October 26, 2009
333-
FORM
Delaware | 41-1590959 | ||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification | ||
Statement.
o
box: þ
o
o
o
o
Large accelerated filer o | Accelerated filer þ | Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o |
Proposed Maximum | Proposed Maximum | Amount of | ||||||||||
Title of Each Class of | Amount to be | Offering | Aggregate | Registration | ||||||||
Securities to be Registered(1) | Registered | Price per Unit | Offering Price(2) | Fee(3) | ||||||||
Common stock, $.01 par value | ||||||||||||
Preferred stock, $.01 par value | ||||||||||||
Debt securities | (4) | (4) | $300,000,000 | $16,740 | ||||||||
Warrants | ||||||||||||
Rights | ||||||||||||
Title of Each Class of Securities To Be Registered | Amount To Be Registered (1) | Proposed Maximum Offering Price Per Share (2) | Proposed Maximum Aggregate Offering Price (2) | Amount Of Registration Fee (3) | |||||||||||||||||
Common Stock, $0.01 par value per share | 5,175,000 shares | $ | 18.98 | $ | 98,221,500 | $ | 10,509.71 | ||||||||||||||
(1) | There are being registered under this registration statement such indeterminate number of shares of common stock |
(2) | Estimated solely for | |
(3) | Calculated pursuant to Rule |
(4) | Omitted pursuant to |
This information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is declared effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
4,500,000 Shares
G-III Apparel Group, Ltd. is offering 1,121,000 shares of our
Preferred Stock
Debt Securities
Warrants
Rights
prospectus supplement for those securities.
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE ‘‘RISK FACTORS’’ BEGINNING ON PAGE 5.
Page | ||||||||
3 | ||||||||
3 | ||||||||
4 | ||||||||
5 | ||||||||
14 | ||||||||
15 | ||||||||
Where You Can Find More Information | ||||||||
EX-12.1 | |||||||||||
EX-23.1 | |||||||||||
EX-24.1 | |||||||||||
EX-24.2 | |||||||||||
EX-24.3 | |||||||||||
EX-24.4 | |||||||||||
EX-24.5 | |||||||||||
EX-24.6 | |||||||||||
EX-24.7 | |||||||||||
EX-24.8 | |||||||||||
EX-24.9 |
2
PROSPECTUS SUMMARY
This summary highlights certain information contained elsewherethe securities described in this prospectus but might notin one or more offerings up to a total dollar amount of $300,000,000. This prospectus provides you with a general description of the securities we may offer. Each time we sell securities, we will provide a prospectus supplement that will contain allspecific information about the securities being offered and the terms of that offering. The prospectus supplement may also add to, update or change information contained in this prospectus. You should read both this prospectus and any prospectus supplement together with the additional information described under the heading “Where You Can Find More Information” carefully before making an investment decision.
See “Incorporation by Reference.” The registration statement, including the exhibits and the documents incorporated or deemed incorporated in this prospectus can be read on the SEC website or at the SEC offices mentioned under the heading “Where You Can Find Additional Information.”
Our Company
Licensed brands have been an important part of our strategy for over 10 years. We currently havelabel brands. G-III has fashion licenses to produce branded fashion apparel including, among others, under the Calvin Klein, Sean John, Kenneth Cole, Cole Haan, Guess?, Jones New York, Jessica Simpson, Nine West, Ellen Tracy, IZOD and Tommy Hilfiger, labels. We also haveEnyce, Levi’s and Dockers brands and sports licenses to produce branded sports apparel containing trademarks ofwith the National Football League, National Basketball Association, Major League Baseball, National Hockey League, Louisville Slugger, World Poker TourTouch by Alyssa Milano and overmore than 100 U.S. colleges and universities.
We also work G-III sells outerwear and handbags under our own Andrew Marc and Marc New York brands and has licensed these brands for women’s footwear, men’s accessories, women’s handbags and men’s cold weather accessories. Our other owned brands include Marvin Richards,G-III, Jessica Howard, Eliza J., Black Rivet, Siena Studio, Tannery West, G-III by Carl Banks and Winlit.G-III works with leadinga diversified group of retailers such as Federated, Wal-Mart, JC Penney and Kohl’s, in developing product lines to be sold under their own proprietary private labels. We produce apparel under our own proprietary brands, including Marvin Richards, G-III Black Rivet, Siena Studio, Colebrook, G-III by Carl Banks, Winlit, NY 10018 and La Nouvelle Renaissance.
In July 2005, we significantly expanded our business when we acquired Marvin Richards and the operating assetsalso operates 121 retail stores, of Winlit Group, Ltd. As a result of the Marvin Richards acquisition, we added licenses for men’s and women’s outerwearwhich 118 are outlet stores operated under the Calvin Klein brand, as well as Marvin Richards’ own proprietary labels. As a result of acquiring Winlit’s assets, we added licenses for men’s and women’s outerwear under the Guess? brand, leather outerwear under the Tommy Hilfiger brand and women’s outerwear under the Ellen Tracy brand. We also acquired Winlit’s own proprietary labels. In addition, we added significant management, merchandising, manufacturing and design expertise as a result of these acquisitions.
Recent Initiatives
In addition to the licenses we added as a result of the two acquisitions we made, during the past year we have undertaken several new initiatives, each of which we believe has significant revenue potential:
Competitive Strengths
We intend to capitalize on the following competitive strengths:
Broad portfolio of recognized brands. Over the past 10 years, we have built a broad and deep portfolio of over 25 licensed and proprietary brands. We believe we are a licensee of choice for well-known brands that have built a loyal following of both fashion-conscious consumers and retailers who desire high quality, well-designed apparel. Our experience in developing our licensed brands and our own proprietary labels, as well as our reputation for producing high quality, well-designed apparel, has led major department stores and retailers, including Federated, Wal-Mart, JC Penney and Kohl’s, to select us as a designer and manufacturer for their private label programs.
Diversified distribution base. We market our products at multiple price points and across multiple channels of distribution. Our products are sold to approximately 2,500 customers, including department and specialty stores such as Macy’s, Nordstrom and Saks, mid-tier and mass merchants such as Wal-Mart, JC Penney, Target and Kohl’s, and membership clubs such as Costco and Sam’s Club.
Superior design, sourcing and quality control. Our designers work closely with our licensors and private label customers to create designs and styles that represent the look they want. We believe that our creative design team and our sourcing expertise give us an advantage in product development. We believe we have developed a significant customer following and positive reputation in the industry as a result of our design capabilities, sourcing expertise, on-time delivery and high standards of quality control.
Leadership position in the outerwear wholesale business. As one of the largest outerwear wholesalers, we are widely recognized within the apparel industry for our quality, well-designed products. Our expertise and reputation in designing, manufacturing and marketing outerwear have enabled us to build strong customer relationships and to expand into women’s suits, dresses and other product categories.
Experienced management team. Our executive management team has extensive experience in the apparel industry. Morris Goldfarb, our Chairman and Chief Executive Officer, has been with us for 35 years. In 2005, we added significant management, merchandising, manufacturing and design expertise as a result of our acquisition of the Marvin Richards and Winlit businesses. The experience, expertise and depth of our management team have enabled us to implement new initiatives in new product categories with existing licensees, such as Calvin Klein and Sean John, and private label customers, such as Wal-Mart.
Growth Strategy
Our goal is to build an all-season diversified apparel company with a broad portfolio of brands that we offer in multiple channels of retail distribution through the following growth strategies:
Execute new initiatives. We are continually seeking opportunities to produce products for all seasons as we attempt to reduce our dependency on our third fiscal quarter for the majority of our net sales and substantially all of our net income. During the past year, we have initiated several product diversification efforts, each of which we believe has significant revenue potential.
Continue to grow our outerwear business. We have been a leader in the outerwear business for many years and believe there is significant growth potential for us within this category. For example, we believe that the strong brand awareness of Calvin Klein, our addition of women’s outerwear for Sean
John, and new private label programs, such as for the Candie’s brand distributed by Kohl’s, will provide us with increased outerwear business.
Extend our new product categories to additional brands. We have been able to leverage our expertise and experience in the outerwear business to expand our licenses to new product categories such as women’s suits, dresses and sportswear. We will attempt to expand our distribution of products in these categories under other licensed brands, private label brands and our own brands.
Seek attractive acquisitions. We plan to pursue acquisitions of complementary product lines and businesses. Our acquisitions of the Marvin Richards and Winlit businesses increased our portfolio of licensed brands, added additional retail customers and allowed us to realize economies of scale.
The Offering
The number of shares of common stock that will be outstanding after this offering is based on 14,138,700 shares of common stock outstanding as of December 15, 2006 and excludes:
All share and per share information in this prospectus has been adjusted to reflect a three-for-two split of our common stock effective March 28, 2006.
Unless otherwise indicated, the information contained in this prospectus assumes no exercise of outstanding options or warrants and no exercise of the underwriters’ over-allotment option to purchase up to an additional 675,000 shares from us.
Corporate Information
We are a Delaware corporation that was formed in 1989. We and our predecessors have conducted our business since 1974. Our executive offices are located at 512 Seventh Avenue, New York, NY 10019New York 10018 and our telephone number is(212) 403-0500. Our website ishttp://www.g-iii.com. The information on our website is not a part of this prospectus.
Summary Consolidated Financial Data(In thousands, except per share data)
The following table summarizes
Our results of operationsmost recent Annual Report onForm 10-K for the year ended January 31, 2006 include2009, which is on file with the results of our Marvin RichardsSEC and Winlit divisions from July 11, 2005, the date we acquired the stock of Marvin Richards and certain assets from Winlit. Our results for fiscal 2006 exclude the seasonal losses that were incurred by the acquired companies in the first half of fiscal 2006. Results for fiscal 2007 include the operations of the acquired companies for the entire period, as well as interest expense and depreciation and amortization expense relating to the acquisitions for the entire period.
The summary consolidated income statement data for the nine months ended October 31, 2005 and 2006 and the summary consolidated balance sheet data as of October 31, 2006 set forth below are derived from our unaudited consolidated financial statements. In the opinion of our management, all known adjustments necessary for a fair presentation of the results for the nine months ended October 31, 2005 and 2006 have been made. The financial data for the nine months ended October 31, 2005 and 2006 include all normal recurring adjustments which in the opinion of our management are necessary for these periods. Our results of operations for the nine months ended October 31, 2006 are not necessarily indicative of the results that may be expected for the entire year or for any future period.
Year Ended January 31, | Nine Months Ended October 31, | |||||||||||||||||||||||||||||
2004 | 2005 | 2006 | 2005 | 2006 | ||||||||||||||||||||||||||
Consolidated Income Statement Data: | ||||||||||||||||||||||||||||||
Net sales | $ | 225,061 | $ | 214,278 | $ | 324,072 | $ | 254,941 | $ | 328,175 | ||||||||||||||||||||
Gross profit | 62,832 | 52,744 | 84,846 | 68,782 | 89,856 | |||||||||||||||||||||||||
Operating profit | 14,793 | 3,066 | 16,958 | 19,742 | 25,089 | |||||||||||||||||||||||||
Net income | $ | 8,376 | $ | 703 | $ | 7,092 | $ | 9,843 | $ | 12,671 | ||||||||||||||||||||
Diluted earnings per share | $ | 0.76 | $ | 0.06 | $ | 0.58 | $ | 0.82 | $ | 0.93 | ||||||||||||||||||||
Weighted average shares outstanding – diluted | 11,022 | 11,292 | 12,236 | 11,993 | 13,630 | |||||||||||||||||||||||||
The following table summarizes our consolidated balance sheet data at October 31, 2006 on an actual basis, and as adjusted to reflect our sale of the 1,121,000 shares offered by us at an assumed public offering price of $19.43 per share, after deducting the underwriting discount and estimated offering expenses payable by us.
As of October 31, 2006 | ||||||||||||
Actual | As Adjusted | |||||||||||
Consolidated Balance Sheet Data: | ||||||||||||
Working capital | $ | 86,704 | $ | 106,896 | ||||||||
Total assets | 298,120 | 318,312 | ||||||||||
Short-term debt | 106,691 | 106,691 | ||||||||||
Long-term debt, excluding current portion | 16,800 | 16,800 | ||||||||||
Total stockholders’ equity | 110,789 | 130,981 | ||||||||||
RISK FACTORS
An investment in our common stock involves various risks. Before making an investment in our common stock, you should carefully consider the following risks, as well as the other information contained oris incorporated by reference in this prospectus, including our consolidated financial statements and in the related notes.documents and reports that we file with the SEC after the date of this prospectus that are incorporated by reference into this prospectus, as well as any risks described in any applicable prospectus supplement. Before making an investment decision,
3
Risk Factors Relating to Our Operations
The failure to maintain our licensing agreements could cause us to lose significant revenues and have a material adverse effect on our results of operations.
We are dependent on sales of licensed product for a substantial portion of our revenues. In fiscal 2006, revenues from the sale of licensed product accounted for 60.8% of our net sales compared to 63.6% of our net sales in fiscal 2005 and 76.3% of our net sales in fiscal 2004. For the nine months ended October 31, 2006, revenues from the sale of licensed product accounted for 60.2% of our net sales compared to 57.3% of our net sales in the comparable period in the prior year.
We are generally required to achieve specified minimum net sales, make specified royalty and advertising payments and receive prior approval of the licensor as to all design and other elements of a garment prior to production. License agreements also may restrict our ability to enter into other license agreements for competing products. If we do not satisfy any of these requirements, a licensor usually will have the right to terminate our license. Even if a licensor does not terminate our license, the failure to achieve net sales sufficient to cover our required minimum royalty payments could have a material adverse effect on our results of operations. If a license contains a renewal provision, there are usually minimum sales and other conditions that must be met in order to be able to renew a license. Even if we comply with all the terms of a licensing agreement, we cannot be sure that we will be able to renew an agreement when it expires even if we desire to do so. The failure to maintain our license agreements could cause us to lose significant revenue and have a material adverse effect on our results of operations.
Our success is dependent on the strategies and reputation of our licensors.
Our business strategy is to offer our products on a multiple brand, multiple channel and multiple price point basis. As a part of this strategy, we license the names and brands of numerous recognized companies, designers and celebrities. In entering into these license agreements, we plan our products to be targeted towards different market segments based on consumer demographics, design, suggested pricing and channel of distribution. If any of our licensors decides to ‘‘reposition’’ its products under the brands we license from them, introduce similar products under similar brand names or otherwise change the parameters of design, pricing, distribution, target market or competitive set, we could experience a significant downturn in that brand’s business, adversely affecting our sales and profitability. In addition, as products may be personally associated with designers or celebrities, our sales of those products could be materially and adversely affected if any of those individuals’ images, reputations or popularity were to be negatively impacted.
If we are unable to successfully translate market trends into attractive product offerings, our sales and profitability could suffer.
Our ability to successfully compete depends on a number of factors, including our ability to effectively anticipate, gauge and respond to changing consumer demands and tastes across multiple product lines and tiers of distribution. We are required to translate market trends into attractive product offerings and operate within substantial production and delivery constraints. We cannot be sure we will
continue to be successful in this regard. For example, a key part of our success in fiscal 2004 was a result of increased sales of fashion sports apparel. This trend did not continue in fiscal 2005 and, as a result, our results of operations were materially adversely affected. We need to anticipate and respond to changing trends quickly, efficiently and effectively in order to be successful.
Expansion of our product offerings involves significant costs and uncertainty and could adversely affect our results of operations.
An important part of our strategy is to expand the types of products we offer. For example, in the past year we have added licenses for new lines of women’s suits, sportswear and dresses. We have limited prior experience designing, manufacturing and marketing these types of products. We intend to continue to add additional product lines in the future. As is typical with new products, demand and market acceptance for any new products we introduce will be subject to uncertainty. Designing, producing and marketing new products require substantial expenditures. We cannot be certain that our efforts and expenditures will successfully generate sufficient sales or that sales that are generated will be sufficient to cover our expenditures.
If our customers change their buying patterns, request additional allowances or develop their own private label brands, our sales to these customers could be materially adversely affected.
Our customers’ buying patterns, as well as the need to provide additional allowances to vendors, could have a material adverse effect on our business, results of operations and financial condition. Customers’ strategic initiatives, including developing their own private labels brands and reducing the number of vendors they purchase from, could also impact our sales to these customers.
We have significant customer concentration, and the loss of one of our large customers could adversely affect our business.
Our 10 largest customers accounted for approximately 60.7% of our net sales in fiscal 2006 compared to 52.6% of our net sales in fiscal 2005, with our two largest customers accounting for 19.0% and 13.2% of our net sales in fiscal 2006. For the nine months ended October 31, 2006, our 10 largest customers accounted for approximately 73.9% of our net sales, with our two largest customers accounting for 23.8% and 14.6% of our net sales during that period. Consolidation in the retail industry, such as the combination of the Federated and May department store chains, has increased the concentration of our sales to our largest customers. We do not have long-term contracts with any customers, and sales to customers generally occur on an order-by-order basis that may be subject to cancellation or rescheduling by the customer. A decision by our major customers to decrease the amount of merchandise purchased from us, to increase the use of their own private label brands or to change the manner of doing business with us could reduce our revenues and materially adversely affect our results of operations.
If we miscalculate the market for our products, we may end up with significant excess inventories for some products and missed opportunities for others.
We often produce garments to hold in inventory in order to meet our customers’ delivery requirements and to be able to quickly fulfill reorders. If we misjudge the market for our products, we may be faced with significant excess inventories for some products and missed opportunities for others. In addition, weak sales and resulting markdown requests from customers could have a material adverse effect on our results of operations.
We are dependent upon foreign manufacturers.
We do not own or operate any manufacturing facilities. Almost all of our products are imported from independent foreign manufacturers. The failure of these manufacturers to ship products to us in a timely manner or to meet required quality standards could cause us to miss the delivery date requirements of our customers. The failure to make timely deliveries could cause customers to cancel
orders, refuse to accept delivery of products or demand reduced prices, any of which could have a material adverse effect on our business. We do not have long-term written agreements with any of our manufacturers. As a result, any of these manufacturers may unilaterally terminate its relationship with us at any time.
We are also dependent on these manufacturers for compliance with our policies and the policies of our licensors and customers regarding labor practices employed by factories that manufacture product for us. Any failure by these manufacturers to comply with required labor standards or any other divergence in their labor or other practices from those generally considered ethical in the United States, and the potential negative publicity relating to any of these events, could result in a violation by us of our license agreements and harm us and our reputation.
We are subject to the risks of doing business abroad.
Our arrangements with foreign manufacturers are subject to the usual risks of doing business abroad, including currency fluctuations, political or labor instability and potential import restrictions, duties and tariffs. We do not maintain insurance for the potential lost profits due to disruptions of our overseas factories. Because our products are produced abroad, political or economic instability in China or elsewhere could cause substantial disruption in the business of our foreign manufacturers. This could materially adversely affect our financial condition and results of operations. There have been threats of anti-dumping cases with respect to apparel sourced from several countries, including Vietnam and China. Heightened terrorism security concerns could subject imported goods to additional, more frequent or more thorough inspections. This could delay deliveries or increase costs, which could adversely impact our results of operations. In addition, since we negotiate our purchase orders with foreign manufacturers in United States dollars, the value of the United States dollar against local currencies could impact our cost in dollars of production from these manufacturers. We are not currently engaged in any hedging activities to protect against these currency risks. If there is downward pressure on the value of the dollar, our purchase prices for our products could increase. We may not be able to offset an increase in product costs with a price increase to our customers.
Fluctuations in the price, availability and quality of materials used in our products could have a material adverse effect on our cost of goods sold and our ability to meet our customers’ demands.
Fluctuations in the price, availability and quality of the leather, wool and other materials used in our products could have a material adverse effect on our cost of sales or our ability to meet our customers’ demands. We compete with numerous entities for supplies of materials and manufacturing capacity. The supply and price of leather are vulnerable to animal diseases as well as natural disasters that can affect the supply and price of raw leather. For example, in the past, the outbreak of mad-cow and foot-and-mouth disease in Europe, and its aftereffects, adversely affected the supply of leather. Any recurrence of these diseases could adversely affect us. The prices for wool and other fabrics used in our products depend largely on the market prices for the raw materials used to produce them, such as raw wool or cotton. We may not be able to pass on all or any portion of higher material prices to our customers.
If we lose the services of our key personnel, our business will be harmed.
Our future success depends on Morris Goldfarb, our Chairman and Chief Executive Officer, and other key personnel. The loss of the services of Mr. Goldfarb and any negative market or industry perception arising from the loss of his services could have a material adverse effect on us and the price of our shares. Our other executive officers have substantial experience and expertise in our business and have made significant contributions to our success. The unexpected loss of services of one or more of these individuals could also adversely affect us.
We have expanded our business through acquisitions that could result in diversion of resources, an inability to integrate acquired operations and extra expenses. This could disrupt our business and adversely affect our financial condition.
Part of our growth strategy is to pursue acquisitions. For example, in July 2005, we acquired Marvin Richards and the operating assets of Winlit. The negotiation of potential acquisitions as well as the integration of acquired businesses could divert our management’s time and resources. Acquired businesses may not be successfully integrated with our operations. We may not realize the intended benefits of any acquisition.
Acquisitions could also result in:
If acquisitions disrupt our operations, our business may suffer.
We may need additional financing to continue to grow.
The continued growth of our business depends on our access to sufficient funds to support our growth. Our primary source of working capital to support our growth is our line of credit and related term loan entered into in July 2005. Our need for working capital and the amount of our debt increased as a result of our two acquisitions in July 2005. In December 2005, we began to make quarterly payments under our term loan of $1,650,000. A final payment under the term loan of $11,850,000 is due in July 2008. Our growth is dependent on our ability to extend and increase the line of credit and may be dependent on our ability to refinance the term loan if we do not generate sufficient cash to make the payments due under the term loan. If we are unable to refinance our debt, we cannot be sure we will be able to secure alternative financing on satisfactory terms or at all.
We are dependent on sales during the July through November period each year for the substantial majority of our net sales and net income, and our results of operations may suffer in the event that the weather is unusually warm during the peak outerwear selling season.
Retail sales of outerwear have traditionally been seasonal in nature. As a result, we are dependent on our sales from July through November each year for the substantial majority of our net sales and net income. Net sales in the months of July through November accounted for approximately 82% of our net sales in fiscal 2006, 74% of our net sales in fiscal 2005 and 75% of our net sales in fiscal 2004. Any difficulties we may encounter during this period as a result of weather or disruption of manufacturing or transportation of our products will have a magnified effect on our net sales and net income for the year. In addition, because of the large amount of outerwear we sell, unusually warm weather conditions during the peak fall outerwear selling season could have a material adverse effect on our results of operations. The July through November time frame is expected to continue to provide a disproportionate amount of our net sales and net income for the foreseeable future.
Risk Factors Relating to the Apparel Industry
The competitive nature of the apparel industry may result in lower prices for our products and decreased gross profit margins.
The apparel business is highly competitive. We have numerous competitors with respect to the sale of apparel, including distributors that import apparel from abroad and domestic retailers with established foreign manufacturing capabilities. Many of our competitors have greater financial and marketing
resources and greater manufacturing capacity than we do. We also compete with vertically integrated apparel manufacturers that also own retail stores. The general availability of contract manufacturing capacity also allows ease of access by new market entrants. The competitive nature of the apparel industry may result in lower prices for our products and decreased gross profit margins, either of which may materially adversely affect our sales and profitability. Sales of our products are affected by style, price, quality, brand reputation and general fashion trends.
If major department, mass merchant and specialty store chains continue to consolidate, our business could be negatively affected.
We sell our products to major department, mass merchant and specialty store chains. Continued consolidation in the retail industry, such as the purchase of May Department Store Company by Federated Department Stores, Inc., could negatively impact our business. Consolidation could reduce the number of our customers and potential customers. With increased consolidation in the retail industry, we are increasingly dependent on retailers whose bargaining strength may increase and whose share of our business may grow. As a result, we may face greater pressure from these customers to provide more favorable terms. If purchasing decisions become more centralized, the risks from consolidation increases. Customers may also concentrate purchases among a narrowing group of vendors. This could adversely affect our business.
The cyclical nature of the apparel industry and uncertainty over future economic prospects and consumer spending could have a materially adverse effect on our results of operations.
The apparel industry is cyclical. Purchases of outerwear, sportswear and other apparel tend to decline during recessionary periods and may decline for a variety of other reasons, including changes in fashion trends and the introduction of new products or pricing changes by our competitors. Uncertainties regarding future economic prospects could affect consumer-spending habits and have an adverse effect on our results of operations. Uncertainty with respect to consumer spending as a result of weak economic conditions has in the past caused our customers to delay the placing of initial orders and to slow the pace of reorders during the seasonal peak of our business. Weak economic conditions have had a material adverse effect on our results of operations at times in the past and could have a material adverse effect on our results of operations in the future as well.
The significant increase in fuel prices could adversely affect our results of operations.
Fuel prices have increased significantly during the past year, most recently as a result of Hurricane Katrina and tensions in the Middle East. Increased gasoline prices could adversely affect consumer spending, including discretionary spending on apparel. In addition, higher fuel prices could cause our operating expenses to increase, especially with respect to warehousing and freight. Any significant decrease in sales or increase in expenses as a result of higher fuel prices could adversely affect our results of operations.
If new legislation restricting the importation or increasing the cost of textiles and apparel produced abroad is enacted, our business could be adversely affected.
Legislation that would restrict the importation or increase the cost of textiles and apparel produced abroad has been periodically introduced in Congress. The enactment of new legislation or international trade regulation, or executive action affecting international textile or trade agreements, could adversely affect our business. International trade agreements that can provide for tariffs and/or quotas can increase the cost and limit the amount of product that can be imported.
The quota system established by the World Trade Organization was eliminated on December 31, 2004. We cannot be certain of the full impact that this elimination will have on international trade in general and the apparel industry in particular. We also cannot be certain of the impact of quota elimination on our business, including increased competition that could result from the importation of an increasing amount of lower priced apparel into the United States. Notwithstanding quota elimination, China’s accession agreement for membership in the WTO provides that WTO
member countries, including the United States, may re-impose safeguard quotas on specific products. In May 2005, the United States imposed unilateral quotas on several product categories, limiting growth in imports of these categories to 7.5% a year. The safeguard quotas in several categories have been extended by the United States government and will likely continue through 2008. These limitations apply to a limited number of products imported by us from China. We are unable to assess the potential for additional action by the United States government with respect to these or other product categories in the event that the quantity of imported apparel significantly disrupts the apparel market in the United States. Additional action by the United States in response to a disruption in its apparel markets could limit our ability to import apparel and increase our costs.
Risks Relating to this Offering and Ownership of Our Common Stock
Two persons may be in a position to control matters requiring a stockholder vote.
Morris Goldfarb, our Chairman and Chief Executive Officer, and his father, Aron Goldfarb, our founder and former director, will beneficially own approximately 23.9% of our common stock after completion of this offering (22.9% if the over-allotment option is exercised in full). As a result, if they vote together, they may have the ability to control the outcome on matters requiring stockholder approval including, but not limited to, the election of directors and any merger, consolidation or sale of all or substantially all of our assets. They also may have the ability to control our management and affairs.
The price of our common stock has fluctuated significantly and could continue to fluctuate significantly.
Between February 1, 2004 and January 3, 2007, the market price of our common stock has ranged from a low of $3.79 to a high of $22.50 per share. The market price of our common stock may change significantly in response to various factors and events beyond our control, including:
Future sales of our common stock, including the shares purchased in this offering, may depress our stock price.
Sales of a substantial number of shares of our common stock in the public market by our stockholders after this offering, sales of our common stock by our management or the perception that such sales are likely to occur could depress the market price of our common stock and impair our ability to raise capital through the sale of additional equity securities. Upon completion of this offering, we will have outstanding 15,372,200 shares of common stock. Of these shares:
We may issue shares of our common stock from time to time as consideration for or to finance future acquisitions and investments. In the event any such acquisition or investment is significant, the number of shares of our common stock, or the number or aggregate principal amount, as the case may be, of other securities that we may issue may in turn be significant. In addition, we may also grant registration rights covering those shares of our common stock or other securities in connection with any such acquisition or investment.
The failure to comply with the internal control evaluation and certification requirements of Section 404 of Sarbanes-Oxley Act could harm our operations and our ability to comply with our periodic reporting obligations.
We will be required to comply with the internal control evaluation and certification requirements of Section 404 of the Sarbanes-Oxley Act of 2002 by the end of our fiscal year ending January 31, 2008. We have begun the process of determining whether our existing internal controls over financial reporting systems are compliant with Section 404. This process may divert internal resources and will take a significant amount of time, effort and expense to complete. If it is determined that we are not in compliance with Section 404, we may be required to implement new internal control procedures and reevaluate our financial reporting. We may experience higher than anticipated operating expenses as well as outside auditor fees during the implementation of these changes and thereafter. Further, we may need to hire additional qualified personnel in order for us to be compliant with Section 404. If we are unable to implement these changes effectively or efficiently, it could harm our operations, financial reporting or financial results and could result in our being unable to obtain an unqualified report on internal controls from our independent auditors, which could adversely affect our ability to comply with our periodic reporting obligations under the Securities and Exchange Act of 1934, as amended, and the rules of the Nasdaq Global Market.
FORWARD-LOOKING STATEMENTS
• | dependence on licensed product; | |
• | reliance on foreign manufacturers; | |
• | risks of doing business abroad; | |
• | the current economic and credit crisis; | |
• | the nature of the apparel industry, including changing consumer demand and tastes; | |
• | seasonality; | |
• | risks of operating a retail business; | |
• | customer acceptance of new products; | |
• | the impact of competitive products and pricing; | |
• | dependence on existing management; | |
• | possible disruption as a result of acquisitions; | |
• | general economic conditions; and | |
• | other risks detailed in our filings with the SEC. |
4
Six Months | ||||||||||||||||||||||||
Fiscal Year Ended January 31, | Ended | |||||||||||||||||||||||
2005 | 2006 | 2007 | 2008 | 2009 | July 31, 2009 | |||||||||||||||||||
Ratio of Earnings to Fixed Charges | 1.9 | 3.1 | 3.5 | 6.0 | (1 | ) | (1 | ) |
(1) | Earnings were insufficient to cover fixed charges by $9.4 million for the year ended January 31, 2009 and $16.5 million for the six month period ended July 31, 2009. Pre-tax loss for the year ended January 31, 2009 includes non-cash impairment charges of $33.5 million. |
We expectamount of net proceeds to usebe used specifically for any of the foregoing purposes. Accordingly, our management will have significant discretion and flexibility in applying the net proceeds for general corporate purposesfrom the sale of securities sold pursuant to supportthis prospectus and the growth of our business. The net proceeds may also be used to acquire complementary product lines or businesses. Although we regularly investigate possible acquisitions, we have no existing commitments or agreements with respect toapplicable prospectus supplement. Pending any particular acquisition.
Until we use, the net proceeds of this offering for theas described above, intended purposes, we intend to invest the net proceeds in high-quality, short-term, interest-bearing securities. Our plans to use the estimated net proceeds from the sale of these securities may change, and if they do, we will update this information in a prospectus supplement.
5
• | common stock; | |
• | preferred stock; | |
• | debt securities; | |
• | warrants to purchase common stock, preferred stock or debt securities; or | |
• | rights to purchase common stock, preferred stock or warrants. |
6
PRICE RANGE OF COMMON STOCK
• | the title of the series and stated value; | |
• | the number of shares of the series of preferred stock offered, the liquidation preference per share, if applicable, and the offering price; | |
• | the applicable dividend rate(s) or amount(s), period(s) and payment date(s) or method(s) of calculation thereof; | |
• | the date from which dividends on the preferred stock will accumulate, if applicable; | |
• | any procedures for auction and remarketing; | |
• | any provisions for a sinking fund; | |
• | any applicable provision for redemption and the price or prices, terms and conditions on which preferred stock may be redeemed; | |
• | any securities exchange listing; | |
• | any voting rights and powers; | |
• | the terms and conditions, if applicable, of conversion into shares of our common stock, including the conversion price or rate or manner of calculation thereof; | |
• | a discussion of any material U.S. federal income tax considerations; | |
• | the relative ranking and preference as to dividend rights and rights upon our liquidation, dissolution or the winding up of our affairs; | |
• | any limitations on issuance of any series of preferred stock ranking senior to or on a parity with such series of preferred stock as to dividend rights and rights upon our liquidation, dissolution or the winding up of our affairs; and | |
• | any other specific terms, preferences, rights, limitations or restrictions of such series of preferred stock. |
7
• | enhance the likelihood of continuity and stability in the composition of the board and in the policies formulated by the board; | |
• | discourage certain types of transactions which may involve an actual or threatened change in control of our company; | |
• | discourage certain tactics that may be used in proxy fights; and | |
• | encourage persons seeking to acquire control of our company to consult first with the board of directors to negotiate the terms of any proposed business combination or offer. |
• | Prior to such date, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder; | |
• | Upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding, those shares owned (1) by persons who are directors and also officers and (2) by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or | |
• | On or after such date, the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders and not by written consent, by the affirmative vote of at least 662/3% of the outstanding voting stock which is not owned by the interested stockholder. |
8
High | Low | |||||||||||
Fiscal 2007 | ||||||||||||
Quarter ended April 30, 2006 | $ | 12.82 | $ | 8.80 | ||||||||
Quarter ended July 31, 2006 | 11.25 | 7.91 | ||||||||||
Quarter ended October 31, 2006 | 15.50 | 9.03 | ||||||||||
Quarter ending January 31, 2007 (through January 3, 2007) | 22.50 | 13.79 | ||||||||||
Fiscal 2006 | ||||||||||||
Quarter ended April 30, 2005 | $ | 5.91 | $ | 4.49 | ||||||||
Quarter ended July 31, 2005 | 7.84 | 4.34 | ||||||||||
Quarter ended October 31, 2005 | 7.93 | 6.23 | ||||||||||
Quarter ended January 31, 2006 | 9.89 | 6.33 | ||||||||||
Fiscal 2005 | ||||||||||||
Quarter ended April 30, 2004 | $ | 7.26 | $ | 4.81 | ||||||||
Quarter ended July 31, 2004 | 6.30 | 4.57 | ||||||||||
Quarter ended October 31, 2004 | 5.02 | 3.83 | ||||||||||
Quarter ended January 31, 2005 | 5.53 | 3.79 | ||||||||||
debt securities. The last sale price of our common stock on the Nasdaq Global Market on January 3, 2007 was $19.43 per share. On December 15, 2006, there were 52 holders of record of our common stock.
DIVIDEND POLICY
Our board of directors currently intendsdebt securities are to followbe issued under a policy of retaining any earningssenior debt securities indenture or subordinated debt securities indenture to finance the continued growth and development of our business and does not anticipate paying cash dividends in the foreseeable future. Any future determination as to the payment of cash dividends will be dependent upon our financial condition, results of operations and other factors deemed relevant by our board. Our loan agreement limits payments for cash dividends and stock redemption to $1.5 million plus an additional amount for stock redemptions based on the proceeds of sales of equity securities.
CAPITALIZATION(In thousands, except share and per share amounts)
The following table sets forth our capitalization at October 31, 2006 on an actual basis, and as adjusted to reflect our sale of the 1,121,000 shares offered byentered into between us at an assumed public offering price of $19.43 per share, after deducting the underwriting discount and estimated offering expenses payable by us.
You should read this table in conjunction with the sections of this prospectus entitled ‘‘Use of Proceeds’’ and ‘‘Selected Consolidated Financial Data,’’ and with our consolidated financial statements and related notes incorporated by reference in this prospectus.
As of October 31, 2006 | ||||||||||||
Actual | As Adjusted | |||||||||||
Current portion of term loan | $ | 6,600 | $ | 6,600 | ||||||||
Long-term debt, less current portion | 16,800 | 16,800 | ||||||||||
Stockholders’ equity: | ||||||||||||
Preferred stock; $.01 par value, 1,000,000 shares authorized; no shares issued and outstanding actual and as adjusted. | ||||||||||||
Common stock; $.01 par value; 40,000,000 shares authorized; 14,386,825 shares issued actual and 15,620,325 shares issued as adjusted(1) | 144 | 156 | ||||||||||
Additional paid-in capital | 52,352 | 72,942 | ||||||||||
Retained earnings | 59,263 | 59,263 | ||||||||||
111,759 | 132,361 | |||||||||||
Common stock held in treasury – 367,225 shares at cost | (970 | ) | (970 | ) | ||||||||
Total stockholders’ equity(1) | 110,789 | 131,391 | ||||||||||
Total capitalization | $ | 134,189 | 154,791 | |||||||||
SELECTED CONSOLIDATED FINANCIAL DATA(In thousands, except per share data)
The selected consolidated financial data as of January 31, 2002, 2003, 2004, 2005 and 2006 set forth below are derived from our audited consolidated financial statements. The selected consolidated income statement data for the nine months ended October 31, 2005 and 2006 and the selected consolidated balance sheet data as of October 31, 2006 set forth below are derived from our unaudited consolidated financial statements. In the opinion of our management, all known adjustments necessary for a fair presentation of the results for the nine months ended October 31, 2005 and 2006 have been made. The financial data for the nine months ended October 31, 2005 and 2006 include all normal recurring adjustments which in the opinion of our management are necessary for these periods. Our results of operations for the nine months ended October 31, 2006 are not necessarily indicative of the results that may be expected for the entire year or for any future period. The selected consolidated financial data should be read in conjunction with our audited consolidated financial statements, unaudited consolidated financial statements and related notes. Certain amounts in the consolidated income statement data for fiscal years 2002 through 2005 have been reclassified to conform to the current year presentation.
Our results of operations for the year ended January 31, 2006 include the results of our Marvin Richards and Winlit divisions from July 11, 2005, the date we acquired the stock of Marvin Richards and certain assets from Winlit. Our results for fiscal 2006 exclude the seasonal losses that were incurred by the acquired companies in the first half of fiscal 2006. Results for fiscal 2007 include the operations of the acquired companies for the entire period, as well as interest expense and depreciation and amortization expense relating to the acquisitions for the entire period.
All share and per share information in the table below has been adjusted to give retroactive effect to a three-for-two split of our common stock effective March 28, 2006.
Year Ended January 31, | Nine Months Ended October 31, | |||||||||||||||||||||||||||||||||||||||||
2002 | 2003 | 2004 | 2005 | 2006 | 2005 | 2006 | ||||||||||||||||||||||||||||||||||||
Consolidated Income Statement Data: | ||||||||||||||||||||||||||||||||||||||||||
Net sales | $ | 201,855 | $ | 203,301 | $ | 225,061 | $ | 214,278 | $ | 324,072 | $ | 254,941 | $ | 328,175 | ||||||||||||||||||||||||||||
Cost of goods sold | 158,160 | 153,367 | 162,229 | 161,534 | 239,226 | 186,159 | 238,319 | |||||||||||||||||||||||||||||||||||
Gross profit | 43,695 | 49,934 | 62,832 | 52,744 | 84,846 | 68,782 | 89,856 | |||||||||||||||||||||||||||||||||||
Selling, general & administrative expenses | 35,174 | 40,841 | 46,784 | 47,452 | 64,763 | 46,990 | 61,467 | |||||||||||||||||||||||||||||||||||
Depreciation and amortization | 1,069 | 1,360 | 1,255 | 1,344 | 3,125 | 2,050 | 3,300 | |||||||||||||||||||||||||||||||||||
Non-recurring charge | 3,556 | |||||||||||||||||||||||||||||||||||||||||
Write-down of equity investment | 882 | |||||||||||||||||||||||||||||||||||||||||
Operating profit | 7,452 | 4,177 | 14,793 | 3,066 | 16,958 | 19,742 | 25,089 | |||||||||||||||||||||||||||||||||||
Interest and financing charges, net | 3,577 | 1,907 | 1,179 | 1,086 | 4,349 | 2,771 | 4,573 | |||||||||||||||||||||||||||||||||||
Income before income taxes | 3,875 | 2,270 | 13,614 | 1,980 | 12,609 | 16,971 | 20,516 | |||||||||||||||||||||||||||||||||||
Income taxes | 1,511 | 1,888 | 5,238 | 1,277 | 5,517 | 7,128 | 7,845 | |||||||||||||||||||||||||||||||||||
Net income | $ | 2,364 | $ | 382 | $ | 8,376 | $ | 703 | $ | 7,092 | $ | 9,843 | $ | 12,671 | ||||||||||||||||||||||||||||
Basic earnings per share | $ | 0.24 | $ | 0.04 | $ | 0.81 | $ | 0.07 | $ | 0.62 | $ | 0.87 | $ | 0.98 | ||||||||||||||||||||||||||||
Weighted average shares outstanding – basic | 10,014 | 10,147 | 10,368 | 10,773 | 11,509 | 11,307 | 12,898 | |||||||||||||||||||||||||||||||||||
Diluted earnings per share | $ | 0.21 | $ | 0.03 | $ | 0.76 | $ | 0.06 | $ | 0.58 | $ | 0.82 | $ | 0.93 | ||||||||||||||||||||||||||||
Weighted average shares outstanding – diluted | 11,061 | 11,020 | 11,022 | 11,292 | 12,236 | 11,993 | 13,630 | |||||||||||||||||||||||||||||||||||
As of January 31, | As of October 31, | |||||||||||||||||||||||||||||||||||
2002 | 2003 | 2004 | 2005 | 2006 | 2006 | |||||||||||||||||||||||||||||||
Consolidated Balance Sheet Data: | ||||||||||||||||||||||||||||||||||||
Working capital | $ | 46,140 | $ | 47,260 | $ | 57,388 | $ | 59,868 | $ | 61,197 | $ | 86,704 | ||||||||||||||||||||||||
Total assets | 67,701 | 70,956 | 80,696 | 80,595 | 138,317 | 298,120 | ||||||||||||||||||||||||||||||
Short-term debt | 906 | 885 | 852 | 972 | 7,578 | 106,691 | ||||||||||||||||||||||||||||||
Long-term debt, excluding current portion | 203 | 88 | 0 | 510 | 21,750 | 16,800 | ||||||||||||||||||||||||||||||
Total stockholders’ equity | 54,813 | 55,748 | 65,272 | 66,930 | 82,011 | 110,789 | ||||||||||||||||||||||||||||||
BUSINESS
Overview
G-III designs, manufactures and markets an extensive range of outerwear and sportswear, including coats, jackets and pants, as well as women’s suits and dresses. We sell our products under licensed brands, our own proprietary brands and private retail labels. We provide high quality apparel under recognized brands to retailers such as Macy’s, Nordstrom and Saks. We distribute our products through a diverse mix and a large number of retailers at a variety of price points.
Licensed brands have been an important part of our strategy for over 10 years. We currently have licenses to produce branded fashion apparel, including, among others, under the Calvin Klein, Sean John, Kenneth Cole, Cole Haan, Guess?, Jones New York, Nine West, Ellen Tracy, IZOD and Tommy Hilfiger labels. We also have licenses to produce branded sports apparel containing trademarks of the National Football League, National Basketball Association, Major League Baseball, National Hockey League, Louisville Slugger, World Poker Tour and over 100 U.S. colleges and universities.
We work with leading retailers, such as Federated, Wal-Mart, JC Penney and Kohl’s, in developing product lines to be sold under their own proprietary private labels. In March 2006, we announced that we had expanded our relationship with Wal-Mart to design and produce a new young men’s and boy’s branded urban sportswear line, under its Exsto label. We began shipping Exsto product during July 2006 and were shipping to over 500 Wal-Mart locations by fall 2006. We also produce apparel under our own proprietary brands, including Marvin Richards, G-III, Black Rivet, Siena Studio, Colebrook, G-III by Carl Banks, Winlit, NY 10018 and La Nouvelle Renaissance.
In July 2005, we acquired the business of Marvin Richards and the operating assets of Winlit Group, Ltd. As a result of the Marvin Richards acquisition, we added licenses for men’s and women’s outerwear under the Calvin Klein brand name, as well as Marvin Richards’ own proprietary labels. As a result of acquiring Winlit’s assets, we added licenses for men’s and women’s outerwear under the Guess? brand, leather outerwear under the Tommy Hilfiger brand and women’s outerwear under the Ellen Tracy brand. We also acquired Winlit’s own proprietary labels. In addition, we added significant management, merchandising, manufacturing and design expertise as a result of these acquisitions.
As an immediate benefit of our acquisition of Marvin Richards, we expanded our relationship with Calvin Klein by entering into license agreements in September 2005 to manufacture and distribute women’s better suits, and in April 2006 to manufacture and distribute women’s dresses, under the Calvin Klein label.
Competitive Strengths
Our broad portfolio of high-profile brands combined with our extensive distribution relationships positions us for growth. We intend to capitalize on the following competitive strengths in order to achieve our goal of creating an all-season diversified apparel company:
Broad portfolio of recognized brands. Over the past 10 years, we have built a broad and deep portfolio of over 25 licensed and proprietary brands. We believe we are a licensee of choice for well-known brands that have built a loyal following of both fashion-conscious consumers and retailers who desire high quality, well designed apparel. We have selectively added the licensing rights to premier brands in women’s, men’s and sports categories catering to a wide range of customers. In an environment of rapidly changing consumer fashion trends, we benefit from a balanced mix of well-established and newer brands. In addition to our licensed brands, we own several successful proprietary brands. Our experience in developing our licensed brands and our own proprietary labels, as well as our reputation for producing high quality, well-designed apparel, has led major department stores and retailers, including Federated, Wal-Mart, JC Penney and Kohl’s, to select us as a designer and manufacturer for their private label programs.
We currently market apparel under the following licensed and proprietary brand names:
Diversified distribution base. We market our products at multiple price points and across multiple channels of distribution, allowing us to provide products to a broad range of consumers, while reducing our reliance on any one demographic segment, merchandise preference or distribution channel. Our products are sold to approximately 2,500 customers, including leading department and specialty stores such as Macy’s, Nordstrom and Saks, mid-tier and mass merchants such as Wal-Mart, JC Penney, Target and Kohl’s, and membership clubs such as Costco and Sam’s Club. As a result of our broad distribution platform, we are a licensee and supplier of choice and can more easily adapt to changes in the retail environment. In addition, we believe our strong relationships with retailers have been established through many years of personal customer service and adherence to meeting or exceeding retailer expectations.
Superior design, sourcing and quality control. Our in-house design and merchandising team of over 100 professionals designs substantially all of our licensed, proprietary and private label products. Our designers work closely with our licensors and private label customers to create designs and styles that represent the look they want. We believe that our creative design team and our sourcing expertise give us an advantage in product development. We have a network of worldwide suppliers that allows us to negotiate competitive terms without relying on any single vendor. In addition, we employ a 25-person quality control team and a 33-person sourcing group in China to ensure the quality of our products. We believe we have developed a significant customer following and positive reputation in the industry as a result of our design capabilities, sourcing expertise, on-time delivery and high standards of quality control.
Leadership position in the outerwear wholesale business. As one of the largest outerwear wholesalers, we are widely recognized within the apparel industry for our high-quality and well-designed products. Our knowledge of the outerwear business and our industry-wide reputation provide us with an advantage when we are competing for outerwear licenses and private label business. We are known for our leather manufacturing expertise, a skill that has given us another competitive advantage in the outerwear market. Our expertise and reputation in designing, manufacturing and marketing outerwear have enabled us to build strong customer relationships and to expand into women’s suits, dresses and other product categories.
Experienced management team. Our executive management team has extensive experience in the apparel industry. Morris Goldfarb, our Chief Executive Officer and son of our founder, has been with us for 35 years, Jeanette Nostra, our President, has been with us for 25 years, and Wayne S. Miller, our Chief Operating Officer, has been with us for eight years. In 2005, we added significant management, merchandising, manufacturing and design expertise as a result of our acquisition of the Marvin Richards and Winlit businesses. The principals of those businesses, Sammy Aaron and David Winn, each have more than 25 years’ experience in the apparel industry. The experience, expertise and depth of our management team have enabled us to implement new initiatives in new product categories with existing licensees, such as Calvin Klein and Sean John, and private label customers, such as Wal-Mart.
Growth Strategy
Our goal is to build an all-season diversified apparel company with a broad portfolio of brands that we offer in multiple channels of retail distribution through the following growth strategies:
Execute new initiatives. We are continually seeking opportunities to produce products for all seasons as we attempt to reduce our dependency on our third fiscal quarter for the majority of our net sales and substantially all of our net income. During the past year, we have initiated the following product diversification efforts, each of which we believe has significant revenue potential:
Continue to grow our outerwear business. We have been a leader in the outerwear business for many years and believe there is significant growth potential for us in this category. Specifically, our Calvin Klein men’s and women’s outerwear businesses is expected to benefit from Calvin Klein’s strong brand awareness and loyalty among consumers. In May 2006, we added a license for Sean John women’s outerwear to our existing license for their men’s outerwear. We also intend to expand our private label outerwear business with additional programs, such as the Candies’ brand distributed by Kohl’s.
Extend our new product categories to additional brands. We have been able to leverage our expertise and experience in the outerwear business to expand our licenses to new product categories such as women’s suits, dresses and sportswear. We will attempt to expand our distribution of products in these categories under other licensed brands, private label brands and our own brands. Specifically, we expect to seek additional licenses to produce dresses and private label programs to produce women’s suits.
Seek attractive acquisitions. We plan to continue to pursue acquisitions of complementary product lines and businesses. In July 2005, we acquired two businesses, Marvin Richards and Winlit, both of which added name-brand licenses, including Calvin Klein, Guess?, Tommy Hilfiger and Ellen Tracy, to our expanding brand portfolio. In addition, each of these companies has recognized proprietary labels and significant private label programs. These acquisitions have increased our portfolio of licensed brands, added additional retail customers and allowed us to realize economies of scale. We believe that our existing infrastructure and management depth will enable us to complete additional acquisitions in the apparel industry.
Products - Development and Design
G-III designs, manufactures and markets women’s and men’s apparel at a wide range of retail sales prices. Our product offerings primarily include outerwear, sportswear and women’s suits and dresses. We sell products under licensed brands, our own brands and private retail labels.
G-III’s licensed apparel consists of both men’s and women’s products. Our strategy is to seek licenses that will enable us to offer a range of products targeting different price points and different tiers of distribution. Our women’s licensed apparel includes products that sell at retail prices generally ranging from $100 for sportswear items to $3,500 for outerwear. Our men’s licensed apparel consists of garments that generally sell at retail prices ranging from $50 for sportswear items to $2,000 for outerwear.
G-III’s proprietary branded apparel also consists of both men’s and women’s products. The Black Rivet, Colebrook, Marvin Richards, Winlit and NY 10018 lines of women’s apparel consist of moderately priced women’s outerwear and sportswear that typically sell at retail prices from $40 for sportswear items to $250 for outerwear. Products in our men’s outerwear lines, primarily consisting of leather outerwear, sold under the G-III, Colebrook and Winlit labels, typically have retail prices between $40 and $400. Siena Studio, LNR and La Nouvelle Renaissance, our bridge-priced lines of women’s leather and textile apparel, primarily consist of jackets, skirts and related sportswear separates with retail prices from $100 for skirts to $700 for outerwear.
We also work with retail chains, such as Federated, Wal-Mart, Sam’s Club, JC Penney and Kohl’s, in developing product lines sold under their own proprietary private labels. We meet frequently with department and specialty chain store buyers who custom order products by color, fabric and style. These buyers may provide samples to us or may select styles already available in our showrooms. We believe we have established a reputation among these buyers for our ability to produce high quality product on a reliable, expeditious and cost-effective basis.
Our in-house designers are responsible for the design and look of our licensed and non-licensed products. We work closely with our licensors to create designs and styles for each of our licensed brands. Licensors generally must approve products to be sold under their brand names prior to production. We respond to style changes in the apparel industry by maintaining a continuous program of style, color, leather and fabric selection. In designing new products and styles, we attempt to incorporate current trends and consumer preferences. We seek to design products in response to trends in consumer preferences, rather than attempt to create new market trends and styles.
Our design personnel meet regularly with our sales and merchandising department, as well as with the design and merchandising staffs of our licensors, to review market trends, sales results and the popularity of our latest products. In addition, our representatives regularly attend trade and fashion shows and shop at fashion forward stores in the United States, Europe and the Far East. Our designers present sample items along with their evaluation of the styles expected to be in demand in the United States. We also seek input from selected customers with respect to product design. We believe that our sensitivity to the needs of retailers, coupled with the flexibility of our production capabilities and our continual monitoring of the retail market, enables us to modify designs and order specifications in a timely fashion.
Licensing
The following table sets forth for each of our principal licenses the date on which the current term ends and the date on which any potential renewal term ends:
Under our licensing agreements, we are generally required to achieve minimum net sales of licensed products, pay guaranteed minimum royalties, make specified royalty and advertising payments (usually based on a percentage of net sales of licensed products), and receive prior approval of the licensor as to all design and other elements of a garment prior to production. If we do not satisfy any of these requirements or otherwise fail to meet our obligations under a license agreement, a licensor usually will have the right to terminate our license.
Our ability to renew the current term of a license agreement is usually subject to attaining minimum sales and/or royalty levels and to our compliance with all of the terms of the agreement. Other criteria may also impact our ability to renew a license. As a result, we cannot be suretrustee that we will select. The forms of these indentures have been filed with the SEC as exhibits to the registration statement of which this prospectus is a part. This description is not complete and is subject to, and is qualified in its entirety by reference to, the forms of indentures and the Trust Indenture Act of 1939, as amended, which we refer to as the “Trust Indenture Act”. The indentures will be able to renew a license agreement when it expires if we desire to do so.
We believe that brand owners are looking to consolidatequalified under the numberTrust Indenture Act.
Revenues from the sale of licensed products accounted for 60.8% of our net sales during fiscal 2006 compared to 63.6% of our net sales in fiscal 2005 and 76.3% of our net sales in fiscal 2004. For the nine months ended October 31, 2006, revenues from the sale of licensed products accounted for 60.2% of our net sales compared to 57.3% of our net sales in the comparable period in the prior year. In fiscal 2006, sales of licensed product as a percentage of total net sales decreased primarily because a majority of the revenue from our Marvin Richards division, which we acquired in fiscal 2006, was generated by their own proprietary brands. The significant decrease in fiscal 2005 compared to fiscal 2004 in the
percentage of our net sales accounted for by licensed products was the result of our largest customer shifting from orders for licensed product to orders for our proprietary branded product.
Manufacturing and Sourcing
G-III arranges for the production of products from independent manufacturers located primarily in China and, to a lesser extent, in South Korea, the Ukraine, Eastern Europe, the Dominican Republic, Macau, Sri Lanka and Vietnam. A small portion of our garments is manufactured in the United States.
In January 2005, we sold our joint venture interest in a factory in Northern China to our joint venture partner. We manufactured approximately 3.2% of our products at this factory in fiscal 2006. We may continue to source comparable unit levels of production through this factory although the percentage of our products from this factory will decrease as a result of our acquisitions in July 2005.
In fiscal 2006, we completed the transition from a branch office in Korea to two representative offices in Qingdao and Hangzhou, China. As a result, we closed our branch office in Korea that had acted as a liaison between us and manufacturers in the Far East. Because a majority of our production is being sourced in China, we believe it is more efficient to provide the liaison functions in closer proximity to where the manufacturing occurs. Our China offices will perform all the functions that had previously been performed in Korea. At November 30, 2006, we had 34 employees in our Qingdao office and 34 employees in our Hangzhou office.
G-III’s headquarters provides these liaison offices with production orders stating the quantity, quality, delivery time and types of garments to be produced. Liaison office personnel negotiate and place orders with one or more manufacturers. In allocating production among independent suppliers, we consider a number of criteria, including, but not limited to, quality, availability of production capacity, pricing and ability to meet changing production requirements.
To facilitate better service for our customers and accommodate the volume of manufacturing in the Far East, we also have an office in Hong Kong. The Hong Kong office also supports third party production of products on a commission-fee basis that we arrange as agent directly for some of our customers. We utilize our China and Hong Kong office employees to monitor production at each manufacturer’s facility to ensure quality control, compliance with our specifications and timely delivery of finished garments to our distribution facilities and customers. At November 30, 2006, the Hong Kong office employed five persons.
In connection with the foreign manufacture of our apparel, manufacturers purchase leather, wool and other fabrics under our direction. In addition, they purchase necessary ‘‘submaterials’’ (such as linings, zippers, buttons and trimmings) according to parameters specified by us. Prior to commencing the manufacture of garments, samples of raw materials or submaterials are sent to us for approval. We regularly inspect and supervise the manufacture of our products in order to ensure timely delivery, maintain quality control and monitor compliance with our manufacturing specifications. We also inspect finished apparel at the factory site.
The manufacture of the substantial majority of our apparel is performed manually. A pattern is used in cutting fabric to panels that are assembled in the factory. All submaterials are also added at this time. We inspect products throughout this process to insure that the design and quality specifications of the order are being maintained as the garment is assembled. After pressing, cleaning and final inspection, the garment is labeled and ready for shipment. A final random inspection by us occurs when the garments are packed for shipment.
We generally arrange for the production of apparel on a purchase order basis with completed garments manufactured to our design specifications. We assume the risk of loss predominantly on a Freight-On-Board (F.O.B.) basis when goods are delivered to a shipper and are insured against casualty losses arising during shipping.
As is customary in the apparel industry, we have not entered into any long-term contractual arrangements with any contractor or manufacturer. We believe that the production capacity of foreign manufacturers with which we have developed, or are developing, a relationship is adequate to meet our apparel production requirements for the foreseeable future. We believe that alternative foreign apparel manufacturers are readily available.
A majority of all finished goods manufactured for us is shipped to our New Jersey warehouse and distribution facilities or to designated third party facilities for final inspection and allocation, as well as reshipment to customers. The goods are delivered to our customers and us by independent shippers, choosing the form of shipment (principally ship, truck or air) based upon a customer’s needs, cost and timing considerations.
Quotas and Customs
Until January 1, 2005, our textile apparel was subject to quota restrictions. Quotas represent the right to export amounts of certain categories of merchandise into a country. On January 1, 2005, pursuant to the Agreement on Textiles and Clothing, quotas on textile and apparel products were eliminated for World Trade Organization, or WTO, members, including the United States. China’s accession agreement for membership in the WTO provides that WTO member countries, including the United States, may re-impose safeguard quotas on specific products if it is determined that imports from China have surged and are threatening to create a market disruption for these categories of products. In May 2005, the United States imposed unilateral safeguard quotas on several product categories, limiting growth in imports of these categories to 7.5% a year. The safeguard quotas in several categories have been extended by the United States government and will likely continue through 2008. These limitations apply to a limited number of products imported by us from China. We do not, however, expect these limitations to have a negative impact on our ability to manufacture and import women’s suits, dresses and sportswear.
Our arrangements with textile manufacturers and suppliers are subject to requisite customs clearances for textile apparel and the imposition of export duties. United States Customs duties on our textile apparel presently range from duty free to 28%, depending upon the type of fabric used and how the garment is constructed. Countries in which our products are manufactured and sold may,offer from time to time impose new duties, tariffs, surcharges or other import controls or restrictions or adjust prevailing duty or tariff levels. We continually monitor duty, tariff and other import restriction developments. We seek to minimize our potential exposure to import related risks through, among other measures, geographical diversification of manufacturing sources and shifts of production among countries and manufacturers.
Raw Materials
We purchase most products manufactured for us on a finished goods basis. We coordinate the sourcing of raw materials used in the production of our apparel, such as leather, wool and cotton, which are available from numerous sources. The leather apparel industry competes with manufacturers of other leather products for the supply of leather. Leather skins are a byproduct. Accordingly, raw material costs for leather products are impacted by changes in meat consumption worldwide, as well as by the popularity of leather products.
Marketing and Distribution
G-III’s products are sold primarily to department, specialty and mass merchant retail stores in the United States. We sell to approximately 2,500 customers, ranging from national and regional chains to small specialty stores.
Sales to Federated Department Stores accounted for an aggregate of 19.0% of our net sales in fiscal 2006 and 23.8% of our net sales in the nine months ended October 31, 2006. Federated completed the acquisition of May Department Store Company in August 2005. Sales to Federated in fiscal 2006 include sales to the Macy’s, Lord & Taylor and Marshall Fields retail chains that were part of the combined Federated and May. Sales to Federated in the nine months ended October 31, 2006 do not include sales to Lord & Taylor, which was sold by Federated during that period. Sales to department store divisions of Federated and May accounted for an aggregate of 11.3% of our net sales in each of fiscal 2005 and fiscal 2004. The increase in the percentage of our net sales to Federated was the result of our two acquisitions in July 2005.
Sales to the Sam’s Club and Wal-Mart divisions of Wal-Mart Stores, Inc. accounted for an aggregate of 15.3% of our net sales in fiscal 2004, 15.0% of our net sales in fiscal 2005, 13.2% of our net sales in fiscal 2006 and 14.6% of our net sales for the nine months ended October 31, 2006.
The loss of either Federated or Wal-Mart, or a significant reduction in purchases by either customer, could have a material adverse effect on our results of operations. Sales to our 10 largest customers accounted for 60.7% of our net sales in fiscal 2006 compared to 52.6% of our net sales in fiscal 2005. For the nine months ended October 31, 2006, our 10 largest customers accounted for approximately 73.9% of our net sales.
Almost all of our sales are made in the United States. We also market our products in Canada, Europe and the Far East, which, on a combined basis, accounted for less than 1% of our net sales in fiscal 2006.
G-III’s products are sold primarily through a direct sales force that consisted of 52 employees as of November 30, 2006. Our principal executives are also actively involved in sales of our products. Some of our products are also sold by various retail buying offices and independent sales representatives located throughout the United States. Final authorization of all sales of product is solely through our New York showrooms, enabling our management to deal directly with, and be readily accessible to, major customers, as well as to more effectively control our selling operations.
Brand name products sold by us pursuant to a license agreement are promoted by institutional and product advertisements placed by the licensor. Our license agreements generally require us to pay the licensor a fee, based on a percentage of net sales of licensed product, to pay for a portion of these advertising costs. We may also be required to spend a specified percentage of net sales of a licensed product on advertising placed by us.
We primarily rely on our reputation and relationships to generate business in our non-licensed segment. We believe we have developed a significant customer following and positive reputation in the industry as a result of, among other things, standards of quality control, on-time delivery, competitive pricing and willingness and ability to assist customers in their merchandising of our products. In addition, we have, to a limited extent, advertised our own labels and engaged in cooperative advertising programs with retailers. We believe we have developed brand awareness of our own labels primarily through our reputation, consumer acceptance and the fashion press.
Seasonality
Retail sales of outerwear apparel have traditionally been seasonal in nature. Although we sell our apparel products throughout the year, net sales in the months of July through November accounted for approximately 82% of our net sales in fiscal 2006, 74% of our net sales in fiscal 2005 and 75% of our net sales in fiscal 2004. The percentage of our net sales increased during this period in fiscal 2006 because we made two acquisitions in July 2005. The July through November time frame is expected to continue to represent a disproportionate amount of our net sales and net income.
Order Book
A portion of our orders consists of short-term purchase orders from customers who place orders on an as-needed basis. Information relative to open purchase orders at any date may also be materially affected by, among other things, the timing of the initial showing of apparel to the trade, as well as by the timing of recording of orders and shipments. As a result, we do not believe that disclosure of the amount of our unfilled customer orders at any time is meaningful.
Competition
We have numerous competitors with respect to the sale of apparel, including distributors that import apparel from abroad and domestic retailers with established foreign manufacturing capabilities. Many of our competitors have greater financial and marketing resources and greater manufacturing capacity than we do. We also compete with vertically integrated apparel manufacturers that also own retail stores. The general availability of contract manufacturing capacity also allows ease of access by new market entrants. Sales of our products are affected by style, price, quality, brand reputation and general fashion trends.
Trademarks
Several trademarks owned by us have been granted federal trademark protection through registration with the U.S. Patent and Trademark Office, including G-III, G-III (& Design), G-III Sports By
Carl Banks & Design, J.L. Colebrook, JLC, Colebrook & Co., American Classics By Colebrook, Black Rivet, Black Rivet & Design [lower diamond], Black Rivet & Design [upper diamond], Black Rivet & Design [circles and diamond], ColeB Co. (& Design), Siena, Siena Studio, Sports 58 (& Design) and Studio 512.We have applications for several additional marks pending before the U.S. Patent and Trademark Office, including the trademarks we acquired from Marvin Richards.
We acquired trademarks previously owned by Winlit Group, Ltd., including WINLIT, WINLIT (Stylized), LNR, LNR (Stylized), La Nouvelle Renaissance and NY 10018 upon our acquisition of specified assets of Winlit. We also acquired the J. Percy Sport, Marvin Richards and J. Percy For Marvin Richards United Kingdom trademarks upon our acquisition of Marvin Richards.
We have been granted trademark registration for G-III in Canada, the European Union, France and Mexico, for J.L. Colebrook in Canada, France, Great Britain, Mexico and the European Union, for J.L.C. (& Design) and JLC (& Design) in Canada, and for BR (& Design) in the European Union and Russia. We also have applications for several additional marks in Canada.
Employees
As of November 30, 2006, we had 532 full-time employees, of whom 94 worked in executive or administrative capacities, 204 worked in design, merchandising and sourcing, 182 worked in warehouse and distribution facilities, and 52 worked in sales. We employ both union and non-union personnel and believe that our relations with our employees are good. We have not experienced any interruption of any of our operations due to a labor disagreement with our employees.
We are a party to an agreement with the Amalgamated Clothing and Textile Workers Union, covering approximately 75 of our full-time employees as of January 31, 2006. This agreement, which is currently in effect through October 31, 2007, automatically renews on an annual basis thereafter unless terminated by us or the union prior to September 1 of that year.
Properties
Our executive offices, sales showrooms and support staff are located at 512 Seventh Avenue in New York City. We lease an aggregate of approximately 42,500 square feet in this building through March 31, 2011 at a current aggregate annual rent of approximately $1.2 million. We also lease approximately 4,000 square feet at a current annual rent of $90,000 in an adjoining building at 500 Seventh Avenue for additional design staff.
We assumed leases for an additional 28,000 square feet of office and showroom space at 512 Seventh Avenue in connection with our acquisition of Marvin Richards. The current aggregate annual rent for this space is $500,000. One of these leases expires in January 2008 and the other expires in December 2013. We assumed a lease in New York City for approximately 20,000 square feet of office and showroom space at 463 Seventh Avenue in connection with the Winlit transaction. The current annual rent is approximately $440,000 and the lease expires in December 2011.
In February 2005, we extended the lease on our warehouse and distribution facility, located in Secaucus, New Jersey, through February 2011. As part of the new lease, we leased an additional 95,000 square feet of adjacent space that we have utilized since October 1, 2005, giving us total space at the facility of approximately 205,000 square feet. Annual rent for the entire premises is approximately $1.2 million. We obtained the additional space to reduce our reliance on third party warehouses and accommodate the additional volume we anticipate being generated from our newly signed licenses. In fiscal 2006, we spent approximately $800,000 to renovate the new and existing warehouse space.
In June 2006, we entered into a seven-year lease for an additional distribution center in South Brunswick, New Jersey. This facility contains approximately 305,000 square feet of space which will be used by us for product distribution. Annual rent for this facility is approximately $1.2 million. Asestablished in or under a result of adding this new facility, we will not renew our lease for our distribution center in Edison, New Jersey which expires in January 2007. The Edison facility contains approximately 89,000 square feet, The additional space is expected to allow us to meet some of our anticipated increased shipping volume. We estimate that the renovation of this new facility will cost us between $1 million and $1.5 million and that the facility will be fully operational by May 2007.
A majority of our finished goods is shipped to our New Jersey warehouse and distribution facilities for final reshipment to customers. We also use third-party warehouses to accommodate our finished goods storage and reshipment needs.
We also lease office space at 345 West 37th Street in New York City for administrative personnel. This space is leased from a corporation owned by Morris Goldfarb and Aron Goldfarb. Aggregate payments under this lease in fiscal 2006 were $227,000. We lease three floors in the building as well as parking spaces and a billboard. Total leased space in this building is approximately 10,100 square feet.
Legal Proceedings
In the ordinary course of our business, we are subject to periodic lawsuits, investigations and claims. Although we cannot predict with certainty the ultimate resolution of lawsuits, investigations and claims asserted against us, we do not believe that any currently pending legal proceeding or proceedings to which we are a party will have a material adverse effect on our business, financial condition or results of operations.
MANAGEMENT
Executive Officers and Directors
The following table sets forth the names, ages and positions of each of our executive officers and directors.
Morris Goldfarb is our Chairman of the Board and Chief Executive Officer, as well as one of our directors. Until April 1997, Mr. Goldfarb also served as our President. Mr. Goldfarb has served as an executive officer of G-III and our predecessors since our formation in 1974. Mr. Goldfarb is also a director of Lakes Entertainment, Inc.
Sammy Aaron became our Vice Chairman and President of our Marvin Richards division, as well as one of our directors, after the Marvin Richards acquisition in July 2005. Prior to joining G-III, Mr. Aaron served as the President of Marvin Richards from 1998 until July 2005.
Jeanette Nostra became our President in April 1997. She had been our Executive Vice President since March 1992. Ms. Nostra’s responsibilities for G-III include sales, marketing, merchandising, product development and public relations for our licensed fashion brands. We have employed Ms. Nostra since 1981.
Wayne S. Miller has been our Chief Operating Officer since December 2003 and our Secretary since November 1998. He also served as our Chief Financial Officer from April 1998 until September 2005 and as our Treasurer from November 1998 until April 2006.
Neal S. Nackman has been our Chief Financial Officer since September 2005 and was elected Treasurer in April 2006. Mr. Nackman also served as Vice President – Finance from December 2003 until April 2006. Prior to joining G-III, Mr. Nackman was a financial consultant with Jefferson Wells International from January 2003 until December 2003. From May 2001 until October 2002, he was Senior Vice President – Controller of Martha Stewart Living Omnimedia, Inc. From May 1999 until May 2001, he was Chief Financial Officer of Perry Ellis International Inc. From August 1995 until May 1999, he was the Vice-President – Finance with Nautica Enterprises, Inc.
Deborah Gaertner is the Vice President – Women’s Division of G-III Leather Fashions and has held this position since March 1992. Ms. Gaertner is responsible for sales and marketing of certain of our women’s apparel lines. She previously served as Vice President, Imports from June 1989 until March 1992, coordinating production and merchandising.
Thomas J. Brosig has served as a member of our board of directors since 1992. Mr. Brosig is currently retired. From January 1999 through February 2002, he served as President, Mid-South Region,
Park Place Entertainment. For more than five years priorand set forth in an officers’ certificate or a supplemental indenture, and in a form of debt security with respect to 1999, he served its predecessor, Grand Casinos, Inc., in various executive capacities including its President from September 1996that series. We will file the applicable executed indenture, such officers’ certificate or supplemental indenture and the form of debt security with the SEC. The prospectus supplement with respect to January 1999. From January 1999the series of debt securities we are offering will describe these particular terms and will indicate the extent to October 1999, he served as President and was a Directorwhich the general terms described below may not apply to that series of Lakes Entertainment, Inc. Mr. Brosig currently serves as a Director of Mountaineer Gaming Inc.
Pieter Deiters has served as a member of our board of directors since 2005. Mr. Deiters has been a memberdebt securities. Whenever particular defined terms of the supervisory boardapplicable form of Tootal N.V. Enshede,indenture, as supplemented or amended from time to time, are referred to in this prospectus or a textile trading companyprospectus supplement, those defined terms are incorporated in the Netherlands, since 2002 and an advisor to Bandolera B.V., a women’s clothing manufacturer in the Netherlands, since 2000. Since 1998, Mr. Deiters has been a senior member of the Turn Around Management Team of the European Bank for Reconstruction and Development and Vice President of the Supervisory Board of Royal Ten Cate Companies, KTC, a Netherlands company quoted in the Euronext Stock Market.
Alan Feller has served as a member of our board of directors since 1996. Mr. Feller is currently retired. Mr. Feller was our Chief Financial Officer from December 1989 to April 1998, and served as our Executive Vice President, Treasurer and Secretary from January 1990 through July 1995. Mr. Feller served as a consultant to us from May 1998 through October 1999.
Carl Katz has served as a member of our board of directors since 1989. Mr. Katz is currently retired. Mr. Katz was Executive Vice President of our Siena Leather division from 1989 until January 2003. Mr. Katz had been an executive of Siena since 1981.
Laura Pomerantz has served as a member of our board of directors since 2005. Ms. Pomerantz has been a principal of PBS Realty Advisors, LLC since 1994. She has also served as a director of Newkirk Realty Trust, Inc. since 2005.
Willem van Bokhorst has served as a member of our board of directors since 1989. Mr. van Bokhorst has been a Managing Partner of STvB Advocaten, a Netherlands Antilles law firm with offices in Amsterdam and Curaçao, for more than the past five years.
Richard White has served as a member of our board of directors since 2003. Mr. White has been a Managing Director and head of the Private Equity Investment Department of Oppenheimer & Co. Inc. since June 2004. From 2002 to June 2004, he served as President of Aeolus Capital Group LLC, an investment management firm. From 1985 until 2002, he was a Managing Director at CIBC Capital Partners, an affiliate of CIBC World Markets, and its predecessor firm, Oppenheimer & Co., Inc. During that time, Mr. White worked in both the Investment Banking and Private Equity Investing departments. Mr. White is a director of ActivIdentity Corp., a company which develops digital identity and authentication software and hardware, and Escalade Inc., a manufacturer of sporting goods and office products. Mr. White previously served as a director of G-III from November 1991 to July 1993.
Carl Katz, one of our directors, and Jeanette Nostra, our President, are married to each other.
Goldfarb Employment Agreement
We have an employment agreement with Morris Goldfarb effective through January 31, 2009. Two years prior to the expiration of the term of the agreement, it will automatically be extended for an additional year unless prior to that time either wethis prospectus or Mr. Goldfarb provides a written notice that the term should not be extended any further. The agreement provides for an annual base salary of $650,000, with increases at the discretion of the board of directors. The agreement also provides for a $2,000,000 life insurance policy which names Mr. Goldfarb’s wife as beneficiary and an annual incentive bonus equal to varying percentages of pre-tax income (as defined in the employment agreement) if pre-tax income exceeds $2,000,000. The percentages vary from 3% of pre-tax income in excess of $2,000,000 up to 6% of pre-tax income in excess of $2,000,000 if pre-tax income exceeds $4,000,000. Pursuant to the employment agreement, we will contribute $50,000 per year to a supplemental pension trust for Mr. Goldfarb’s benefit for each year in which net after-tax income (as defined in the employment agreement) exceeds $1,500,000. In addition, pursuant to the employment agreement, in the event that Morris Goldfarb’s employment is terminated (i)such prospectus supplement by us without cause or (ii) by Morris Goldfarb because of a material breach by us of the agreement, in either case at any time after a ‘‘Change in Control’’ (as defined in the employment agreement), then Mr. Goldfarbreference.
Aaron Employment Agreement
On July 11, 2005, we enteredmay be convertible into an employment agreement with Sammy Aaron. His employment agreement has a term through January 31, 2009 with automatic one-year renewals unless either party gives written notice to the other at least 90 days prior to the expiration of the initial term or any renewal period. The employment agreement provides for an annual base salary of $500,000, with increases at the discretion of the board of directors. On February 1, 2006, the Compensation Committee of the board of directors approved an increase in Mr. Aaron’s annual base salary to $600,000. Mr. Aaron is also entitled to participate in our benefit plans. If the employment agreement is terminated by us without justifiable cause (as defined in the employment agreement) or by Mr. Aaron for good reason (as defined in his employment agreement), Mr. Aaron is entitled to receive his salary and benefits for the remainder of the term of the employment agreement, subject to compliance by Mr. Aaron with his non-competition and other certain obligations in the employment agreement.
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth information regarding the beneficial ownershipshares of our common stock or preferred stock. The indentures do not limit the amount of debt securities that we may issue and permit us to issue debt securities from time to time in different series, each of which may have different terms. Debt securities issued under the indentures will be issued as part of December 15, 2006 and upon completiona series that has been established by us under the indenture.
• |
• |
• |
• |
• | ||
• | the interest rate or rates (which may be fixed or variable) or, if applicable, the method used to determine such rate or rates; the date or dates from which interest, if any, will be payable and any regular record date for the interest payable; | |
• | the place or places where principal and, if applicable, premium and interest, is payable; | |
• | the terms and conditions upon which we may, or the holders may require us to, redeem or repurchase the debt securities; |
9
• | the denominations in which such debt securities may be issuable, if other than denominations of $1,000 or any integral multiple of that number; | |
• | whether the debt securities are to be issuable in the form of certificated debt securities or global debt securities; | |
• | the portion of principal amount that will be payable upon declaration of acceleration of the | |
• | the currency of denomination; | |
• | the designation of the currency, currencies or currency units in which payment of principal and, if applicable, premium and interest, will be made; | |
• | if payments of principal and, if applicable, premium or interest, on the debt securities are to be made in one or more currencies or currency units other than the currency of denomination, the manner in which the exchange rate with respect to such payments will be determined; | |
• | if amounts of principal and, if applicable, premium and interest may be determined by reference to an index based on a currency or currencies or by reference to a commodity, commodity index, stock exchange index or financial index, then the manner in which such amounts will be determined; | |
• | the provisions, if any, relating to any collateral provided for such debt securities; | |
• | the provisions, if any, with respect to amortization; | |
• | any addition to or change in the covenantsand/or the acceleration provisions described in this prospectus or in the indenture; | |
• | any events of default, if not otherwise described below under “— Events of Default, Notice and Waiver”; | |
• | the terms and conditions, if any, for conversion into or exchange for shares of common stock or preferred stock; | |
• | any terms and conditions restricting the declaration of dividends or requiring the maintenance of any asset ratio or the creation or maintenance of reserves; | |
• | any provisions restricting the incurrence of additional debt or the issuance of additional securities; | |
• | any depositaries, interest rate calculation agents, exchange rate calculation agents or other agents; | |
• | the terms and conditions, if any, upon which the debt securities shall be subordinated in right of payment to our other indebtedness; | |
• | whether the debt security will be defeasible; and | |
• | any other terms of the debt securities. |
Except as indicated by footnote, the persons named
10
11
• | add, change or eliminate provisions in the applicable indenture; or | |
• | change the rights of the holders of our debt securities. |
• | change the final maturity; | |
• | reduce the principal amount or any premium; | |
• | reduce the interest rate or extend the time of payment of interest; | |
• | in the case of subordinated debt securities, modifying the subordination provisions in a manner that is adverse to holders of the subordinated debt securities; |
12
• | in the case of senior debt securities, modifying the securities to subordinate the securities to other indebtedness; | |
• | reduce any amount payable on redemption or provable in bankruptcy; | |
• | reduce the amount of the principal of an original issue discount security that would be payable on acceleration; | |
• | impair or affect the right of any holder to institute suit for payment; | |
• | change any right of the holder to require repayment; or | |
• | reduce the requirement for majority approval of supplemental indentures. |
• | to be discharged from all our obligations on your debt securities, except for our obligations to register transfers and exchanges, to replace temporary or mutilated, destroyed, lost or stolen debt securities, to maintain an office or agency in respect of the debt securities and to hold moneys for payment in trust (“defeasance”); or | |
• | to be released from covenants with respect to your debt securities that we may specify in accordance with the indenture (“covenant defeasance”). |
13
Percentage of beneficial ownership after the transaction is based on 15,372,200 shares ofpreferred stock or debt securities. Warrants may be issued independently or together with common stock, outstanding at the completion of this offering.
Except for beneficial ownership of ourpreferred stock, debt securities or positionsrights, and the warrants may be attached to or separate from such securities. We may issue warrants directly or under a warrant agreement to be entered into between us and a warrant agent. We will name any warrant agent in the applicable prospectus supplement. Any warrant agent will act solely as directorsour agent in connection with the warrants of a particular series and will not assume any obligation or officers as reflected below, nonerelationship of agency or trust for or with any holders or beneficial owners of warrants.
Except as set forth inany applicable warrant agreement, including, where applicable, the footnotes to the table, the information set forth below under the captions ‘‘Other 5% Holders’’ and ‘‘Other Selling Stockholders’’ has been provided to us by the selling stockholders.
Name and Address | Shares Beneficially Owned Prior To Offering(1) Number | Percent | Number Of Shares Being Offered | Shares Beneficially Owned After Offering | Percent | |||||||||||||||||||||||||
Directors | ||||||||||||||||||||||||||||||
Morris Goldfarb(2) | 4,629,488 | (3) | 31.9 | % | 1,300,000 | 3,329,488 | 21.2 | % | ||||||||||||||||||||||
Sammy Aaron(2) | 363,859 | (4) | 2.6 | % | 200,000 | 163,859 | 1.1 | % | ||||||||||||||||||||||
Thomas J. Brosig(2) | 4,500 | (5) | * | — | 4,500 | * | ||||||||||||||||||||||||
Pieter Deiters(2) | 6,600 | (6) | * | — | 6,600 | * | ||||||||||||||||||||||||
Alan Feller(2) | 19,112 | (7) | * | — | 19,112 | * | ||||||||||||||||||||||||
Carl Katz(2) | 173,400 | (8) | 1.2 | % | 75,000 | (9) | 98,400 | * | ||||||||||||||||||||||
Laura Pomerantz(2) | 3,000 | (10) | * | — | 3,000 | * | ||||||||||||||||||||||||
Willem van Bokhorst Julianaplein 5 Curaçao, Netherlands Antilles | 51,825 | (11) | * | — | 51,825 | * | ||||||||||||||||||||||||
Richard White(2) | 33,600 | (12) | * | — | 33,600 | * | ||||||||||||||||||||||||
Other Executive Officers | ||||||||||||||||||||||||||||||
Jeanette Nostra(2) | 173,400 | (13) | 1.2 | % | 75,000 | 98,400 | * | |||||||||||||||||||||||
Wayne S. Miller(2) | 102,298 | (14) | * | 37,500 | 64,798 | * | ||||||||||||||||||||||||
Deborah Gaertner(2) | 44,512 | (15) | * | 7,500 | 37,012 | * | ||||||||||||||||||||||||
Neal S. Nackman(2) | 27,000 | (16) | * | 9,000 | 18,000 | * | ||||||||||||||||||||||||
Other 5% Holders | ||||||||||||||||||||||||||||||
S.A.C. Capital Associates, LLC c/o S.A.C. Capital Advisors, LLC 72 Cummings Point Road Stamford, CT 06902 | 881,610 | (17) | 5.3 | %(18) | 371,200 | 510,410 | 3.3 | % | ||||||||||||||||||||||
Name and Address | Shares Beneficially Owned Prior To Offering(1) Number | Percent | Number Of Shares Being Offered | Shares Beneficially Owned After Offering | Percent | |||||||||||||||||||||||||
Aron Goldfarb(2) | 929,532 | (19) | 6.6 | % | 500,000 | 429,532 | 2.8 | % | ||||||||||||||||||||||
Wynnefield Capital Group 450 Seventh Avenue, Suite 509 New York, NY 10123 | 755,035 | (20) | 5.3 | % | — | 755,035 | 4.9 | % | ||||||||||||||||||||||
Buckingham Capital Management 750 Third Avenue, Sixth Floor New York, NY 10017 | 1,113,150 | (21) | 7.9 | % | — | 1,113,150 | 7.2 | % | ||||||||||||||||||||||
All directors and executive officers as a group (13 persons) | 5,459,194 | (22) | 36.7 | % | 1,629,000 | 3,830,194 | (23) | 23.9 | % | |||||||||||||||||||||
Other Selling Stockholders | ||||||||||||||||||||||||||||||
Lee Lipton(2) | 211,250 | (24) | 1.5 | % | 100,000 | 111,250 | * | |||||||||||||||||||||||
Andrew Reid(2) | 211,250 | (25) | 1.5 | % | 100,000 | 111,250 | * | |||||||||||||||||||||||
David Winn(2) | 112,500 | (26) | * | 50,000 | 62,500 | * | ||||||||||||||||||||||||
Prentice Capital Partners, LP 623 Fifth Avenue, 32nd Floor New York, NY 10022 | 64,590 | (27) (28) | * | 27,200 | 37,390 | * | ||||||||||||||||||||||||
Prentice Capital Partners QP, LP 623 Fifth Avenue, 32nd Floor New York, NY 10022 | 323,950 | (28) (29) | 2.3 | % | 136,400 | 187,550 | 1.2 | % | ||||||||||||||||||||||
Prentice Capital Offshore, Ltd. 623 Fifth Avenue, 32nd Floor New York, NY 10022 | 712,270 | (28) (30) | 4.9 | %(31) | 299,900 | 412,370 | 2.7 | % | ||||||||||||||||||||||
PEC I, LLC 623 Fifth Avenue, 32nd Floor New York, NY 10022 | 237,500 | (28) (32) | 1.7 | % | 100,000 | 137,500 | * | |||||||||||||||||||||||
GPC XLIII, LLC 623 Fifth Avenue, 32nd Floor New York, NY 10022 | 155,080 | (28) (33) | 1.0 | % | 65,300 | 89,780 | * | |||||||||||||||||||||||
the offering price and aggregate number of warrants offered; | ||
the |
the effect of any merger, consolidation, sale or other disposition of our business on the warrant agreement and the warrants; | ||
• | the terms of any rights to redeem or call the warrants; | |
• | any provisions for changes to or adjustments in the exercise price or number of securities issuable upon exercise of the warrants; | |
• | the dates on which the right to exercise the warrants will commence and expire; | |
• | the manner in which the warrant agreement and warrants may be modified; | |
• | a discussion of any material U.S. federal income tax considerations of holding or exercising the warrants; | |
• | the terms of the securities issuable upon exercise of the warrants; and | |
• | any other specific terms, preferences, rights or limitations of or restrictions on the warrants. |
14
• | the date of determining the security holders entitled to the rights distribution; | |
• | the aggregate number of rights issued and the aggregate number of shares of common stock |
the exercise |
the conditions to completion of |
the date on which | ||
• | any applicable federal income tax considerations. |
Each right would entitle the holder of the rights to purchase for cash the amount |
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement, each of the underwriters named below has severally agreed to purchase from us and the selling stockholders the aggregate number of shares of common stock set forth opposite its name below:
Of the 4,500,000 shares to be purchased by the underwriters, 1,121,000 shares will be purchased from us and 3,379,000 will be purchased from the selling stockholders.
The underwriting agreement provides that the obligations of the several underwriters are subject to various conditions, including approval of legal matters by counsel. The underwriters are required to purchase and pay for all of the shares of commonor preferred stock listed above if any are purchased.
Thomas Weisel Partners LLC expects to deliver the shares of common stock to purchasers on or about , 2007.
Over-Allotment Option
We have granted a 30-day over-allotment option to the underwriters to purchase up to a total of 675,000 additional shares of our common stock from uswarrants at the public offeringexercise price less the underwriting discount payable, as set forth on the cover page of this prospectus. If the underwriters exercise this option in whole or in part, then each of the underwriters will be separately committed, subject to the conditions described in the underwriting agreement, to purchase the additional shares of our common stock in proportion to their respective commitments set forth in the table above.
Commissions and Discounts
The underwriters proposeapplicable prospectus supplement. Rights may be exercised at any time up to the close of business on the expiration date for the rights provided in the applicable prospectus supplement. After the close of business on the expiration date, all unexercised rights will become void.
The following table summarizes the compensation to be paid to the underwriters by us and the selling stockholders and the proceeds, before expenses, payable to us and the selling stockholders:
• | through a combination of these methods of sale. |
15
any agency fees or underwriting discounts and commissions and other items constituting agents’ or underwriters’ compensation; | ||||||||||||||||||
Indemnification of Underwriters
describe their compensation. We and the selling stockholders will indemnifymay have agreements with the underwriters, dealers and agents to indemnify them against somespecified civil liabilities, including liabilities under the Securities ActAct. Underwriters, dealers and agents may engage in transactions with or perform services for us or our subsidiaries in the ordinary course of 1933, as amended. their businesses.
No Salessale. The obligations of Similar Securities
Our directors and executive officers and the selling stockholders have agreed with the underwriters to purchase the securities will be subject to certain exceptions, notthe conditions set forth in the applicable underwriting agreement. The underwriters will be obligated to offer, sell,purchase all the securities offered if they purchase any of the securities offered. We may change from time to time any initial public offering price and any discounts or concessions the underwriters allow or reallow or pay to dealers. We may use underwriters with whom we have a material relationship. We will describe in the prospectus supplement naming the underwriters the nature of any such relationship.
We have agreed that for a period of 90 days after the date of this prospectus, we will not, without the prior written consent of Thomas Weisel Partners LLC, offer, sell, agree to sell, directly or indirectly, or otherwise dispose of any shares of our common stock or any securities convertible into or exercisable or exchangeable for shares of our common stock, except for (1) the shares of common stock offered in this offering, (2) any shares of our common stock issuable upon exercise of options or warrants outstanding on the date of this prospectus, and (3) any shares of our common stock issued as consideration for the acquisition of another entity or in connection with a license, joint venture or similar arrangement in an amount not to equal or exceed 20% of the number of shares of our common stock outstanding immediately following this offering.
The 90-day restricted period described in the preceding paragraphs will be automatically extended if: (1) during the last 17 days of the 90-day restricted period we release earnings results or announce material news or a material event; or (2) prior to the expiration of the 90-day restricted period, we announce that we will release earnings results during the 15-day period following the last day of the 90-day period, then in each case the restrictions described in the preceding paragraphs will be automatically extended until the expiration of the 18-day period beginning on the date of release of the earnings results or the announcement of the material news or material event.
Nasdaq Global Market Listing
Our common stockwhich is quotedtraded on the Nasdaq Global Market under the symbol ‘‘GIII.’’
Short Sales, Stabilizing Transactions and Penalty Bids
In orderSelect Market. We may elect to facilitate this offering, persons participatinglist any other class or series of securities on any exchange, but we are not obligated to do so. It is possible that one or more underwriters may make a market in this offering may engage in transactions that stabilize, maintaina class or otherwise affect the priceseries of our common stock during and after this offering. Specifically,securities, but the underwriters will not be obligated to do so and may engagediscontinue any market
16
Shortopen market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short Shorts sales involve the salessale by the underwriters of a greater number of sharessecurities than they are required to purchase in thisthe offering. Covered“Covered” short sales are short sales made in an amount not
greater than the underwriters’ option to purchase additional securities from us, if any, in the offering. If the underwriters have an over-allotment option to purchase additional sharessecurities from us, in this offering. Thethe underwriters may close out any covered short position by either exercising their over-allotment option to purchase shares or purchasing sharessecurities in the open market. In determining the source of sharessecurities to close out the covered short position, the underwriters willmay consider, among other things, the price of sharessecurities available for purchase in the open market as compared to the price at which they may purchase sharessecurities through the over-allotment option. Naked“Naked” short sales are any short sales in excess of such option or where the underwriters do not have an over-allotment option. The underwriters must close out any naked short position by purchasing sharessecurities in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stocksecurities in the open market after pricing that could adversely affect investors who purchase in thisthe offering.
Stabilizing transactions. The underwriters may make bids for
Penalty bids. Ifsecurities, the underwriters may bid for or purchase sharessecurities in the open market and may impose penalty bids. If penalty bids are imposed, selling concessions allowed to syndicate members or other broker-dealers participating in a stabilizing transactionthe offering are reclaimed if securities previously distributed in the offering are repurchased, whether in connection with stabilization transactions or syndicate covering transaction, they may reclaim a selling concession from the underwriters and selling group members who sold those shares as partotherwise. The effect of this offering. Stabilization and syndicate coveringthese transactions may causebe to stabilize or maintain the market price of the securities at a level above that which might otherwise prevail in the open market. The impositions of a penalty bid may also effect the price of the sharessecurities to be higher thanthe extent that it would be in the absence of these transactions. The imposition of a penalty bid might also have an effect on the pricediscourages resale of the shares if it discourages presalessecurities. The magnitude or effect of the shares.
Theany stabilization or other transactions aboveis uncertain. These transactions may occurbe effected on the Nasdaq Global Select Market or otherwise. Neither we nor the underwriters make any representation or prediction as to the effect that the transactions described above may have on the price of the shares. If these transactions areotherwise and, if commenced, they may be discontinued without notice at any time.
Each of the underwriters has represented and agreed that:
(a) it has not made or will not make an offer of shares to the public in the United Kingdom within the meaning of Section 102B of the Financial Services and Markets Act 2000, as amended, or FSMA, except to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities or otherwise in circumstances which do not require the publication by us of a prospectus pursuant to the Prospectus Rules of the Financial Services Authority;
(b) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of FSMA) to persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 or in circumstances in which Section 21 of FSMA does not apply to us; and
(c) it has complied with, and will comply with, all applicable provisions of FSMA with respect to anything done by it in relation to the shares in, from or otherwise involving the United Kingdom.
In relation to each member state of the European Economic Area which has implemented the Prospectus Directive, which we refer to as a Relevant Member State, each underwriter has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State, which we refer to as the Relevant Implementation Date, it has not made and will not make an offer of shares to the public in that Relevant Member State prior to the publication of a prospectus in relation to the shares which has been approved by the competent authority in that Relevant Member State or, where approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of shares to the public in that Relevant Member State at any time:
(a) to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;
(b) to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year, (2) a total balance sheet of more than € 43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; or
(c) in any other circumstances which do not require the publication by us of a prospectus pursuant to Article 3 of the Prospectus Directive.
For the purposes of this provision, the expression an ‘‘offer of shares to the public’’ in relation to any shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the shares to be offered so as to enable an investor to decide to purchase or subscribe for the shares, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State, and the expression ‘‘Prospectus Directive’’ means Directive 2003/71/ EC and includes any relevant implementing measure in each Relevant Member State.
LEGAL MATTERS
The validity of the shares of common stock offered in this prospectus will be passed upon for us by Fulbright & Jaworski L.L.P., New York, New York. Certain legal matters relating to the offering will be passed upon for the underwriters by Morgan, Lewis & Bockius LLP, New York, New York.
The combined financial statements
17
This prospectus may contain information that updates, modifies or is contrary to information in one or more15(d) of the documentsExchange Act after the date of this prospectus are incorporated by reference in this prospectus.
prospectus as of the respective filing dates of these documents and reports. Statements contained in documents that we file with the SEC and that are incorporated by reference in this prospectus will automatically update and supersede information contained in this prospectus, including information in previously filed documents or reports that have been incorporated by reference in this prospectus, to the extent the new information differs from or is inconsistent with the old information.
18
Upon your written or oral
Requests for such documents should be directed to:
Neal S. NackmanChief Financial Officer
contacting:
4,500,000 SharesCommon Stock
Thomas Weisel Partners LLC
Neither we nor any of the underwriters has authorized anyone to provide information different from that contained in this prospectus. When you make a decision about whether to invest in our common stock, youYou should not rely upon any information other thanonly on the information in this prospectus. Neither the delivery of this prospectus nor the sale of our common stock means that information contained in this prospectus, including information incorporated by reference as described above, or any prospectus supplement that we have specifically referred you to. We have not authorized anyone else to provide you with different information. You should not assume that the information in this prospectus or any prospectus supplement is correct afteraccurate as of any date other than the date on the front of those documents or that any document incorporated by reference is accurate as of any date other than its filing date. You should not consider this prospectus. This prospectus to be an offer or solicitation relating to the securities in any jurisdiction in which such an offer or solicitation relating to the securities is not authorized. Furthermore, you should not consider this prospectus to be an offer or solicitation relating to sell or a solicitation of an offer to buy these shares of common stock in any circumstances under whichthe securities if the person making the offer or solicitation is unlawful.not qualified to do so, or if it is unlawful for you to receive such an offer or solicitation.
19
Other Expenses of Issuance and |
Securities and Exchange Commission registration fee | $ | 16,740 | ||
Accounting fees and expenses* | 15,000 | |||
Legal fees and expenses* | 35,000 | |||
Blue sky fees and expenses* | 5,000 | |||
Transfer agent and listing fees* | 2,000 | |||
Miscellaneous* | 6,260 | |||
Total | $ | 80,000 | ||
Amount | ||||||
SEC Registration Fee | $ | 10,510 | ||||
NASD Filing Fee | $ | 10,322 | ||||
Printing and Engraving Fee | $ | 100,000 | ||||
Legal Fees and Expenses | $ | 175,000 | ||||
Accounting Fees and Expenses | $ | 100,000 | ||||
Transfer Agent and Registrar Fee | $ | 5,000 | ||||
Miscellaneous expenses | $ | 99,168 | ||||
Total | $ | 500,000 | ||||
The selling stockholders will not bear any of the expenses in this offering.
Does not include expenses of preparing prospectus supplements and other expenses relating to offerings of particular securities. |
Item 15. | Indemnification of Directors and |
II-1
Exhibit | ||||
Number | Exhibit Title | |||
1 | .1* | Form of Underwriting Agreement by and among the Company and the underwriters named therein. | ||
3 | .1 | Certificate of Incorporation (previously filed as an exhibit to G-III’s Registration Statement onForm S-1(No. 33-31906), which exhibit is incorporated herein by reference). | ||
3 | .2 | Certificate of Amendment of Certificate of Incorporation, dated June 8, 2006, (previously filed as an exhibit to G-III’s Quarterly Report onForm 10-Q for the fiscal quarter ended July 31, 2006 filed on September 13, 2006, which exhibit is incorporated herein by reference). | ||
3 | .3 | By- laws, as amended (previously filed as an exhibit to G-III’s Annual Report onForm 10-K for the fiscal year ended January 31, 2008, filed on April 15, 2008, which exhibit is incorporated herein by reference). | ||
3 | .4 | Form of Common Stock Certificate (previously filed as an exhibit to G-III’s Registration Statement onForm 8-A(No. 33-31906), which exhibit is incorporated herein by reference). | ||
3 | .5* | Form of Certificate of Designations, Rights and Preferences of Preferred Stock. | ||
3 | .6* | Form of Certificate for Preferred Stock. | ||
4 | .1 | Form of Senior Debt Securities Indenture (including form of Senior Note). | ||
4 | .2 | Form of Subordinated Debt Securities Indenture (including form of Subordinated Note). | ||
4 | .3* | Form of Warrant Agreement and Warrant Certificate. | ||
4 | .4* | Form of Rights Certificate. | ||
4 | .5* | Form of Rights Agent Agreement or Subscription Agent Agreement. | ||
5 | .1 | Opinion of Fulbright & Jaworski L.L.P. | ||
12 | .1 | Statement Regarding Computation of Ratios of Earnings to Fixed Charges. | ||
23 | .1 | Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm. | ||
23 | .2 | Consent of Fulbright & Jaworski L.L.P. (included in Exhibits 5.1 and 8.1). | ||
24 | .1 | Power of Attorney of Morris Goldfarb. | ||
24 | .2 | Power of Attorney of Neal S. Nackman. | ||
24 | .3 | Power of Attorney of Sammy Aaron. | ||
24 | .4 | Power of Attorney of Thomas J. Brosig. | ||
24 | .5 | Power of Attorney of Alan Feller. | ||
24 | .6 | Power of Attorney of Jeffrey Goldfarb. | ||
24 | .7 | Power of Attorney of Laura Pomerantz. | ||
24 | .8 | Power of Attorney of Willem van Bokhorst. | ||
24 | .9 | Power of Attorney of Richard White. | ||
25 | .1* | Statement of Eligibility onForm T-1 under the Trust Indenture Act of 1939, as amended, with respect to the Senior Debt Securities. | ||
25 | .2* | Statement of Eligibility onForm T-1 under the Trust Indenture Act of 1939, as amended, with respect to the Subordinated Debt Securities. |
* | To be |
II-2
II-3
II-1
against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the 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 such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.
(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus 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) Forfile an application for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus 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.
The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filingeligibility of the registrant’s annual report pursuanttrustee to section 13(a) or section 15(d)act under subsection (a) of Section 310 of the Securities ExchangeTrust Indenture Act in accordance with the rules and regulations prescribed by the Commission under Section 305(b)(2) of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.Trust Indenture Act.
II-4
II-2
SIGNATURES
By: | /s/ | |||||
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints MORRIS GOLDFARB, WAYNE S. MILLER and NEAL S. NACKMAN, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and his name, place and stead, and in any and all capacities, to sign any and all amendments to this registration statement (including post-effective amendments), and to file the same, and any subsequent registration statement for the same offering which may be filed under Rule 462(b), with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting to said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or either of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue thereof.
Signature | Title | Date | ||||
/s/ Morris Goldfarb Morris Goldfarb | Director, Chairman of the Board and Chief Executive Officer (Principal Executive Officer) | |||||
/s/ Neal S. Nackman Neal S. Nackman | Chief Financial Officer and Treasurer | |||||
/s/ Sammy Aaron Sammy Aaron | Director and Vice Chairman | |||||
/s/ Thomas J. Brosig | ||||||
Thomas J. Brosig | ||||||
Director | ||||||
/s/ Alan Feller Alan Feller | Director | |||||
/s/ Jeffrey Goldfarb Jeffrey Goldfarb | Director | October 23, 2009 | ||||
Carl Katz | Director | |||||
/s/ Laura Pomerantz Laura Pomerantz | Director | |||||
/s/ Willem van Bokhorst | ||||||
Willem van Bokhorst | ||||||
Director | October 23, 2009 | |||||
/s/ Richard White Richard White | Director | |||||
EXHIBIT INDEX
II-5