
event giving rise to a suspension in any notice to holders of the notes of the
existence of such a suspension.
Upon the resale of notes or common stock issued upon conversion of the
notes, each selling security holder will be required to deliver a notice of such
sale to the trustee and us. The notice will, among other things:
- identify the sale as a transfer pursuant to the shelf
registration statement;
40
- certify that the prospectus delivery requirements, if any, of
the Securities Act have been complied with; and
- certify that the selling security holder and the aggregate
principal amount of the notes and/or number of shares of our
common stock owned by such holder are identified in the
related prospectus in accordance with the applicable rules and
regulations under the Securities Act.
If:
- the initial shelf registration statement, of which this
prospectus is a part, has not been declared effective by the
SEC on or prior to 180 calendar days after October 21, 2003
- the shelf registration statement is filed and declared
effective but thereafter ceases to be effective or usable in
connection with resales of notes and common stock issuable
upon conversion of the notes and we do not cause the shelf
registration statement to become effective or usable within
five business days by filing a post-effective amendment,
prospectus supplement or report pursuant to the Exchange Act;
- if applicable, we do not terminate the suspension period by
the 30th or 45th calendar day, as the case may be, or a
suspension period exceeds an aggregate of 120 calendar days in
any 360 calendar day period; or
- subsequent to the effectiveness of the initial registration
statement, of which this prospectus is a part, we shall fail
to comply with our obligation to name in the prospectus, as a
selling security holder, a holder of notes and common stock
issuable upon conversion of the notes who has returned a
completed and signed election and questionnaire;
each such event referred to in the bullet points above being referred
to as a "registration default," then additional interest will accrue on the
notes from and including the calendar day following the registration default to
but excluding the earlier of (1) the calendar day on which all registration
defaults have been cured and (2) the date of the shelf registration statement is
no longer required to be kept effective. Additional interest will be paid
semi-annually in arrears, with the first semi-annual payment due on the first
interest payment date following the date on which such additional interest
begins to accrue, and will accrue on the notes at a rate per year equal to 0.25%
for the first 90 calendar day period and to 0.50% thereafter of the principal
amount of such notes. If a holder converts some or all of its notes into common
stock during the occurrence of a registration default, the holder will not be
entitled to receive additional interest on such common stock, but will receive
103% of the number of shares of our common stock the holder receives upon
conversion (except to the extent we elect to deliver cash upon conversion).
While holders of notes have the right to specifically enforce our registration
obligations, we will have no other liability for monetary damages with respect
to any of our registration obligations.
FORM, DENOMINATION AND REGISTRATION
Denomination and Registration
The notes are issued in fully registered form, without coupons, in
denominations of $1,000 principal amount and integral multiples thereof.
Global Notes
Notes are evidenced by one or more global notes deposited with the
trustee as custodian for DTC, and registered in the name of Cede & Co. as DTC's
nominee.
Record ownership of the global notes may be transferred, in whole or in
part, only to another nominee of DTC or to a successor of DTC or its nominee,
except as set forth below. A holder may hold its interests in the global notes
directly through DTC if such holder is a participant in DTC, or indirectly
through organizations which are direct DTC participants if such holder is not a
participant in DTC. Transfers between direct DTC participants will be effected
in the ordinary way in accordance with DTC's rules and will be settled in
same-day funds. Holders may also
41
beneficially own interests in the global notes held by DTC through certain
banks, brokers, dealers, trust companies and other parties that clear through or
maintain a custodial relationship with a direct DTC participant, either directly
or indirectly.
So long as Cede & Co., as nominee of DTC, is the registered owner of
the global notes, Cede & Co. for all purposes will be considered the sole holder
of the global notes. Except as provided below, owners of beneficial interests in
the global notes:
- will not be entitled to have certificates registered in their
names;
- will not receive or be entitled to receive physical delivery
of certificates in definitive form; and
- will not be considered holders of the global notes.
The laws of some states require that certain persons take physical
delivery of securities in definitive form. Consequently, the ability of an owner
of a beneficial interest in a global security to transfer the beneficial
interest in the global security to such persons may be limited.
We will wire, through the facilities of the trustee, payments of
principal, accrued interest, contingent interest and additional amounts, if any,
on the global notes to Cede & Co., the nominee of DTC, as the registered owner
of the global notes. None of the Company, the trustee or any paying agent will
have any responsibility or be liable for paying amounts due on the global notes
to owners of beneficial interests in the global notes.
It is DTC's current practice, upon receipt of any payment of principal,
accrued interest, contingent interest and additional amounts, if any, on the
global notes, to credit participants' accounts on the payment date in amounts
proportionate to their respective beneficial interests in the notes represented
by the global notes, as shown on the records of DTC, unless DTC believes that it
will not receive payment on the payment date. Payments by DTC participants to
owners of beneficial interests in notes represented by the global notes held
through DTC participants will be the responsibility of DTC participants, as is
now the case with securities held for the accounts of customers registered in
"street name."
If a holder would like to convert its notes pursuant to the terms of
the notes, the holder should contact its broker or other direct or indirect DTC
participant to obtain information on procedures, including proper forms and
cut-off times, for submitting those requests.
Because DTC can only act on behalf of DTC participants, who in turn act
on behalf of indirect DTC participants and other banks, a holder's ability to
pledge its interest in the notes represented by global notes to persons or
entities that do not participate in the DTC system, or otherwise take actions in
respect of such interest, may be affected by the lack of a physical certificate.
DTC has advised us that it will take any action permitted to be taken
by a holder of notes, including, without limitation, the presentation of notes
for conversion as described below, only at the direction of one or more direct
DTC participants to whose account with DTC interests in the global notes are
credited and only for the principal amount of the notes for which directions
have been given.
DTC has advised us that DTC is:
- a limited purpose trust company organized under the laws of
the State of New York;
- a member of the Federal Reserve System;
- a "clearing corporation" within the meaning of the Uniform
Commercial Code; and
- a "clearing agency" registered pursuant to the provisions of
Section 17A of the Exchange Act.
DTC was created to hold securities for DTC participants and to
facilitate the clearance and settlement of securities transactions between DTC
participants through electronic book-entry changes to the accounts of its
participants, thereby eliminating the need for physical movement of
certificates. Participants include securities
42
brokers and dealers, banks, trust companies and clearing corporations and may
include certain other organizations, such as the initial purchasers of the
notes. Certain DTC participants or their representatives, together with other
entities, own DTC. Indirect access to the DTC system is available to others such
as banks, brokers, dealers and trust companies that clear through, or maintain a
custodial relationship with, a participant, either directly or indirectly.
Although DTC has agreed to the foregoing procedures in order to
facilitate transfers of interests in the global notes among DTC participants, it
is under no obligation to perform or continue to perform such procedures, and
such procedures may be discontinued at any time. If (a) DTC is at any time
unwilling or unable to continue as depositary or if at any time ceases to be a
"clearing agency" registered under the Exchange Act and a successor depositary
is not appointed by us within 90 days or (b) an event of default under the
indenture occurs and is continuing and the registrar has received a request from
DTC that the notes be issued in definitive registered form, we will cause notes
to be issued in definitive registered form in exchange for the global notes.
None of The Men's Wearhouse, the trustee or any of their respective agents will
have any responsibility for the performance by DTC or direct or indirect DTC
participants of their obligations under the rules and procedures governing their
operations, including maintaining, supervising or reviewing the records relating
to or payments made on account of beneficial ownership interests in global
notes.
According to DTC, the foregoing information with respect to DTC has
been provided to its participants and other members of the financial community
for information purposes only and is not intended to serve as a representation,
warranty or contract modification of any kind.
Transfer and Exchange
A holder may transfer or exchange the notes in accordance with the
indenture. No service charge will be made for any registration of transfer or
exchange of notes, but we may require payment of a sum sufficient to cover any
tax, assessment or other governmental charge payable in connection therewith. We
are not required to transfer or exchange any note in respect of which a
designated event purchase notice has been given and not withdrawn by the holder
thereof.
SATISFACTION AND DISCHARGE
We may satisfy and discharge our obligations under the indenture by
delivering to the trustee for cancellation all outstanding notes or by
depositing with the paying agent or the conversion agent, as the case may be,
after the notes have become due and payable, whether at maturity, any redemption
date, any purchase date, or upon conversion or otherwise, cash or common stock
(as applicable under the terms of the indenture) sufficient to pay all of the
outstanding notes and paying all other sums payable under the indenture. Such
discharge is subject to terms contained in the indenture.
GOVERNING LAW
The indenture and the notes are governed by, and construed in
accordance with, the laws of the State of New York.
TRUSTEE, TRANSFER AGENT AND REGISTRAR
JPMorgan Chase Bank, as trustee, has been appointed by us as paying
agent, conversion agent, bid solicitation agent, registrar and custodian with
regard to the notes. JPMorgan Chase Bank or its affiliates may from time to time
in the future provide banking and other services to us in exchange for a fee.
American Stock Transfer & Trust Company is the transfer agent and
registrar for our common stock.
CALCULATIONS IN RESPECT OF NOTES
We or our agents are responsible for making all calculations called for
under the notes. These calculations include, but are not limited to,
determination of the market price of our common stock. We or our agents will
make all these calculations in good faith and, absent manifest error, our and
their calculations will be final and binding on
43
holders of notes. We or our agents will provide a schedule of these calculations
to the trustee, and the trustee is entitled to conclusively rely upon the
accuracy of these calculations without independent verification.
REPURCHASE AND CANCELLATION OF NOTES
We may, to the extent permitted by law, repurchase notes in the open
market or by tender offer at any price or by private agreement. Any notes
purchased by us, to the extent permitted by law, may be reissued or resold or
may, at our option, be surrendered to the trustee for cancellation. Any notes
surrendered for cancellation may not be reissued or resold and will be promptly
cancelled.
All notes surrendered for payment, redemption, registration of transfer
or exchange or conversion shall, if surrendered to any person other than the
trustee, be delivered to the trustee. All notes delivered to the trustee shall
be cancelled promptly by the trustee. No notes shall be authenticated in
exchange for any notes cancelled as provided in the indenture.
REPLACEMENT OF NOTES
We will replace mutilated, destroyed, stolen or lost notes at expense
of the holder upon delivery to the trustee of the mutilated notes, or evidence
of the loss, theft or destruction of the notes satisfactory to us and the
trustee. In the case of a lost, stolen or destroyed note, indemnity satisfactory
to the trustee and us may be required at the expense of the holder of such note
before a replacement note will be issued.
44
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 100,000,000 shares of common
stock, par value $.01 per share, and 2,000,000 shares of preferred stock, par
value $.01 per share. As of January 31, 2004, there were 36,075,392 shares of
our common stock outstanding.
COMMON STOCK
Holders of shares of Common Stock are entitled to one vote per share in
the election of directors and on all other matters submitted to a vote of
shareholders. Such holders do not have the right to cumulate their votes in the
election of directors. Holders of Common Stock have no redemption or conversion
rights and no preemptive or other rights to subscribe for securities of the
Company. In the event of a liquidation, dissolution or winding up of the
Company, holders of Common Stock are entitled to share equally and ratably in
all of the assets remaining, if any, after satisfaction of all debts and
liabilities of the Company, and the preferential rights of any series of
Preferred Stock then outstanding. The shares of Common Stock outstanding are
fully paid and non-assessable.
Holders of Common Stock have an equal and ratable right to receive
dividends, when, as and if declared by the board of directors out of funds
legally available therefor and only after payment of, or provision for, full
dividends on all outstanding shares of any series of Preferred Stock and after
the Company has made provision for any required sinking or purchase funds for
any series of Preferred Stock. Our Credit Agreement prohibits the payment of
cash dividends on the Common Stock.
PREFERRED STOCK
The Preferred Stock may be issued, from time to time in one or more
series, and the board of directors, without further approval of the
shareholders, is authorized to fix the dividend rights and terms, redemption
rights and terms, liquidation preferences, conversion rights, voting rights and
sinking fund provisions applicable to each such series of Preferred Stock. If
the Company issues a series of Preferred Stock in the future that has voting
rights or preference over the Common Stock with respect to the payment of
dividends and upon the Company's liquidation, dissolution or winding up, the
rights of the holders of Common Stock offered hereby may be adversely affected.
The issuance of shares of Preferred Stock could be utilized, under
certain circumstances, in an attempt to prevent an acquisition of the Company.
We have no present intention to issue any shares of Preferred Stock.
LIMITATION OF DIRECTOR LIABILITY
The Restated Articles of Incorporation of the Company contain a
provision that limits the liability of the Company's directors as permitted
under Texas law. The provision eliminates the liability of a director to the
Company or its shareholders for monetary damages for negligent or grossly
negligent acts or omissions in the director's capacity as a director. The
provision does not affect the liability of a director (i) for breach of his duty
of loyalty to the Company or to its shareholders, (ii) for acts or omissions not
in good faith or that involve intentional misconduct or a knowing violation of
law, (iii) for acts or omissions for which the liability of a director is
expressly provided by an applicable statute, or (iv) in respect of any
transaction from which a director received an improper personal benefit.
Pursuant to the Restated Articles of Incorporation, the liability of
directors will be further limited or eliminated without action by shareholders
if Texas law is amended to further limit or eliminate the personal liability of
directors.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is American Stock
Transfer & Trust Company.
MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following discussion describes the material U.S. federal income tax
considerations relevant to persons holding the notes and our common stock into
which the notes may be converted. This discussion applies only to
45
holders holding the notes and our common stock as capital assets. This
discussion does not describe all of the tax considerations that may be relevant
to a holder in light of its particular circumstances or to holders subject to
special rules, such as:
- certain financial institutions;
- insurance companies;
- tax-exempt organizations;
- dealers and certain traders in securities;
- persons holding the notes or our common stock as part of a
"straddle", "hedge", "conversion" or similar transaction;
- United States Holders (as defined below) whose functional
currency is not the U.S. dollar;
- certain former citizens or residents of the United States;
- partnerships or other entities classified as partnerships for
U.S. federal income tax purposes; and
- persons subject to the alternative minimum tax.
This discussion is based on the Internal Revenue Code of 1986, as
amended (the "Code"), administrative pronouncements, judicial decisions and
final, temporary and proposed Treasury regulations, changes to any of which
subsequent to the date of this prospectus may affect the tax consequences
described herein, possibly with retroactive effect. This discussion does not
describe any tax consequences arising out of the tax laws of any state, local or
foreign jurisdiction, or any possible applicability of the U.S. federal gift or
estate tax laws.
THIS DISCUSSION IS PROVIDED FOR GENERAL INFORMATION ONLY AND DOES NOT
CONSTITUTE LEGAL ADVICE TO ANY HOLDER. HOLDERS OF THE NOTES ARE URGED TO CONSULT
THEIR TAX ADVISERS WITH REGARD TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX
LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES ARISING
UNDER THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION.
CLASSIFICATION OF THE NOTES
The notes will be treated as indebtedness for U.S. federal income tax
purposes. Under the indenture governing the notes, we agreed, and by acceptance
of a beneficial interest in a note, each holder of a note has been deemed to
have agreed, to treat the notes as indebtedness for U.S. federal income tax
purposes that is subject to the Treasury regulations governing contingent
payment debt instruments (the "contingent payment debt regulations"). Pursuant
to the terms of the indenture, we and every holder have agreed (in the absence
of an administrative determination or judicial ruling to the contrary) to be
bound by our application of the contingent payment debt regulations to the
notes, including our determination of the projected payment schedule (as
described below) and the rate at which interest will be deemed to accrue on the
notes for U.S. federal income tax purposes.
The IRS has issued a ruling addressing the U.S. federal income tax
classification and treatment of instruments similar, although not identical, to
the notes, and concluded that the instruments addressed in that published
guidance were subject to the contingent payment debt regulations. In addition,
the IRS clarified various aspects of the potential applicability of certain
other provisions of the Code to the instruments addressed in that published
guidance. However, the ruling is limited to its particular facts, and, the
proper application of the contingent payment debt regulations to the notes is
uncertain in a number of respects, and no assurance can be given that the IRS
will not assert that the notes should be treated differently. A different
treatment of the notes could significantly affect the amount, timing and
character of income, gain or loss with respect to an investment in the notes.
Accordingly, holders are urged to consult their tax advisers regarding the U.S.
federal income tax consequences of holding the notes as well as with respect to
any tax consequences arising under the laws of any state, local or foreign
taxing jurisdiction, and the possible effects of changes in tax laws.
46
The remainder of this discussion assumes that the notes will be treated
as indebtedness subject to the contingent payment debt regulations as described
above.
TAX CONSEQUENCES TO UNITED STATES HOLDERS
As used herein, the term "United States Holder" means a beneficial
owner of a note or our common stock that is for U.S. federal income tax
purposes:
- a citizen or resident of the United States;
- a corporation, or other entity taxable as a corporation for
U.S. federal income tax purposes, created or organized in or
under the laws of the United States or of any political
subdivision thereof;
- an estate, the income of which is includable in gross income
for U.S. federal income tax purposes regardless of its source;
or
- a trust if a U.S. court is able to exercise primary
supervision over administration of the trust and one or more
U.S. persons have the authority to control all substantial
decisions of the trust.
Interest Accruals on the Notes
Under the contingent payment debt regulations, a United States Holder,
regardless of its method of accounting for U.S. federal income tax purposes,
will be required to accrue interest income on the notes on a constant yield
basis at an assumed yield (the "comparable yield") determined at the time of
issuance of the notes. Accordingly, United States Holders generally will be
required to include interest in income, in each year prior to maturity, in
excess of the interest payments on the notes. The comparable yield for the notes
is based on the yield at which we would have issued, as of the issue date, a
nonconvertible fixed rate debt instrument with no contingent payments, but with
terms and conditions otherwise similar to those of the notes. We have determined
the comparable yield to be 8.0%, compounded semi-annually.
Solely for purposes of determining the amount of interest income that a
United States Holder will be required to accrue, we have constructed a
"projected payment schedule" in respect of the notes representing a series of
payments the amount and timing of which would produce a yield to maturity on the
notes equal to the comparable yield. The projected payment schedule includes
estimates for certain payments of contingent interest and an estimate for a
payment at maturity, taking into account the conversion feature. Holders that
wish to obtain the projected payment schedule may do so by submitting a written
request for such information to The Men's Wearhouse, Inc., 5803 Glenmont Drive,
Houston, Texas 77081, Attention: Claudia A. Pruitt.
NEITHER THE COMPARABLE YIELD NOR THE PROJECTED PAYMENT SCHEDULE
CONSTITUTES A PROJECTION OR REPRESENTATION BY US REGARDING THE ACTUAL AMOUNT
THAT WILL BE PAID ON THE NOTES, OR THE VALUE AT ANY TIME OF THE COMMON STOCK
INTO WHICH THE NOTES MAY BE CONVERTED. For U.S. federal income tax purposes, a
United States Holder is required under the contingent payment debt regulations
to use the comparable yield and the projected payment schedule established by us
in determining interest accruals and adjustments in respect of a note, unless
such United States Holder timely discloses and justifies the use of a different
comparable yield and projected payment schedule to the IRS. Pursuant to the
terms of the indenture, we and every United States Holder have agreed (in the
absence of an administrative determination or judicial ruling to the contrary)
to be bound by our determination of the comparable yield and projected payment
schedule.
It is possible that the IRS could challenge the specific yield and
projected payment schedule. The yield, if redetermined as a result of such a
challenge, could be greater or less than the comparable yield provided by us,
and the projected payment schedule could differ materially from the projected
payment schedule we have provided. In such case, the taxable income of a holder
arising from the ownership, sale, exchange, conversion, redemption or retirement
of a note could be increased or decreased.
Based on the comparable yield and the issue price of the notes, a
United States Holder of a note (regardless of its accounting method) will be
required to accrue interest as the sum of the daily portions of interest on the
notes for each day in the taxable year on which the United States Holder holds
the note, adjusted upward or downward to
47
reflect the difference, if any, between the actual and projected amount of any
contingent payments on the notes (as set forth below). The issue price of the
notes is the first price at which a substantial amount of the notes were sold to
the public, excluding sales to bond houses, brokers or similar persons or
organizations acting in the capacity as underwriters, placement agents or
wholesalers (the "issue price").
The daily portions of interest in respect of a note are determined by
allocating to each day in an accrual period the ratable portion of interest on
the note that accrues in the accrual period. The amount of interest on a note
that accrues in an accrual period is the product of the comparable yield on the
note (adjusted to reflect the length of the accrual period) and the adjusted
issue price of the note as of the beginning of the accrual period. The adjusted
issue price of a note at the beginning of the first accrual period will equal
its issue price and for any accrual periods thereafter will be (x) the sum of
the issue price of such note and any interest previously accrued thereon
(disregarding any positive or negative adjustments described below) minus (y)
the amount of any projected payments on the notes for previous accrual periods.
In addition to the interest accrual discussed above, a United States
Holder will be required to recognize interest income equal to the amount of the
excess of actual payments over projected payments (a "positive adjustment") in
respect of a note for a taxable year. For this purpose, the payments in a
taxable year include the fair market value of property (including our common
stock) received in that year. If a United States Holder receives actual payments
that are less than the projected payments in respect of a note for a taxable
year, the United States Holder will incur a "negative adjustment" equal to the
amount of such difference. This negative adjustment will (i) first reduce the
amount of interest in respect of the note that a United States Holder would
otherwise be required to include in income in the taxable year and (ii) to the
extent of any excess, give rise to an ordinary loss equal to that portion of
such excess that does not exceed the excess of (A) the amount of all previous
interest inclusions under the note over (B) the total amount of the United
States Holder's net negative adjustments treated as ordinary loss on the note in
prior taxable years. A net negative adjustment is not subject to the two percent
floor limitation imposed on miscellaneous deductions under Section 67 of the
Code. Any negative adjustment in excess of the amounts described in (i) and (ii)
will be carried forward to offset future interest income in respect of the notes
or, if there is a negative adjustment carryforward on the note in a taxable year
in which the note is sold, converted, exchanged, redeemed or retired, to reduce
the amount realized on a sale, conversion, exchange, redemption or retirement of
the notes.
Amounts treated as interest under the contingent payment debt
regulations are treated as original issue discount for all purposes of the Code.
Purchases of Notes at a Price other than the Adjusted Issue Price
If a United States Holder purchases a note for an amount that differs
from the adjusted issue price of the notes at the time of the purchase, such
holder will be required to accrue interest income on the note in accordance with
the projected payment schedule based on the comparable yield even if market
conditions have changed since the date of issuance. The normal rules for
accruing bond premium, acquisition premium and market discount will not apply;
instead, a United States Holder must reasonably determine whether the difference
between the purchase price for a note and the adjusted issue price of such note
is attributable to a change in expectations as to the contingent amounts
potentially payable in respect of the notes, a change in interest rates since
the notes were issued, or both, and allocate reasonably the difference according
to such determination. To the extent that the difference between purchase price
and adjusted issue price is attributable to a change in interest rates, it must
be allocated reasonably to the daily portions of interest over the remaining
term of the notes. To the extent that such difference is attributable to a
change in expectations as to the contingent amounts payable in respect of the
notes, it must be allocated reasonably to the contingent payments based on the
projected payment schedule.
If the purchase price of a note is less than its adjusted issue price,
the amount of the difference is treated as a positive adjustment on the date the
daily portion of interest accrues or the contingent payment is made (depending
on how such difference was allocated, as discussed in the preceding paragraph).
This positive adjustment will increase (a) the amount of interest (including
with respect to contingent payments) that the United States Holder otherwise
would accrue and include in income each year or (b) the amount of ordinary
income (or decrease the amount of ordinary loss) recognized upon redemption or
maturity, or both. If the purchase price of a note is more than its adjusted
issue price, the amount of the difference is treated as a negative adjustment on
the date the daily portion of interest accrues or the contingent payment is made
(depending on how such difference was allocated, as
48
discussed above). This negative adjustment will decrease (a) the amount of
interest (including with respect to contingent payments) that the United States
Holder must include in income each year or (b) the amount of ordinary income (or
increase the amount of ordinary loss) recognized upon redemption or maturity, or
both. Any positive or negative adjustment that a United States Holder is
required to make during its holding period as a result of purchasing a note at a
price other than the note's adjusted issue price will increase or decrease,
respectively, such holder's tax basis in the note.
Certain United States Holders will receive Form 1099-OID reporting
interest accruals on their notes. Those forms will not, however, reflect the
effect of any positive or negative adjustments resulting from a United States
Holder's purchase of a note at a price that differs from its adjusted issue
price on the date of purchase.
UNITED STATES HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS AS TO
WHETHER, AND HOW, THE ADJUSTMENTS SHOULD BE MADE TO THE AMOUNTS REPORTED ON ANY
FORM 1099-OID.
Sale, Conversion, Exchange, Redemption or Retirement of the Notes
Upon a sale, conversion, exchange, redemption or retirement of a note
for cash or our common stock, a United States Holder will generally recognize
gain or loss equal to the difference between the amount realized on the sale,
conversion, exchange, redemption or retirement (including the fair market value
of our common stock received, if any) and such United States Holder's adjusted
tax basis in the note. A United States Holder's adjusted tax basis in a note
will generally be equal to the United States Holder's purchase price for the
note, increased by any interest income previously accrued by the United Stated
Holder (determined without regard to any positive or negative adjustments to
interest accruals described above) and decreased by the amount of any projected
payments previously made on the notes to the United States Holder. A United
States Holder generally will treat any gain as interest income and any loss as
ordinary loss to the extent of the excess of previous interest inclusions over
the total negative adjustments previously taken into account as ordinary loss,
and the balance as capital loss. The deductibility of capital losses is subject
to limitations. A United States Holder who sells the notes at a loss that meets
certain thresholds may be required to file a disclosure statement with the IRS
under recently promulgated Treasury regulations.
A United States Holder's tax basis in our common stock received upon a
conversion of a note will equal the then current fair market value of such
common stock. The United States Holder's holding period for the common stock
received will commence on the day immediately following the date of conversion.
Constructive Dividends
If at any time we increase the conversion rate, either at our
discretion or pursuant to the anti-dilution provisions, the increase may be
deemed to be the payment of a taxable dividend to the United States Holders of
the notes.
Generally, a reasonable increase in the conversion rate in the event of
stock dividends or distributions of rights to subscribe for our common stock
will not be a taxable dividend.
Taxation of Distributions on Common Stock
Distributions paid on our common stock received upon conversion of a
note, other than certain pro rata distributions of common shares, will be
treated as a dividend to the extent paid out of current or accumulated earnings
and profits (as determined under U.S. federal income tax principles) and will be
includible in income by the United States Holder and taxable as ordinary income
when received. If a distribution exceeds our current and accumulated earnings
and profits, the excess will be first treated as a tax-free return of the United
States Holder's investment, up to the United States Holder's tax basis in the
common stock. Any remaining excess will be treated as a capital gain. Under
recently enacted legislation, dividends received by noncorporate United States
Holders on common stock may be subject to U.S. federal income tax at lower rates
than other types of ordinary income if certain conditions are met. United States
Holders should consult their own tax advisers regarding the implications of this
new legislation in their particular circumstances.
49
Sale or Other Disposition of Common Stock
Gain or loss realized by a United States Holder on the sale or other
disposition of our common stock received upon conversion of a note will be
capital gain or loss for U.S. federal income tax purposes, and will be long-term
capital gain or loss if the United States Holder held the common stock for more
than one year. The amount of the United States Holder's gain or loss will be
equal to the difference between the United States Holder's tax basis in the
common stock disposed of and the amount realized on the disposition. A United
States Holder who sells the stock at a loss that meets certain thresholds may be
required to file a disclosure statement with the IRS under recently promulgated
Treasury regulations.
TAX CONSEQUENCES TO NON-UNITED STATES HOLDERS
As used herein, the term "Non-United States Holder" means a beneficial
owner of a note or our common stock that is, for U.S. federal income tax
purposes:
- an individual who is classified as a nonresident alien for
U.S. federal income tax purposes;
- a foreign corporation; or
- a foreign estate or trust.
Payments on Notes
All payments on the notes made to a Non-United States Holder, including
a payment in our common stock or cash pursuant to a conversion, exchange,
redemption or retirement and any gain realized on a sale of the notes, will be
exempt from U.S. federal income and withholding tax, provided that:
- the Non-United States Holder does not own, actually or
constructively, 10% or more of the total combined voting power
of all classes of our stock entitled to vote and is not a
controlled foreign corporation related, directly or
indirectly, to us through stock ownership and is not a bank
receiving certain types of interest;
- the certification requirement described below has been
fulfilled, prior to payment, with respect to the Non-United
States Holder;
- such payments are not effectively connected with the conduct
by such Non-United States Holder of a trade or business in the
United States; and
- in the case of gain realized on the sale, conversion,
exchange, redemption or retirement of the notes we are not,
and have not been within the shorter of the five-year period
preceding such sale, conversion, exchange, redemption or
retirement and the period the Non-United States Holder held
the notes, a U.S. real property holding corporation. We
believe that we are not, and do not anticipate becoming, a
U.S. real property holding corporation for U.S. federal income
tax purposes.
However, if a Non-United States Holder were deemed to have received a
constructive dividend (see "-- Tax Consequences to United States Holders --
Constructive Dividends" above), the Non-United States Holder generally will be
subject to United States withholding tax at a 30% rate, subject to reduction by
an applicable treaty, on the taxable amount of the dividend. A Non-United States
Holder who is subject to withholding tax under such circumstances should consult
his own tax adviser as to whether it can obtain a refund for all or a portion of
the withholding tax.
The certification requirement referred to above will be fulfilled if,
prior to payment, the beneficial owner of a note certifies on IRS Form W-8BEN,
under penalties of perjury, that it is not a U.S. person and provides its name
and address.
If a Non-United States Holder of a note is engaged in a trade or
business in the United States, and if payments on the note are effectively
connected with the conduct of this trade or business, the Non-United States
50
Holder, although exempt from U.S. withholding tax, will generally be taxed in
the same manner as a United States Holder (see "Tax Consequences to United
States Holders" above), except that the Non-United States Holder will be
required to provide a properly executed IRS Form W-8ECI in order to claim an
exemption from withholding tax. These Non-United States Holders should consult
their own tax advisers with respect to other tax consequences of the ownership
of the notes, including the possible imposition of a 30% branch profits tax.
Distributions on Common Stock
Dividends paid to a Non-United States Holder of our common stock
generally will be subject to U.S. withholding tax at a 30% rate, subject to
reduction under an applicable treaty. In order to obtain a reduced rate of
withholding, a Non-United States Holder will be required to provide a properly
executed IRS Form W-8BEN certifying its entitlement to benefits under a treaty.
A Non-United States Holder who is subject to withholding tax under such
circumstances should consult his own tax adviser as to whether he can obtain a
refund for all or a portion of the withholding tax.
If a Non-United States Holder of our common stock is engaged in a trade
or business in the United States, and if the dividends are effectively connected
with the conduct of this trade or business, the Non-United States Holder,
although exempt from U.S. withholding tax, will generally be taxed in the same
manner as a United States Holder (see "-- Tax Consequences to United States
Holders" above), except that the Non-United States Holder will be required to
provide a properly executed IRS Form W-8ECI in order to claim an exemption from
withholding tax. These Non-United States Holders should consult their own tax
advisers with respect to other tax consequences of the ownership of our common
stock, including the possible imposition of a 30% branch profits tax.
Sale or Other Disposition of Common Stock
A Non-United States Holder generally will not be subject to U.S.
federal income and withholding tax on gain realized on a sale or other
disposition of the common stock received upon a conversion of a note, unless:
- the gain is effectively connected with the conduct by such
Non-United States Holder of a trade or business in the United
States;
- in the case of a Non-United States Holder who is a nonresident
alien individual, the individual is present in the United
States for 183 or more days in the taxable year of the
disposition and certain other conditions are met; or
- we are or have been a U.S. real property holding corporation
at any time within the shorter of the five-year period
preceding such sale, exchange or disposition and the period
the Non-United States Holder held the common stock. We believe
that we are not, and do not anticipate becoming, a U.S. real
property holding corporation for United States federal income
tax purposes.
If a Non-United States Holder of our common stock is engaged in a trade
or business in the United States, and if the gain on the common stock is
effectively connected with the conduct of this trade or business, the Non-United
States Holder will generally be taxed in the same manner as a United States
Holder (see "-- Tax Consequences to United States Holders" above). These
Non-United States Holders should consult their own tax advisers with respect to
other tax consequences of the disposition of the common stock, including the
possible imposition of a 30% branch profits tax.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Information returns may be filed with the IRS in connection with
payments on the notes, the common stock and the proceeds from a sale or other
disposition of the notes or the common stock. In addition, copies of these
information returns also may be made available under the provisions of a
specific treaty or other agreement to the tax authorities of the country in
which the Non-United States Holder resides. A United States Holder may be
subject to United States backup withholding tax on these payments if it fails to
provide its taxpayer identification number to the paying agent and comply with
certification procedures or otherwise establish an exemption from backup
withholding. A Non-United States Holder may be subject to United States backup
withholding tax on these payments unless the Non-United States Holder complies
with certification procedures to establish that it is not a
51
U.S. person. The certification procedures required of Non-United States Holders
to claim the exemption from withholding tax on certain payments on the notes,
described above, will satisfy the certification requirements necessary to avoid
the backup withholding tax as well. The amount of any backup withholding from a
payment will be allowed as a credit against the holder's U.S. federal income tax
liability and may entitle the holder to a refund, provided that the required
information is timely furnished to the IRS.
CERTAIN ERISA CONSIDERATIONS
The following is a summary of certain considerations associated with
the purchase, ownership and disposition of the notes by employee benefit plans
that are subject to Title I of the U.S. Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), plans (including individual retirement accounts)
that are subject to Section 4975 of the Code, and entities whose underlying
assets are considered to include "plan assets" of such plans (each, a "plan").
GENERAL FIDUCIARY MATTERS
ERISA imposes certain duties on persons who are fiduciaries of a plan
subject to Title I of ERISA (an "ERISA plan"). Under ERISA, any person who
exercises any authority or control over the management or disposition of the
assets of an ERISA plan, or who renders investment advice for a fee or other
compensation to such ERISA plan, is generally considered to be a fiduciary of
such ERISA plan.
In considering the purchase of notes to be held as the assets of any
plan, a fiduciary should determine whether the investment in the notes is in
accordance with the documents and instruments governing the plan and the
applicable provisions of ERISA, including, without limitation, the prudence,
diversification, delegation of control and prohibited transaction provisions of
ERISA.
PROHIBITED TRANSACTION ISSUES
Section 406 of ERISA and Section 4975 of the Code prohibit plans from
engaging in specified transactions involving plan assets with persons who are
"parties in interest," within the meaning of ERISA or "disqualified persons,"
within the meaning of Section 4975 of the Code, unless an exemption is
available. A disqualified person that engages in a non-exempt prohibited
transaction may be subject to excise taxes and other penalties and liabilities
under Section 4975 of the Code, and the fiduciary of the ERISA plan that engages
in a non-exempt prohibited transaction may be subject to penalties and
liabilities under ERISA.
Whether or not any of our underlying assets are deemed to be "plan
assets," as described below, the purchase and holding of the notes by an ERISA
plan with respect to which we or the initial purchasers are considered a party
in interest or a disqualified person may constitute or result in a direct or
indirect prohibited transaction under Section 406 of ERISA and/or Section 4975
of the Code, unless the notes are acquired and held in accordance with an
applicable statutory, class or individual prohibited transaction exemption. In
this regard, the U.S. Department of Labor (the "DOL") has issued prohibited
transaction class exemptions, or "PTCEs," that may apply to the purchase and
holding of the notes. These class exemptions include, without limitation, PTCE
91-38 regarding bank collective investment funds, PTCE 90-1 regarding insurance
company pooled separate accounts, PTCE 84-14 regarding transactions determined
by independent qualified professional asset managers, PTCE 95-60 regarding life
insurance company general accounts and PTCE 96-23 regarding transactions
determined by in-house asset managers. There can be no assurance that all of the
conditions of any such exemptions will be satisfied.
Under a "look-through" rule set forth in the Department of Labor's plan
asset regulations (29 C.F.R. 2510.3-101), a pro rata portion of the assets of an
entity will be treated as "plan assets" of any plan that acquires an equity
interest in such entity unless an exception applies. Such look-through rule does
not apply to "operating companies" or "publicly offered securities," in each
case as described in such plan asset regulations, and the issuer believes it
presently qualifies as an "operating company" and its outstanding shares of
common stock currently qualify as "publicly offered securities." The issuer
expects to continue to qualify as an operating company and its common stock to
qualify as publicly offered securities, but no assurances can be provided that
the issuer or its common stock will be able to so qualify at all times in the
future. Fiduciaries and other persons considering the
52
purchase of notes with the assets of any plans should consider the risks that
the issuer will not be able to continue to qualify as an operating company or
its common stock as publicly offered securities.
In addition, the issuer is a party in interest and disqualified person
with respect to plans directly covering employees of the issuer or any
subsidiary thereof, but the issuer is not aware that it provides services to or
is otherwise a "party in interest" or "disqualified person" with respect to any
other plans. However, the issuer does not monitor whether the persons to which
it provides services are plans, and accordingly there are no assurances that the
issuer might not be a party in interest or disqualified person subject to the
prohibited transaction provisions of ERISA or Section 4975 of the Code with
respect to any plans besides those plans directly covering its own employees.
Fiduciaries and other persons considering the purchase of notes with the assets
of any plan should determine whether the issuer is or is likely to become a
party in interest or disqualified person with respect to such plan.
It is anticipated that the issuer will qualify as an "operating
company" and/or the common stock issuable upon conversion of the notes will
constitute "publicly offered securities," each within the meaning of the plan
asset regulations, although no assurances can be given in this regard.
PLAN ASSET CONSEQUENCES
If our assets were deemed to be "plan assets" under ERISA, this would
result, among other things, in (i) the application of the prudence and other
fiduciary responsibility standards of ERISA to investments made by us, and (ii)
the possibility that certain transactions in which we might engage would
constitute "prohibited transactions" under ERISA and Section 4975 of the Code.
REPRESENTATION
Accordingly, by acceptance of the notes (or any interest therein) or
the common stock issuable upon conversion of the notes (or any interest
therein), each purchaser and subsequent transferee of the notes will be deemed
to have represented and warranted either that (i) for the entire period during
which such purchaser or transferee holds its interest in the notes, or the
common stock issuable upon conversion of the notes, no portion of the assets
used by such purchaser or transferee to acquire and hold its interest in the
notes or common stock issuable upon conversion of the notes constitute assets of
any plan or (ii) the acquisition and holding of the notes (or any interest
therein) or the common stock issuable upon conversion of the notes (or any
interest therein) by such purchaser or transferee will not constitute a non-
exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the
Code or a violation of any applicable similar laws.
The foregoing discussion is general in nature and is not intended to be
all-inclusive. Due to the complexity of these rules and the penalties that may
be imposed upon persons involved in non-exempt prohibited transactions, it is
particularly important that fiduciaries, or other persons considering purchasing
notes or common stock issuable upon conversion of the notes on behalf of, or
with the assets of, any plan, consult with their counsel to determine whether
such plan is subject to Title I of ERISA, Section 4975 of the Code or any
similar laws.
GOVERNMENTAL AND CHURCH PLANS
Governmental plans, some church plans and non-U.S. plans, while not
subject to the fiduciary responsibility or prohibited transaction provisions of
ERISA or Section 4975 of the Code, may be subject to federal, state or other
laws that are very similar to such provisions of ERISA and the Code. If you are
a fiduciary of a governmental plan, church plan or non-U.S. plan, you should
consult with counsel before purchasing any notes.
53
PLAN OF DISTRIBUTION
The securities to be offered and sold using this prospectus are being
registered to permit public secondary trading of these securities by the selling
security holders from time to time after the date of this prospectus. We will
not receive any of the proceeds from the sale by the selling security holders of
the securities offered by this prospectus. The aggregate proceeds to the selling
security holders from the sale of the notes or the common stock issuable upon
conversion of the notes will be the purchase price of the notes or the common
stock issuable upon conversion of the notes less any discounts and commissions.
A selling security holder reserves the right to accept and, together with its
agents, to reject, any proposed purchases of notes or common stock to be made
directly or through agents.
The notes and the common stock issuable upon conversion of the notes
may be sold from time to time to purchasers directly by the selling security
holders and their successors, which includes their transferees, pledges or
donees or their successors, or through underwriters, broker-dealers or agents
who may receive compensation in the form of discounts, concessions or
commissions from the selling security holders or the purchasers of the notes and
the common stock issuable upon conversion of the notes. These discounts,
concessions or commissions may be in excess of those customary in the types of
transactions involved.
The selling security holders and any underwriters, broker-dealers or
agents who participate in the distribution of the notes and the common stock
issuable upon conversion of the notes may be deemed to be "underwriters" within
the meaning of the Securities Act of 1933, as amended. As a result, any profits
on the sale of the notes and the common stock issuable upon the conversion of
the notes by selling security holders and any discounts, commissions or
concessions received by any such broker-dealers or agents may be deemed to be
underwriting discounts and "underwriters" within the meaning of the Securities
Act will be subject to prospectus delivery requirements of the Securities Act.
If the selling security holders were deemed to be underwriters, the selling
security holders may be subject to certain statutory liabilities of the
Securities Act and the Securities Exchange Act of 1934, as amended. If the notes
and the common stock issuable upon conversion of the notes are sold through
underwriters, broker-dealers or agents the selling security holders will be
responsible for underwriting discounts or commissions or agent's commissions. We
estimate that our share of the total expenses of this offering will be
approximately $395,000.
The initial purchasers and their affiliates have engaged in, and may in
the future engage in, investment banking and other commercial dealings with us.
The initial purchasers have received customary fees and commissions for these
transactions.
Sheldon I. Stein, a Senior Managing Director of Bear, Stearns & Co.
Inc., is a member of our board of directors and is a member of each of the
audit, compensation and nominating and corporate governance committees of our
board of directors. As of December 12, 2003, Mr. Stein was the beneficial owner
of 19,718 shares of our common stock, including 18,000 shares that may be
acquired upon the exercise of stock options and 1,718 shares held by Mr. Stein's
sons.
JPMorgan Chase Bank, an affiliate of J.P. Morgan Securities Inc.,
Wachovia Bank, National Association, an affiliate of Wachovia Capital Markets,
LLC, and Fleet National Bank, an affiliate of Fleet Securities, Inc., are
lenders under our revolving credit facility. As of November 1, 2003, we had no
borrowings outstanding under our revolving credit facility. JPMorgan Chase Bank,
an affiliate of J.P. Morgan Securities Inc., Wachovia Bank, National
Association, an affiliate of Wachovia Capital Markets, LLC, and Fleet National
Bank, an affiliate of Fleet Securities, Inc., are lenders under our term credit
facility which was repaid using a portion of the net proceeds from the private
placements of the notes. J.P. MORGAN SECURITIES INC. ACTED AS BOOK-RUNNER AND
CO-LEAD ARRANGER FOR EACH OF OUR CREDIT FACILITIES. SEE "DESCRIPTION OF NOTES--
RANKING." IN ADDITION, JPMORGAN CHASE BANK, AN AFFILIATE OF J.P. MORGAN
SECURITIES INC., IS SERVING AS THE TRUSTEE FOR THE NOTES AND WILL RECEIVE
CUSTOMARY FEES AND EXPENSE REIMBURSEMENTS IN CONNECTION THEREWITH.
54
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND OTHER FACTORS
Certain statements made herein and in other public filings and releases
by the Company contain "forward-looking" information (as defined in the Private
Securities Litigation Reform Act of 1995) that involve risk and uncertainty.
These forward-looking statements may include, but are not limited to, future
capital expenditures, acquisitions (including the amount and nature thereof),
future sales, earnings, margins, costs, number and costs of store openings,
demand for clothing, market trends in the retail clothing business, currency
fluctuations, inflation and various economic and business trends.
Forward-looking statements may be made by management orally or in writing,
including, but not limited to, Management's Discussion and Analysis of Financial
Condition and Results of Operations section and other sections of our filings
with the SEC under the Securities Exchange Act of 1934 (the "Exchange Act") and
the Securities Act.
Actual results and trends in the future may differ materially depending on a
variety of factors including, but not limited to, domestic and international
economic activity and inflation, our successful execution of internal operating
plans and new store and new market expansion plans, performance issues with key
suppliers, severe weather, foreign currency fluctuations, government export and
import policies and legal proceedings. Future results will also be dependent
upon our ability to continue to identify and complete successful expansions and
penetrations into existing and new markets and our ability to integrate such
expansions with our existing operations.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy materials that we have
filed with the SEC at the SEC's public reference room located at 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549. Please call the SEC at 1-800-
SEC-0330 for further information on the public reference room. Our SEC filings
also are available to the public on the SEC's web site at www.sec.gov, which
contains reports, proxies and information statements and other information
regarding issuers that file electronically.
We have agreed that if, at any time that the notes are "restricted
securities" within the meaning of the Securities Act and we are not subject to
the information reporting requirements of the Exchange Act, we will furnish to
holders of the notes and to prospective purchasers designated by them the
information required to be delivered pursuant to Rule 144(d)(4) under the
Securities Act to permit compliance with Rule 144A in connection with resales of
the notes.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This prospectus "incorporates by reference" information that we have
filed with the SEC under the Exchange Act (File No. 001-16097), which means that
we are disclosing important information to you by referring you to those
documents. Any statement contained in this prospectus or in any document
incorporated or deemed to be incorporated by reference into this prospectus will
be deemed to be modified or superseded for purposes of this prospectus to the
extent that a statement contained in this prospectus or any subsequently filed
document which also is, or is deemed to be incorporated by reference into this
prospectus modifies or supersedes that statement. Any statement so modified or
superseded will not be deemed, except as so modified or superseded, to
constitute a part of this prospectus. We incorporate by reference the following
documents listed below and any future filings made with the SEC under Sections
13(a), 13(c), 14, or 15(d) of the Exchange Act (other than Current Reports
furnished under Items 9 or 12 of Form 8-K), until the initial purchasers sell
all of the notes:
- Our Annual Report on Form 10-K of the fiscal year ended
February 1, 2003;
- Our Quarterly Reports on Form 10-Q for the fiscal quarters
ended May 3, 2003, August 2, 2003 and November 1, 2003; and
- Our Current Reports on Form 8-K filed on October 14, 2003,
October 16, 2003, and October 21, 2003.
55
You may request a copy of these filings and of the form of the
indenture, notes and registration rights agreement at no cost, by writing or
telephoning us at the following address:
The Men's Wearhouse, Inc.
5803 Glenmont Drive
Houston, Texas 77081
Attn: Claudia A. Pruitt
(713) 592-7200
LEGAL MATTERS
The validity of the notes offered hereby and of the shares of common
stock issuable upon the conversion thereof and certain other legal matters will
be passed upon for us by Fulbright & Jaworski L.L.P., Houston, Texas. Michael W.
Conlon, a partner in the firm of Fulbright & Jaworski L.L.P., is the Secretary
of the Company.
EXPERTS
The consolidated financial statements incorporated in this prospectus
by reference from our Annual Report on Form 10-K for the year ended February 1,
2003 have been audited by Deloitte & Touche LLP, independent auditors, as stated
in their report, which is incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
56
PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses in connection
with the distribution of the securities covered by the registration statement of
which this prospectus is a part . We will bear all of these expenses.
[Download Table]
Registration fee under the Securities Act $ 10,517
Printing and engraving expenses * 92,000
Legal fees and expenses* 200,000
Accounting fees and expenses* 92,000
Miscellaneous* 483
--------
Total $395,000
========
* Estimated solely for the purpose of this Item. Actual expenses may be
more or less.
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
The Restated Articles of Incorporation, as amended, and Bylaws of The
Men's Wearhouse together provide that directors shall not be personally liable
to the Company or it's stockholders for monetary damages for an act or omission
in a director's capacity as a director, except for liability for (i) a breach of
the director's duty of loyalty to the Company or its shareholders, (ii) an act
or omission not in good faith that constitutes a breach of duty of such director
to the Company or an act or omission that involves intentional misconduct or a
knowing violation of the law; (iii) a transaction from which such director
received an improper benefit, whether or not the benefit resulted from an action
taken within the scope of the director's office; or (iv) an act or omission for
which the liability of a director is expressly provided by an applicable
statute. The Restated Articles of Incorporation, as amended, and Bylaws of the
Company also provide that if the Texas Business Corporation Act (the "TBCA"),
the Texas Miscellaneous Corporation Laws Act or any other applicable Texas
statute is amended to authorize further elimination or limitation of the
personal liability of the directors, then the liability of Company's directors
shall be eliminated or limited to the fullest extent permitted by such
statute(s), as so amended.
TBCA Article 2.02-1 provides that the Company may indemnify certain
persons, including any person who was, is or is threatened to be made a named
defendant or respondent in an action, suit or proceeding because the person is
or was a director or officer, against judgments, penalties (including excise and
similar taxes), fines, settlements and reasonable expenses (including court
costs and attorneys' fees) actually incurred by the person in connection with
the action, suit or proceeding. The Company is required by Article 2.02-1 to
indemnify a director or officer against reasonable expenses (including court
costs and attorneys' fees) incurred by him in connection with an action, suit or
proceeding in which he is a named defendant or respondent because he is or was a
director or officer if he has been wholly successful, on the merits or
otherwise, in the defense of the action, suit or proceeding. Article 2.02-1
provides that indemnification pursuant to its provisions is not exclusive of
other rights of indemnification to which a person may be entitled under any
bylaw, agreement, vote of shareholders or disinterested directors, or otherwise.
ITEM 16. EXHIBITS
[Enlarge/Download Table]
EXHIBIT
NO. DESCRIPTION
----------------- -------------------------------------------------------------------------------------------
3.1 -- Restated Articles of Incorporation (incorporated by reference from Exhibit 3.1 to the
Company's Quarterly Report on Form 10-Q for the quarter ended July 30, 1994).
3.2 -- By-laws, as amended (incorporated by reference from Exhibit 3.2 to the Company's Annual
Report on Form 10-K for the fiscal year ended February 1, 1997).
3.3 -- Articles of Amendment to the Restated Articles of Incorporation (incorporated by reference
from Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended July
31, 1999).
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[Enlarge/Download Table]
4.1 -- Restated Articles of Incorporation (included as Exhibit 3.1).
4.2 -- By-laws (included as Exhibit 3.2).
4.3 -- Form of Common Stock certificate (incorporated by reference from Exhibit 4.3 to the
Company's Registration Statement on Form S-1 (Registration No. 33-45949)).
4.4 -- Articles of Amendment to the Restated Articles of Incorporation (included as Exhibit 3.3).
4.5 -- Revolving Credit Agreement dated as of January 29, 2003, among the Company and JPMorgan
Chase Bank and the Banks listed therein (incorporated by
reference from Exhibit 4.5 to the Company's Annual
Report on Form 10-K for the fiscal year ended February
1, 2003).
4.6 -- Term Sheet Agreement dated as of January 29, 2003 evidencing the uncommitted CAN$10 million
facility of National City Bank, Canada Branch to Golden Brand Clothing (Canada) Ltd.
(incorporated by reference from Exhibit 4.7 to the Company's Annual Report on Form 10-K for
the fiscal year ended February 1, 2003).
4.7 -- Indenture (including form of note) dated October 21, 2003 among The Men's Wearhouse and
JPMorgan Chase Bank, as trustee, relating to The Men's Wearhouse's 3.125% Convertible Senior
Notes due 2023 (incorporated by reference from Exhibit 4.1 to the Company's Quarterly Report
on Form 10-Q for the fiscal quarter ended November 1, 2003).
4.8 -- Registration Rights Agreement dated October 21, 2003 among The Men's Wearhouse and Bear,
Stearns & Co. Inc., Wachovia Capital Markets, LLC, J.P. Morgan Securities Inc., Fleet
Securities, Inc. (incorporated by reference from Exhibit 4.2 to the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended November 1, 2003).
4.9 -- First Amendment to Revolving Credit Agreement, dated October 13, 2003 among the Company,
JPMorgan Chase Bank and the Banks listed therein (incorporated by reference from Exhibit 4.3
to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended November 1,
2003).
5.1 -- Opinion of Fulbright & Jaworski L.L.P. regarding the legality of the securities to be
offered hereby. (filed herewith)
12.1* -- Computation of ratio of earnings to fixed charges.
23.1 -- Consent of Deloitte & Touche LLP, independent auditors. (filed herewith)
23.2 -- Consent of Fulbright & Jaworski L.L.P. (included in Exhibit 5.1)
24.1* -- Powers of Attorney.
25.1 -- Statement of Eligibility and Qualification of Trustee
under the Trust Indenture Act of 1939, as amended, on
Form T-1 (incorporated by reference from Exhibit 25.1 to
the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended November 1, 2003).
-----------------
*Previously Filed
ITEM 17. UNDERTAKINGS
A. 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:
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(a) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(b) To reflect in the prospectus any facts or events
arising after the effective date of this 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 this
registration statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of
the prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(c) To include any material information with respect to
the plan of distribution not previously disclosed in this registration statement
or any material change to the information in this registration statement;
provided, however, that paragraphs A(l)(a) and A(l)(b) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs 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 this registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each of the post-effective amendments shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of the securities at that time shall be deemed to be the initial bona
fide offering thereof.
(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.
B. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, the filing of our annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference
in this registration statement shall be deemed to be a new registration
statement relating to the securities offered herein, and the offering of the
securities at that time shall be deemed to be the initial bona fide offering
thereof.
C. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
registrant pursuant to the provisions described in Item 15 above, or otherwise,
that registrant has been advised that in the opinion of the SEC that
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against any liability (other than the payment by a registrant of expenses
incurred or paid by a director, officer, or controlling person of a registrant
in the successful defense of any action, suit or proceeding) is asserted by a
director, officer, or controlling person in connection with the securities being
registered, that registrant 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 indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of the issue.
D. The undersigned registrant hereby undertakes:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus or any
prospectus supplement filed as part of this registration statement in reliance
on Rule 430A and contained in a form of prospectus or prospectus supplement
filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this registration statement as of
the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus or prospectus supplement 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.
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E. The undersigned registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act (the "Act") in
accordance with the rules and regulations prescribed by the Commission under
Section 305(b)(2) of the Act.
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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 Amendment
No. 1 to Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized in the City of Houston, State of Texas, on the 15th
day of March, 2004.
THE MEN'S WEARHOUSE, INC.
By: /s/ NEILL P. DAVIS
------------------------------------------------------
Neill P. Davis
Executive Vice President, Chief Financial Officer and
Principal Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to Registration Statement has been signed by the following
persons in the capacities indicated on the 15th day of March, 2004.
[Enlarge/Download Table]
SIGNATURE TITLE
--------- -----
/s/ GEORGE ZIMMER Chairman of the Board of Directors and Chief
----------------------------------------------------- Executive Officer (principal executive officer)
George Zimmer
/s/ NEILL P. DAVIS Executive Vice President, Chief Financial Officer and
----------------------------------------------------- Principal Financial Officer
Neill P. Davis
/s/ DIANA M. WILSON
-----------------------------------------------------
Diana M. Wilson Vice President and Principal Accounting Officer
*
-----------------------------------------------------
David H. Edwab Vice Chairman of the Board of Directors
*
-----------------------------------------------------
Sheldon I. Stein Director
*
-----------------------------------------------------
Michael L. Ray, Ph.D. Director
*
-----------------------------------------------------
Rinaldo S. Brutoco Director
*
-----------------------------------------------------
Kathleen Mason Director
* By: /s/ GEORGE ZIMMER
---------------------------------------------
George Zimmer, as attorney-in-fact
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EXHIBIT INDEX
[Enlarge/Download Table]
EXHIBIT
NO. DESCRIPTION
----------------- ----------------------------------------------------------------------------------------------
3.1 -- Restated Articles of Incorporation (incorporated by reference from Exhibit 3.1 to the
Company's Quarterly Report on Form 10-Q for the quarter ended July 30, 1994).
3.2 -- By-laws, as amended (incorporated by reference from Exhibit 3.2 to the Company's Annual
Report on Form 10-K for the fiscal year ended February 1, 1997).
3.3 -- Articles of Amendment to the Restated Articles of Incorporation (incorporated by reference
from Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended July
31, 1999).
4.1 -- Restated Articles of Incorporation (included as Exhibit 3.1).
4.2 -- By-laws (included as Exhibit 3.2).
4.3 -- Form of Common Stock certificate (incorporated by reference from Exhibit 4.3 to the
Company's Registration Statement on Form S-1 (Registration No. 33-45949)).
4.4 -- Articles of Amendment to the Restated Articles of Incorporation (included as Exhibit 3.3).
4.5 -- Revolving Credit Agreement dated as of January 29, 2003, among the Company and JPMorgan
Chase Bank and the Banks listed therein (incorporated by
reference from Exhibit 4.5 to the Company's Annual
Report on Form 10-K for the fiscal year ended February
1, 2003).
4.6 -- Term Sheet Agreement dated as of January 29, 2003 evidencing the uncommitted CAN$10 million
facility of National City Bank, Canada Branch to Golden Brand Clothing (Canada) Ltd.
(incorporated by reference from Exhibit 4.7 to the Company's Annual Report on Form 10-K for
the fiscal year ended February 1, 2003).
4.7 -- Indenture (including form of note) dated October 21, 2003 among The Men's Wearhouse and
JPMorgan Chase Bank, as trustee, relating to The Men's Wearhouse's 3.125% Convertible Senior
Notes due 2023 (incorporated by reference from Exhibit 4.1 to the Company's Quarterly Report
on Form 10-Q for the fiscal quarter ended November 1, 2003).
4.8 -- Registration Rights Agreement dated October 21, 2003 among The Men's Wearhouse and Bear,
Stearns & Co. Inc., Wachovia Capital Markets, LLC, J.P. Morgan Securities Inc., Fleet
Securities, Inc. (incorporated by reference from Exhibit 4.2 to the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended November 1, 2003).
4.9 -- First Amendment to Revolving Credit Agreement, dated October 13, 2003 among the Company,
JPMorgan Chase Bank and the Banks listed therein (incorporated by reference from Exhibit 4.3
to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended November 1,
2003).
5.1 -- Opinion of Fulbright & Jaworski L.L.P. regarding the legality of the securities to be
offered hereby. (filed herewith)
12.1* -- Computation of ratio of earnings to fixed charges.
23.1 -- Consent of Deloitte & Touche LLP, independent auditors. (filed herewith)
23.2 -- Consent of Fulbright & Jaworski L.L.P. (included in Exhibit 5.1)
24.1* -- Powers of Attorney.
25.1 -- Statement of Eligibility and Qualification of Trustee
under the Trust Indenture Act of 1939, as amended, on
Form T-1 (incorporated by reference from Exhibit 25.1 to
the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended November 1, 2003).
-----------------
*Previously Filed
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Dates Referenced Herein and Documents Incorporated by Reference
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