<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 4, 1998
REGISTRATION NO. 333-58541
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
GENESCO INC.
(Exact name of Registrant as specified in its Charter)
---------------------
<TABLE>
<S> <C> <C>
TENNESSEE 5661 62-0211340
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
1415 MURFREESBORO ROAD
NASHVILLE, TENNESSEE 37217-2895
(615) 367-7000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
---------------------
ROGER G. SISSON
SECRETARY AND GENERAL COUNSEL
GENESCO INC.
1415 MURFREESBORO ROAD
NASHVILLE, TENNESSEE 37217-2895
(615) 367-7000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
COPIES OF COMMUNICATIONS TO:
<TABLE>
<S> <C>
J. GENTRY BARDEN MARY A. BERNARD
BASS, BERRY & SIMS PLC KING & SPALDING
FIRST AMERICAN CENTER 1185 AVENUE OF THE AMERICAS
NASHVILLE, TENNESSEE 37238 NEW YORK, NEW YORK 10036
(615) 742-6200 (212) 556-2100
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of this Registration Statement.
If the only securities being registered on this form are being registered
on this form are being offered pursuant to dividend or interest reinvestment
plans, check the following box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with the dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
------------
If delivery of the prospectus is expected to be made pursuant to Rule
434, check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH
SECTION 8(A), MAY DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED NOVEMBER 4, 1998
PROSPECTUS
$103,500,000
[LOGO OF GENESCO INC.]
5 1/2% CONVERTIBLE SUBORDINATED NOTES DUE 2005
This Prospectus relates to the resale from time to time by the holders (the
"Selling Securityholders") of up to $103,500,000 aggregate principal amount of
5 1/2% Convertible Subordinated Notes due 2005 (the "Notes") of Genesco Inc., a
Tennessee corporation ("Genesco" or the "Company"), and the resale of shares of
Common Stock, par value $1.00 per share (the "Common Stock"), of the Company
issuable upon the conversion thereof (the "Conversion Shares"). The Notes were
originally sold by the Company on April 9, 1998 in a private placement to the
Initial Purchasers (as defined herein). The Notes were resold by the Initial
Purchasers in transactions exempt from registration under the Securities Act of
1933, as amended (the "Securities Act"), in the United States to persons
reasonably believed to be "qualified institutional buyers" as defined in Rule
144A under the Securities Act.
The Notes are convertible into shares of Common Stock at any time prior to
the close of business on the maturity date, unless previously redeemed or
repurchased, at a conversion rate of 47.5172 shares of Common Stock per $1,000
principal amount of Notes (equivalent to a conversion price of $21.045 per
share), subject to adjustment in certain events. See "Description of the Notes
- -- Conversion Rights." The Company's Common Stock is listed on the New York
Stock Exchange (the "NYSE") and the Chicago Stock Exchange under the symbol
"GCO." On November 3, 1998, the last reported sales price of the Common Stock on
the NYSE was $6 15/16 per share. The Conversion Shares have been approved for
listing, subject to notice of issuance, on the NYSE.
Interest on the Notes is payable on April 15 and October 15 of each year,
commencing on October 15, 1998. The Notes may be redeemed at the option of the
Company on and after April 17, 2001, in whole or in part, at the redemption
prices set forth herein, plus accrued interest to the redemption date. See
"Description of the Notes -- Optional Redemption." The Notes are not entitled to
the benefits of any sinking fund.
In the event of a Change of Control, each holder of Notes may require the
Company to repurchase its Notes, in whole or in part, for cash or, at the
Company's option, Common Stock (valued at 95% of the average closing prices for
the five trading days immediately preceding and including the third trading day
prior to the repurchase date) at a repurchase price of 100% of the principal
amount of Notes to be repurchased, plus accrued interest to the repurchase date.
See "Description of Notes -- Repurchase at Option of Holders Upon a Change of
Control."
The Notes are unsecured obligations of the Company subordinated in right of
payment to all existing and future Senior Debt (as defined) of the Company and
effectively subordinated in right of payment to all indebtedness and other
liabilities of the Company's subsidiaries. As of August 1, 1998, the Company had
approximately $40.1 million of Senior Debt outstanding (consisting primarily of
letters of credit, bankers' acceptances, and forward foreign exchange
contracts), and the Company's subsidiaries had an aggregate of approximately
$155,000 of indebtedness and other liabilities outstanding.
The Selling Securityholders may offer Notes or Conversion Shares from time
to time to purchasers directly or through underwriters, dealers or agents. Such
Notes or Conversion Shares may be sold at market prices prevailing at the time
of sale or at negotiated prices. Each Selling Securityholder will be responsible
for payment of any and all commissions to brokers, which will be negotiated on
an individual basis.
The Notes are eligible for trading in the Private Offerings, Resales and
Trading through Automated Linkages ("PORTAL") market.
The Company will not receive any of the proceeds from the sale of any Notes
or Conversion Shares by the Selling Securityholders. Expenses of preparing and
filing the registration statement to which this Prospectus relates and all post-
effective amendments will be borne by the Company. See "Plan of Distribution"
for a description of the indemnification arrangements between the Company and
the Selling Securityholders.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE NOTES AND THE
CONVERSION SHARES OFFERED HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
THE DATE OF THIS PROSPECTUS IS NOVEMBER , 1998
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
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PAGE
----
<S> <C>
Available Information........................... 2
Incorporation of Certain Information by
Reference..................................... 3
Forward-Looking Statements...................... 3
Risk Factors.................................... 4
The Company..................................... 8
Ratios of Earnings to Fixed Charges............. 9
Use of Proceeds................................. 9
Description of Notes............................ 9
Description of Capital Stock.................... 21
Certain United States Federal Tax
Considerations................................ 22
Selling Securityholders......................... 30
Plan of Distribution............................ 32
Experts......................................... 32
</TABLE>
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and is required to file
periodic reports, proxy statements and other information with the Securities and
Exchange Commission (the "SEC"). Such reports, proxy statements and other
information may be inspected and copied at the public reference facilities
maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the regional offices of the SEC located at 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 and at Seven World Trade Center, 13th Floor, New York,
New York 10048. Copies of such material can also be obtained from the SEC at
prescribed rates from the Public Reference Section of the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549. Electronic filings made by the Company
through the SEC's Electronic Data Gathering, Analysis and Retrieval System are
publicly available through the SEC's world wide web site (http://www.sec.gov).
The Common Stock is listed for trading on the NYSE and the Chicago Stock
Exchange and copies of reports, proxy and information statements and other
materials concerning the Company can also be inspected at the offices of the
NYSE, 20 Broad Street, New York, New York 10005 and the Chicago Stock Exchange
at 440 South LaSalle Street, Chicago, Illinois, 60605.
This Prospectus is part of a Registration Statement on Form S-3 (together
with all amendments and exhibits thereto, the "Registration Statement") filed by
the Company with the SEC under the Securities Act with respect to the securities
offered hereby. As permitted by the rules and regulations of the SEC, this
Prospectus omits certain information contained or incorporated by reference in
the Registration Statement. Statements made in this Prospectus as to the
contents of any contract, agreement or other document referred to are not
necessarily complete, and, in each instance, reference is made to the copy of
such document filed as an exhibit to the Registration Statement or otherwise
filed with the SEC. Each such statement is deemed to be qualified in its
entirety by such reference.
Johnston & Murphy(R), Journeys(R), and Jarman(R) are registered trademarks
of the Company and Underground Station(TM) is a trademark of the Company for
which registration is pending. Nautica(R), Nautica Competition(R), and
Dockers(R) are exclusively licensed to the Company for footwear products.
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INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents have been filed by the Company with the SEC
pursuant to the Exchange Act and are incorporated by reference:
1. Annual Report on Form 10-K for the fiscal year ended January 31, 1998;
2. Quarterly Reports on Form 10-Q for the quarterly periods ended May 2,
1998 and August 1, 1998;
3. Current Reports on Form 8-K filed with the SEC on April 6, 1998, April
15, 1998, June 23, 1998 and October 20, 1998; and
4. The description of the Company's Common Stock contained in the Company's
Registration Statement on Form 8-A, as amended to date.
All documents filed by the Company with the SEC pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act after the date of this Prospectus and
prior to the termination of the offering of the Notes and Conversion Shares
offered hereby shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the date any such document is filed. Any
statements contained in a document incorporated by reference in this Prospectus
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained in this Prospectus (or in any other
subsequently filed document which also is incorporated by reference in this
Prospectus) modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed to constitute a part of this Prospectus except as
so modified or superseded.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the documents incorporated herein by reference (other than
exhibits to such documents, unless such exhibits are specifically incorporated
by reference in such documents). Requests for such copies should be directed to
Genesco Inc., 1415 Murfreesboro Road, Nashville, Tennessee 37217, Attn.: Roger
G. Sisson, Secretary and General Counsel. Telephone inquiries may be directed to
Mr. Sisson at (615) 367-7000.
FORWARD-LOOKING STATEMENTS
This Prospectus and the information incorporated by reference herein
contain certain forward-looking statements within the meaning of Section 27A of
the Securities Act and Section 21E of the Exchange Act, which are intended to be
covered by the safe harbors created thereby. Investors are cautioned that all
forward-looking statements involve risks and uncertainties many of which are
beyond the Company's control including, without limitation, the factors set
forth under the caption "Risk Factors." Although the Company believes that the
assumptions underlying the forward-looking statements contained or incorporated
by reference herein are reasonable, any of the assumptions could be inaccurate
and, therefore, there can be no assurance that the forward-looking statements
included or incorporated by reference in this Prospectus will prove to be
accurate. In light of the significant uncertainties inherent in the
forward-looking statements included or incorporated by reference herein, the
inclusion or incorporation by reference of such information should not be
regarded as a representation by the Company or any other person that the
objectives and plans of the Company will be achieved. Moreover, the Company
assumes no obligation to update these forward-looking statements to reflect
actual results, changes in assumptions, or changes in other factors affecting
such forward-looking statements.
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RISK FACTORS
Potential investors should consider carefully the following factors, as
well as the more detailed information contained or incorporated by reference in
this Prospectus, before making a decision to invest in the Notes or Conversion
Shares offered hereby.
BUSINESS EXPANSION AND NEW STORE OPENINGS
The Company's continued growth is largely dependent upon its ability to
expand its retail operations by opening and operating new stores on a profitable
basis. The Company opened 102 new stores in fiscal 1998 and intends to open
approximately 150 new stores in fiscal 1999. In addition, the Company's pace for
new store openings has been accelerated in response to the acquisition by
Dillard's Inc. ("Dillard's") of Mercantile Stores Company ("Mercantile"). See
"-- Potential Loss of Jarman Leased Shoe Departments." Recent pressures on
retail performance including current excess supplies of footwear inventory
throughout the industry, which the Company believes to be primarily related to
nationwide liquidation sales and inventory reduction programs by a retail
competitor, and a generally cautious retail environment may cause the Company to
slow the pace for its new store openings. The Company's ability to open new
stores and leased departments on a timely and profitable basis is subject to
various contingencies, some of which are beyond the Company's control. The
contingencies include the Company's ability to locate suitable store sites;
negotiate acceptable lease terms; build-out or refurbish sites on a timely and
cost-effective basis; hire, train and retain qualified managers and personnel;
obtain adequate capital resources; and successfully integrate new stores into
existing operations. Furthermore, the Company's Underground Station initiative
is untested and its consumer acceptance is unproven. There can be no assurance
that the Company will be able to achieve its planned expansion or that its new
stores will achieve levels of sales and profitability comparable to the
Company's existing stores. Failure by the Company to achieve its planned
expansion on a profitable basis could have a material adverse effect on the
Company's business, financial condition, or results of operations.
POTENTIAL LOSS OF JARMAN LEASED SHOE DEPARTMENTS
The Company's Jarman Division had an arrangement with Mercantile in which
Jarman operated Mercantile's men's shoe departments. Dillards acquired
Mercantile in August 1998. It is currently anticipated that Dillard's pending
acquisition of Mercantile will result in the termination of the arrangement
under which the Company operates Mercantile's men's shoe departments. Except for
17 stores closed or sold by Dillard's in September 1998 and four additional
stores to be converted to Dillard's stores in November 1998, the Company expects
to continue to operate substantially all of the former Mercantile lease
locations under the current arrangement through the remainder of fiscal 1999. In
fiscal 1998, the Company's operation of Mercantile's men's shoe departments
contributed approximately $4.1 million in operating earnings of the Company's
aggregate ongoing operating earnings, before restructuring and other charges, of
$39.1 million. Although the Company believes that the loss of the Company's
arrangement with Mercantile will have only a short-term effect on the Company's
results of operations and financial condition, there can be no assurance that
the Company's accelerated growth plan for Journeys and Johnston & Murphy new
store openings will be successfully implemented or that the Company will be able
to otherwise replace the contributions by the Jarman leased departments in
Mercantile stores to the Company's net sales and operating earnings.
COMPARABLE STORE SALES
The Company's retail operations have achieved significant increases in
comparable store sales in recent fiscal years (10% in fiscal 1998, 12% in fiscal
1997, and 6% in fiscal 1996), primarily as a result of comparable store sales
growth in the Company's Journeys stores (15% in fiscal 1998, 26% in fiscal 1997,
and 19% in fiscal 1996). The Company does not expect to achieve similar
comparable store sales increases, particularly with respect to its Journeys
stores, in future periods. Comparable store sales are subject to fluctuation
based on a number of factors, including changes in the Company's marketing
strategy, prevailing market conditions, changes in consumer preferences, and the
timing and concentration of store openings. There can be no assurance that these
and other factors will not result in declining comparable store sales, which
could have a material adverse effect on the Company's business, financial
condition, or results of operations.
4
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CHANGES IN CONSUMER PREFERENCES
The Company's continued success depends on its ability to anticipate and
respond to changing merchandise trends and consumer preferences in a timely
manner. Any failure by the Company to identify and respond to emerging fashion
trends could adversely affect consumer acceptance of the Company's brand names
and product lines, which in turn could adversely affect the Company's business,
financial condition, or results of operations.
DEPENDENCE ON LICENSES
The Nautica and Dockers brand footwear lines are sold by the Company under
license agreements expiring in 2002 and 2001, respectively. The Company has an
option to renew the Nautica license through 2007, subject to the Company's
meeting minimum sales requirements and to other conditions. The net sales
attributable to these licensed businesses accounted for approximately 12% of the
Company's net sales for fiscal 1998. There can be no assurance that the Company
will be able to renew its existing licenses beyond current option periods or
obtain new licenses to replace lost licenses. Failure of the Company to retain
existing licenses or to obtain new licenses could have a material adverse effect
on the Company's business, financial condition, or results of operations. The
Company's business could also be affected by the performance of the licensors'
other products, such as apparel.
COMPETITION
Competition is intense in the footwear industry. The Company's retail
footwear competitors range from small, locally owned shoe stores to regional and
national department stores, discount stores, and specialty chains. The Company
competes with hundreds of footwear wholesale and manufacturing operations in the
United States and throughout the world, most of which are relatively small,
specialized operations, but some of which are large, diversified companies. Some
of the Company's competitors have certain resources that are not available to
the Company. The Company's success depends on its ability to remain competitive
with respect to style, price, quality, comfort, brand availability, and customer
service. The location and atmosphere of the Company's retail stores is an
additional competitive factor for the Company's retail operations. Any failure
by the Company to remain competitive with respect to such key factors could have
a material adverse effect on the Company's business, financial condition, or
results of operations.
RELIANCE ON FOREIGN SOURCES OF PRODUCTION
The Company relies primarily on independent third-party manufacturers for
production of its footwear products. Foreign sourced footwear represented
substantially all of the Company's net sales in fiscal 1998, except for net
sales attributable to the western boot business. The Company sources footwear
products from foreign manufacturers located in China, Italy, Mexico, Brazil,
Indonesia, Taiwan and the United Kingdom. The Company does not have any
long-term contracts with its independent third-party foreign manufacturers.
There can be no assurance that the Company will not experience difficulties with
such manufacturers, which could include a reduced availability of production
capacity, failure to meet production deadlines, or increases in manufacturing
costs. Foreign manufacturing is also subject to a number of inherent risks,
including work stoppages, transportation delays and interruptions, political
instability, expropriation, nationalization, foreign currency fluctuations,
changing economic conditions, the imposition of tariffs, import, and export
controls and other non-tariff barriers, and changes in local government
administration and governmental policies. Any of these events could have a
material adverse effect on the Company's business, financial condition, or
results of operations.
Manufacturers in China have become major suppliers to Genesco and other
footwear companies in the United States. In fiscal 1998, the Company imported
approximately 32% of inventory purchases from China. In addition to the products
the Company imports directly, a significant amount of the products purchased by
the Company from other suppliers have been imported from China. In recent years,
China's most favored nation status has been controversial, and various trade
sanctions have been threatened, although no such measures have been implemented.
Additionally, certain U.S. companies with which the Company has
5
<PAGE> 7
business relationships have from time to time threatened to require the Company
to cease sourcing goods from China under such companies' human rights or
business ethics policies. Any deterioration in the trade relationship between
the U.S. and China or other disruption in the Company's ability to import shoes
from China could have a material adverse effect on the Company's business,
financial condition, or results of operations.
The Company is also exposed to foreign currency risk. Although the Company
purchases products from certain foreign manufacturers in U.S. dollars and
otherwise engages in foreign currency hedging transactions, there can be no
assurance that the Company will not experience foreign currency losses. The
Company cannot predict whether additional U.S. or foreign customs quotas,
duties, taxes, or other charges or restrictions will be imposed upon the
importation of non-domestically produced products in the future or what effect
such actions could have on its business, financial condition, or results of
operations.
GENERAL ECONOMIC CONDITIONS; SEASONALITY
The Company's performance is subject to prevailing economic conditions and
operating risks normally incident to the retail industry. The Company's business
is seasonal, with the Company's investment in inventory and accounts receivable
normally peaking in the spring and fall of each year. Cash flow from operations
is ordinarily generated principally in the fourth quarter of each fiscal year.
In addition, consumer purchasing patterns may be influenced by consumers'
disposable income. Consequently, the success of the Company may depend to a
significant extent upon a number of factors affecting disposable income,
including, without limitation, prevailing economic conditions, employment
levels, interest rates, and tax rates. Changes in consumer spending or general
economic conditions could have a material adverse effect on the Company's
business, financial condition, or results of operations.
YEAR 2000 COMPLIANCE
Based on a recent assessment, the Company determined that it will be
required to modify or replace significant portions of its software so that its
computer systems will properly utilize dates beyond December 31, 1999. The
Company has also begun the process of replacing its major information systems,
including its wholesale and retail operating systems and its financial systems,
with systems that are Year 2000 compliant. The Company anticipates that these
replacements will be substantially complete by July 31, 1999. The Company has
also implemented a contingency plan for remediating its existing wholesale and
retail systems if certain milestones are not met by February 1999. Other
contingency plans are expected to be completed during the first quarter of
fiscal year 2000. The Company has also begun formal communications with all of
its significant suppliers and large customers to determine the extent to which
the Company is vulnerable to those third parties' failure to remediate their own
Year 2000 issues. There can be no assurance, however, that the Company will be
able to complete its upgrade before December 31, 1999, that its new systems will
be Year 2000 compliant, that computer systems of other companies on which the
Company's systems rely will be timely converted, or that failure to convert by
another company, or a conversion that is incompatible with the Company's
systems, would not have a material adverse effect on the Company's business,
financial condition, or results of operations.
DEPENDENCE ON KEY PERSONNEL
The Company's future success depends to a significant extent on the efforts
and abilities of its executive officers and management personnel directly
responsible for the marketing of the Company's various footwear brands. The loss
of the services of one or more of these individuals could have a material
adverse effect on the Company's business, financial condition, or results of
operations. Furthermore, the Company's ability to manage its growth,
particularly in its retail business, will require it to continue to train,
motivate, and manage its employees and to attract, motivate, and retain
additional qualified managerial and merchandising personnel. Competition for
such personnel is intense, and there can be no assurance that the Company will
be successful in attracting, assimilating, and retaining the personnel required
to grow and operate profitably.
6
<PAGE> 8
EFFECT OF ENVIRONMENTAL REGULATION
The Company's manufacturing operations are subject to numerous federal,
state, and local laws and regulations relating to human health and safety and
the environment. These laws and regulations address and regulate, among other
matters, wastewater discharge, air quality and the generation, handling,
storage, treatment, disposal and transportation of solid and hazardous wastes
and releases of hazardous substances into the environment. In addition, third
parties and governmental agencies in some cases, have the power under such laws
and regulations to require remediation of environmental conditions and, in the
case of governmental agencies, to impose fines and penalties. The Company makes
capital expenditures from time to time to stay in compliance with applicable
laws and regulations. Several of the facilities owned or operated by the Company
(currently or in the past) are located in industrial areas and have historically
been used for extensive periods for industrial operations such as tanning,
dyeing, and manufacturing. Some of these operations used materials and generated
wastes that would be considered regulated substances under current environmental
laws and regulations. The Company is currently involved in administrative and
judicial environmental proceedings relating to some of the Company's former and
current facilities. There can be no assurance that past operations at or near
the facilities owned or operated by the Company (currently or in the past), or
that the Company's present or future operations, will not necessitate action by
the Company or give rise to actions by governmental agencies or private parties
that could cause the Company to incur response costs, remediation expenses,
fines, penalties, or other similar damages, expenses, or liabilities, or to
incur operational shut-downs, business interruptions, or other similar losses,
that either individually or in the aggregate could have a material adverse
effect on the Company's business, financial condition, or results of operations.
SUBORDINATION OF THE NOTES
The Notes are unsecured and subordinated in right of payment in full to all
existing and future Senior Debt of the Company. As a result, in the event of the
Company's liquidation or insolvency, a payment or covenant default with respect
to Senior Debt, or upon acceleration of the Notes due to an event of default,
the assets of the Company will be available to pay obligations on the Notes only
after all Senior Debt has been paid in full, and there may not be sufficient
assets remaining to repay in full all of the Notes then outstanding. The Notes
are also effectively subordinated in right of payment to all indebtedness and
other liabilities, including trade payables, of the Company's subsidiaries. The
incurrence of additional indebtedness and other liabilities by the Company or
its subsidiaries could adversely affect the Company's ability to pay its
obligations on the Notes. The Indenture does not limit the Company's ability to
incur Senior Debt or the Company's or any subsidiary's ability to incur other
indebtedness and liabilities.
ABSENCE OF TRADING MARKET; VOLATILITY OF PRICE
There is no existing trading market for the Notes and there can be no
assurance as to the liquidity of any such market that may develop, the ability
of holders to sell such securities, the price at which the holders of Notes
would be able to sell such securities or whether a trading market, if it
develops, will continue. If such a market were to exist, the Notes could trade
at prices higher or lower than their principal amount, depending on many
factors, including prevailing interest rates, the market for similar securities,
the operating results of the Company, and the trading price of the Common Stock.
7
<PAGE> 9
THE COMPANY
Genesco is a leading retailer and wholesaler of branded footwear. At August
1, 1998, the Company operated 656 stores and leased footwear departments
throughout the United States and Puerto Rico. The Company's retail business
operates under six names and formats including: Journeys (232 stores), Johnston
& Murphy (127 stores and leased departments), Jarman (258 stores and leased
departments), General Shoe Warehouse (13 stores and leased departments), Nautica
Retail (15 leased departments) and Underground Station (11 stores). The Company
also designs, sources, markets and distributes footwear at wholesale under its
own and licensed brands, including Johnston & Murphy, Nautica, and Dockers, to
more than 2,700 retail accounts in the United States, including a number of
leading department, discount, and specialty stores. The Company's wholesale
operations also include leather tanning and finishing, primarily for sale to
military boot manufacturers.
The Company's fiscal year ends on the Saturday closest to January 31. Any
reference herein to a fiscal year of the Company refers to the fiscal year ended
or ending in such year.
The Company was incorporated under the laws of the State of Tennessee in
1925. Its principal executive offices are located at 1415 Murfreesboro Road,
Nashville, Tennessee 37217-2895 and its telephone number at that address is
615/367-7000.
RETAIL
The Company operates its retail stores and leased departments primarily in
the following formats:
Journeys. Journeys stores, located primarily in the Southeast,
Midwest, California, Texas, and Puerto Rico, target customers in the 13-22
year age group through the use of youth-oriented decor and popular music
videos. Journeys stores carry predominately branded merchandise of other
footwear companies across a spectrum of prices, including leading brand
names such as Dr. Martens(TM), Nike(TM), Airwalk(TM), Skechers(TM), and
Timberland(TM).
Johnston & Murphy. Johnston & Murphy retail shops are located
primarily in better malls nationwide and sell a broad range of men's dress
and casual footwear and accessories. Johnston & Murphy stores target
business and professional consumers primarily between the ages of 25 and
54. Johnston & Murphy's branded footwear accounted for approximately 74% of
Johnston & Murphy's retail sales for fiscal 1998. Retail prices for
Johnston & Murphy footwear generally range from $135 to $240. To capitalize
upon the trend toward more casual business attire, Johnston & Murphy retail
shops have increased their selection of casual and dress casual products.
Jarman. Jarman consists of both stand-alone stores and leased space
in larger department stores. Jarman stores are located primarily in urban
and suburban areas in the Southeast and Midwest, target male consumers in
the 18-35 age group and sell footwear in the mid-price range ($50 to $100).
Underground Station. Underground Station, first opened by the Company
in March 1998, targets urban males in the 18-35 age group and is
merchandised to address the target customer's preference for footwear that
complements lifestyle fashion apparel collections, with brand names
including Tommy Hilfiger(TM), Polo(TM), Nautica, Timberland, Mezlan(TM),
and NY Lugz(TM).
WHOLESALE
Substantially all of the Company's wholesale footwear sales are of
Genesco-owned brands or brands for which Genesco has an exclusive footwear
license. The Company's wholesale operations also include leather tanning and
finishing, primarily for sale to military boot manufacturers.
Johnston & Murphy. In addition to sales through Company-owned
Johnston & Murphy retail shops and factory stores, Johnston & Murphy
footwear is sold primarily through better department stores and independent
speciality stores.
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<PAGE> 10
Nautica Footwear. Genesco acquired the exclusive worldwide license to
market Nautica footwear in 1991. In 1992, the Company introduced a line of
casual footwear under the Nautica label, targeted at young, active,
upper-income consumers, and designed to complement Nautica sportswear. In
fiscal 1997, the Company introduced a line of Nautica footwear for boys and
a line of athletic footwear under the Nautica Competition label. Nautica
footwear is sold in department stores and in specialty athletic footwear
stores. Suggested retail prices of Nautica casual footwear generally range
from $30 to $150, suggested retail prices of Nautica boys' footwear
generally range from $25 to $65, and suggested retail prices of Nautica
Competition athletic footwear generally range from $55 to $75.
Dockers Footwear. In 1991, Levi Strauss & Co. granted the Company the
exclusive license to market men's footwear under the Dockers brand name in
the United States. The Dockers brand name is one of the most recognized in
the men's casual fashion industry. The Company uses the Dockers brand name
to market a line of comfortable, moderately-priced, casual lifestyle
footwear. Dockers footwear is marketed through many of the same national
retail chains that carry Dockers slacks and sportswear. Suggested retail
prices for Dockers footwear generally range from $49 to $79.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the consolidated ratio of earnings to fixed
charges of the Company. The ratio of earnings to fixed charges is computed by
dividing earnings by fixed charges. For this purpose, "earnings" includes
pre-tax income from continuing operations plus fixed charges. "Fixed charges'
include interest, whether expensed or capitalized, amortization of debt expense,
and the portion of rental expense that is representative of the interest factor
in these rentals.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEAR -------------------
- ------------------------------------------ AUG. 2, AUG. 1,
1994 1995 1996 1997 1998 1997 1998
- ------ ------ ------ ------ ------ -------- --------
<S> <C> <C> <C> <C> <C> <C>
- -- -- -- 1.51X 1.41X 1.61X 1.85X
----- -----
</TABLE>
Fixed charges exceeded earnings available for fixed charges by $29.8
million, $17.8 million, and $3.8 million in fiscal 1994, 1995, and 1996,
respectively.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Notes or the
Conversion Shares by the Selling Securityholders.
DESCRIPTION OF NOTES
The Notes were issued under an Indenture, dated as of April 9, 1998 (the
"Indenture"), between the Company and United States Trust Company of New York,
as trustee (the "Trustee"). The Indenture will be qualified under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). Wherever
particular defined terms of the Indenture (including the Notes and the various
forms thereof) are referred to, such defined terms are incorporated herein by
reference (the Notes and various terms relating to the Notes being referred to
in the Indenture as "Securities"). References in this section to the "Company"
are solely to Genesco Inc. and not to its subsidiaries. The following summaries
of certain provisions of the Indenture do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, the detailed
provisions of the Notes, the Indenture, and the Trust Indenture Act.
GENERAL
The Notes are unsecured subordinated obligations of the Company, are
limited to $103,500,000 aggregate principal amount, and will mature on April 15,
2005. The Notes bear interest at the rate of 5 1/2% per annum from April 9, 1998
or from the most recent Interest Payment Date to which interest has been paid or
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<PAGE> 11
provided for, payable semiannually on April 15 and October 15 of each year,
commencing on October 15, 1998. Interest is calculated on the basis of a 360-day
year consisting of twelve 30-day months.
The Notes are convertible into Common Stock initially at the conversion
rate of 47.5172 shares of Common Stock per $1,000 principal amount of Notes,
subject to adjustment upon the occurrence of certain events described under
"-- Conversion Rights," at any time prior to the close of business on the
maturity date, unless previously redeemed or repurchased.
The Notes are redeemable at the option of the Company under the
circumstances and at the redemption prices set forth below under "-- Optional
Redemption," plus accrued interest to the redemption date. The Notes also are
subject to repurchase by the Company at the option of the holders as described
under "-- Repurchase at Option of Holders Upon a Change of Control."
The Notes were issued only in fully registered form, without coupons, in
denominations of $1,000 and integral multiples thereof. No service charge will
be made for any registration of transfer or exchange of Notes, but the Company
may require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
FORM AND DENOMINATION
Notes sold to "qualified institutional buyers" in reliance on Rule 144A
were initially represented by one or more global Notes in fully registered form
without interest coupons (collectively, the "Global Notes" and individually, a
"Global Note") and were deposited with the Trustee as custodian for DTC and
registered in the name of a nominee of DTC.
Except in the limited circumstances described below under "--Global Notes,"
owners of beneficial interests in Global Notes will not be entitled to receive
physical delivery of certificated Notes. The Notes are not issuable in bearer
form.
The Company has appointed the Trustee at its Corporate Trust Office as
paying agent, transfer agent, registrar, and conversion agent for the Notes. In
such capacities, the Trustee is responsible for, among other things, (i)
maintaining a record of the aggregate holdings of Notes represented by the
Global Note and accepting Notes for exchange and registration of transfer, (ii)
ensuring that payments of principal, premium, if any, and interest in respect of
the Notes received by the Trustee from the Company are duly paid to DTC or its
nominees, (iii) transmitting to the Company any notices from holders, (iv)
accepting conversion notices and related documents and transmitting the relevant
items to the Company, and (v) delivering certificates for Common Stock issued in
conversion of the Notes.
The Company will cause each transfer agent to act as a registrar and will
cause to be kept at the office of each transfer agent a register in which,
subject to such reasonable regulations as it may prescribe, the Company will
provide for the registration of the Notes and registration of transfers of the
Notes. The Company may vary or terminate the appointment of any paying agent,
transfer agent, or conversion agent, or appoint additional or other such agents
or approve any change in the office through which any such agent acts, provided
that there shall at all times be a paying agent, a transfer agent, and a
conversion agent in the Borough of Manhattan, The City of New York, New York.
The Company will cause notice of any registration, termination or appointment of
the Trustee or any paying agent, transfer agent, or conversion agent, and of any
change in the office through which any such agent will act, to be provided to
holders of the Notes.
GLOBAL NOTES
The following description of the operations and procedures of DTC is
provided solely as a matter of convenience. These operations and procedures are
solely within the control of the respective settlement systems and are subject
to changes by them from time to time. The Company takes no responsibility for
these operations and procedures and urges investors to contact the system or
their participants directly to discuss these matters.
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<PAGE> 12
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code, as amended, and a "Clearing Agency" registered pursuant
to the provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participating organizations (collectively, "participants")
and facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes in accounts of its
participants, thereby eliminating the need for physical transfer and delivery of
certificates. Participants include securities brokers and dealers, banks, trust
companies and clearing corporations and may include certain other organizations.
Indirect access to the DTC system is available to other entities such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly ("indirect
participants").
Upon the issuance of any Global Note, DTC will credit, on its internal
system, the respective principal amount of the individual beneficial interests
represented by such Global Note to the accounts of DTC participants or persons
who hold interests through participants. Ownership of beneficial interests in
such Global Note will be shown on, and the transfer of that ownership will be
effected only through, records maintained by DTC or its nominee (with respect to
interests of participants) or by the participants and the indirect participants
(with respect to other owners of beneficial interests in the Global Notes).
As long as DTC, or its nominee, is the registered holder of a Global Note,
DTC or such nominee, as the case may be, will be considered the sole owner and
holder of the Notes represented by such Global Note for all purposes under the
Indenture and the Notes. Unless DTC notifies the Company that it is unwilling or
unable to continue as depository for a Global Note, or ceases to be a "Clearing
Agency" registered under the Exchange Act or announces an intention permanently
to cease business or does in fact do so, or an Event of Default has occurred and
is continuing with respect to a Global Note, owners of beneficial interests in a
Global Note will not be entitled to have any portions of such Global Note
registered in their names, will not receive or be entitled to receive physical
delivery of Notes in definitive form and will not be considered the owners or
holders of the Global Note (or any Notes presented thereby) under the Indenture
or the Notes. In addition, no beneficial owner of an interest in a Global Note
will be able to transfer that interest except in accordance with DTC's
applicable procedures (in addition to those under the Indenture referred to
herein). In the event that owners of beneficial interests in a Global Note
become entitled to receive Notes in definitive form, such Notes will be issued
only in registered form in denominations of $1,000 and integral multiples
thereof.
EXCEPT AS DESCRIBED UNDER "-- TRANSFER, EXCHANGE, AND WITHDRAWAL," OWNERS
OF INTERESTS IN GLOBAL NOTES WILL NOT HAVE NOTES REGISTERED IN THEIR NAMES, WILL
NOT RECEIVE PHYSICAL DELIVERY OF NOTES IN CERTIFICATED FORM AND WILL NOT BE
CONSIDERED THE REGISTERED OWNERS OR HOLDERS THEREOF UNDER THE INDENTURE FOR ANY
PURPOSE.
Payments of the principal of, premium, if any, and interest on Global Notes
will be made to DTC or its nominee as the registered owner thereof. The Company
expects that DTC or its nominee, upon receipt of any payment of principal or
interest in respect of a Global Note representing any Notes held by it or its
nominee, will immediately credit participants' accounts with payment in amounts
proportionate to their respective beneficial interests in the principal amount
of such Global Notes for such Notes as shown on the records of DTC or its
nominee. The Company also expects that payments by participants to owners of
beneficial interests in such Global Notes held through such participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers registered in "street name."
Such payments will be the responsibility of such participants. Neither the
Company, the Trustee nor any of their respective agents will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global Notes
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
Transfers of beneficial interests in the Global Notes between participants
will be effected in accordance with DTC's procedures and will trade in DTC's
Same-Day Funds Settlement System, and secondary market trading activity in such
interests will therefore settle in immediately available funds.
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<PAGE> 13
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Notes (including the presentation of Notes for exchange as
described below) only at the direction of one or more participants to whose
account with DTC interests in the Global Notes are credited and only in respect
of such portion of the aggregate principal amount of the Notes as to which such
participant or participants has or have given such direction. However, if there
is an Event of Default (as defined below) under the Notes, DTC reserves the
right to exchange the Global Notes for legended Notes in certificated form, and
to distribute such Notes to its participants.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of beneficial ownership interests in the Global Notes among
participants of DTC, it is under no obligation to perform or continue to perform
such procedures, and such procedures may be discontinued at any time. None of
the Company, the Trustee nor any of their respective agents will have any
responsibility for the performance by DTC, its participants or indirect
participants of their respective obligations under the rules and procedures
governing DTC's operations, including maintaining, supervising or reviewing the
records relating to, or payments made on account of, beneficial ownership
interests in Global Notes.
CERTIFICATED NOTES
If DTC is at any time unwilling or unable to continue as a depositary for
the reasons set forth above under " -- Global Notes," is closed for business for
14 continuous days or announces an intention to cease or permanently ceases
business, the Company will issue certificates for the Notes in definitive, fully
registered, non-global form without interest coupons in exchange for the Global
Note, bearing appropriate legends. The holder of a Note in non-global form may
transfer such Note, subject to compliance with the provisions of such legend, by
surrendering it at the office or agency maintained by the Company for such
purpose in the Borough of Manhattan, the City of New York, which initially will
be the office of the Trustee. Upon the transfer, exchange or replacement of
Notes bearing a legend, or upon specific request for removal of a legend on a
Note, the Company will deliver only Notes that bear such legend, or will refuse
to remove such legend, as the case may be, unless there is delivered to the
Company such satisfactory evidence, which may include an opinion of counsel, as
may reasonably be required by the Company that neither the legend nor the
restrictions on transfer set forth therein are required to ensure compliance
with the provisions of the Securities Act.
Notwithstanding any statement herein, the Company and the Trustee reserve
the right to impose such transfer, certification, exchange or other
requirements, and to require such restrictive legends on certificates evidencing
Notes, as they may determine are necessary to ensure compliance with the
securities laws of the United States and the States therein and any other
applicable laws, to ensure that the Shelf Registration Statement or amendment
covering the Notes and the Conversion Shares remains effective or as DTC may
require.
REGISTRATION RIGHTS
The holders of the Notes and the Common Stock issuable upon conversion
thereof are entitled to the benefits of a Registration Rights Agreement, dated
as of April 9, 1998, between the Company and the Initial Purchasers (the
"Registration Rights Agreement"). Pursuant to the Registration Rights Agreement,
the Company has agreed for the benefit of the holders from time to time of the
Notes and the Common Stock issuable upon conversion thereof (together, the
"Registrable Securities") that it will, at its expense, use its best efforts to
maintain the Registration Statement of which this Prospectus forms a part
continuously effective under the Securities Act until the second annual
anniversary of the later of the effective date of such Registration Statement
and the last original issuance of the Notes or such earlier date as is provided
in the Registration Rights Agreement.
In the event that such Registration Statement ceases to be effective prior
to the second annual anniversary of the initial effective date of such
Registration Statement or such earlier date as is provided in the Registration
Rights Agreement for a period in excess of 60 days, whether or not consecutive,
during any 12-month period, then the interest rate borne by the Notes shall
increase by an additional one-half of one percent
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<PAGE> 14
(0.50%) per annum on the 61st day of the applicable 12-month period such
Registration Statement ceases to be effective to but excluding the day on which
the Registration Statement again becomes effective.
CONVERSION RIGHTS
The holder of any Note has the right, at the holder's option, to convert
any portion of the principal amount of a Note that is an integral multiple of
$1,000 into shares of Common Stock at any time prior to the close of business on
the maturity date, unless previously redeemed or repurchased, at a conversion
rate of 47.5172 shares of Common Stock per $1,000 principal amount of Notes (the
"Conversion Rate") (equivalent to a conversion price of approximately $21.045
per share of Common Stock), subject to adjustment as described below. The right
to convert a Note called for redemption or delivered for repurchase will
terminate at the close of business on the Redemption Date or Repurchase Date for
such Note.
The right of conversion attaching to any Note may be exercised by the
holder by delivering the Note at the specified office of the Conversion Agent,
accompanied by a duly signed and completed notice of conversion, a copy of which
may be obtained from the Trustee. The conversion date will be the date on which
the Note and the duly signed and completed notice of conversion are so
delivered. As promptly as practicable on or after the conversion date, the
Company will issue and deliver to the Trustee a certificate or certificates for
the number of full shares of Common Stock issuable upon conversion, together
with payment in lieu of any fraction of a share or, at the Company's option,
rounded up to the next whole number of shares; such certificate will be sent by
the Trustee to the Conversion Agent (if other than the Trustee) for delivery to
the holder. Such shares of Common Stock issuable upon conversion of the Notes,
in accordance with the provisions of the Indenture, will be fully paid and
nonassessable and will rank pari passu with the other shares of Common Stock of
the Company outstanding from time to time. Any Note surrendered for conversion
during the period from the close of business on any Regular Record Date to the
opening of business on the next succeeding Interest Payment Date (the "Record
Date Period") (except Notes called for redemption on a Redemption Date or to be
repurchased on a Repurchase Date during, in each case, such Record Date Period)
must be accompanied by payment of an amount equal to the interest payable on
such Interest Payment Date relating to such Record Date Period on the principal
amount of such Notes being surrendered for conversion, and the interest payable
on such Interest Payment Date in respect of such Note shall be paid to the
holder of such Note as of the Regular Record Date. The interest payable on such
Interest Payment Date with respect to any Note which has been called for
redemption on a Redemption Date, or is repurchaseable on a Repurchase Date,
occurring, in either case, during such Record Date Period, which Note is
surrendered for conversion during such Record Date Period, shall be paid to the
holder of such Note being converted in an amount equal to the interest that
would have been payable on such Note if such Note had been converted as of the
close of business on such Interest Payment Date. Interest payable in respect of
any Note surrendered for conversion on or after an Interest Payment Date shall
be paid to the holder of such Note as of the next preceding Regular Record Date,
notwithstanding the exercise of the right of conversion.
As a result of the foregoing provisions, holders that surrender Notes for
conversion on a date that is not an Interest Payment Date will not receive any
interest for the period from the Interest Payment Date next preceding the date
of conversion to the date of conversion or for any later period, even if the
Notes are surrendered after a notice of redemption (except for the payment of
interest on Notes called for redemption on a Redemption Date or to be
repurchased on a Repurchase Date between a Regular Record Date and the Interest
Payment Date to which it relates). No other payment or adjustment for interest,
or for any dividends in respect of Common Stock, will be made upon conversion.
Holders of Common Stock issued upon conversion will not be entitled to receive
any dividends payable to holders of Common Stock as of any record time before
the close of business on the conversion date.
A holder delivering a Note for conversion will not be required to pay any
taxes or duties in respect of the issue or delivery of Common Stock on
conversion but will be required to pay any tax or duty which may be payable in
respect of any transfer involved in the issue or delivery of the Common Stock in
a name other than that of the holder of the Note. Certificates representing
shares of Common Stock will not be issued or delivered unless the person
requesting such issue has paid to the Company the amount of any such tax or duty
or has established to the satisfaction of the Company that such tax or duty has
been paid.
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<PAGE> 15
The Conversion Rate is subject to adjustment in certain events, including,
without duplication: (a) dividends (and other distributions) payable in Common
Stock on shares of capital stock of the Company, (b) the issuance to all holders
of Common Stock of rights, options or warrants entitling them to subscribe for
or purchase Common Stock at less than the then current market price of such
Common Stock (determined as provided in the Indenture) as of the record date for
shareholders entitled to receive such rights, options or warrants, (c)
subdivisions, combinations and reclassifications of Common Stock, (d)
distributions to all holders of Common Stock of evidences of indebtedness of the
Company, shares of capital stock, cash or assets (including securities, but
excluding those dividends, rights, options, warrants and distributions referred
to above, dividends and distributions paid exclusively in cash and in mergers
and consolidations to which the second succeeding paragraph applies), (e)
distributions consisting exclusively of cash (excluding any cash portion of
distributions referred to in (d) above or cash distributed upon a merger or
consolidation to which the next succeeding paragraph applies) to all holders of
Common Stock in an aggregate amount that, combined together with (i) other such
all-cash distributions made within the preceding twelve months in respect of
which no adjustment has been made and (ii) any cash and the fair market value of
other consideration payable in respect of any tender offer by the Company or any
of its subsidiaries for Common Stock concluded within the preceding twelve
months in respect of which no adjustment has been made, exceeds 10% of the
Company's market capitalization (being the product of the then current market
price (determined as provided in the Indenture) per share of the Common Stock
and the number of shares of Common Stock then outstanding) on the record date
for such distribution, and (f) the successful completion of a tender offer made
by the Company or any of its subsidiaries for Common Stock which involves an
aggregate consideration that, together with (i) any cash and other consideration
payable in a tender offer by the Company or any of its subsidiaries for Common
Stock expiring within the twelve months preceding the expiration of such tender
offer in respect of which no adjustment has been made and (ii) the aggregate
amount of any such all-cash distributions referred to in (e) above to all
holders of Common Stock within the twelve months preceding the expiration of
such tender offer in respect of which no adjustments have been made, exceeds 10%
of the Company's market capitalization on the expiration of such tender offer.
The Company reserves the right to make such increases in the Conversion Rate in
addition to those required in the foregoing provisions as it considers to be
advisable in order that any event treated for federal income tax purposes as a
dividend or distribution of stock or issuance of rights or warrants to purchase
or subscribe for stock will not be taxable to the recipients. No adjustment of
the Conversion Rate will be required to be made until the cumulative adjustments
amount to 1.0% or more of the Conversion Rate. The Company shall compute any
adjustments to the Conversion Rate pursuant to this paragraph and will give
notice to the holders of the Notes of any adjustments.
In case of any consolidation or merger of the Company with or into another
Person or any merger of another Person into the Company (other than a merger
which does not result in any reclassification, conversion, exchange or
cancellation of the Common Stock), or in case of any sale, transfer or lease of
all or substantially all of the assets of the Company, each Note then
outstanding will, without the consent of the holder of any Note, become
convertible only into the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, sale or transfer by a holder of the
number of shares of Common Stock into which such Note was convertible
immediately prior thereto (assuming such holder of Common Stock failed to
exercise any rights of election and that such Note was then convertible).
The Company from time to time may increase the Conversion Rate by any
amount for any period of at least 20 days, in which case the Company shall give
at least 15 days' notice of such increase, if the Board of Directors has made a
determination that such increase would be in the best interests of the Company,
which determination shall be conclusive. No such increase shall be taken into
account for purposes of determining whether the closing price of the Common
Stock exceeds the Conversion Price by 105% in connection with an event which
otherwise would be a Change of Control.
If at any time the Company makes a distribution of property to its
stockholders which would be taxable to such stockholders as a dividend for
federal income tax purposes (e.g., distributions of evidences of indebtedness or
assets of the Company, but generally not stock dividends on Common Stock or
rights to subscribe for Common Stock) and, pursuant to the anti-dilution
provisions of the Indenture, the number of
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<PAGE> 16
shares into which Notes are convertible is increased, such increase may be
deemed for federal income tax purposes to be the payment of a taxable dividend
to holders of Notes. See "Certain United States Federal Tax Considerations."
SUBORDINATION
The payment of the principal of, premium, if any, and interest on
(including any amounts payable upon the redemption or repurchase of the Notes
permitted by the Indenture) the Notes are subordinated in right of payment, to
the extent set forth in the Indenture, to the prior payment in full of the
principal of, premium, if any, interest and other amounts in respect of all
Senior Debt of the Company. The Notes also are effectively subordinated in right
of payment to all indebtedness and other liabilities of the Company's
subsidiaries.
Senior Debt is defined in the Indenture to mean the principal of (and
premium, if any) and interest (including all interest accruing subsequent to the
commencement of any bankruptcy or similar proceeding, whether or not a claim for
post-petition interest is allowable as a claim in any such proceeding) on, and
all fees and other amounts payable in connection with, the following, whether
direct or indirect, absolute or contingent, secured or unsecured, due or to
become due, outstanding on the date of the Indenture or thereafter created,
incurred or assumed: (a) indebtedness of the Company for money borrowed or
evidenced by credit or loan agreement, bonds, debentures, notes or similar
instruments, (b) all obligations of the Company evidenced by a note or similar
instrument or written agreement given in connection with the acquisition of any
businesses, properties or assets, including securities, (c) obligations of the
Company as lessee under leases capitalized on the balance sheet of the lessee
under generally accepted accounting principles, (d) obligations of the Company
under interest rate and currency swaps, caps, floors, collars, hedge agreements,
forward contracts, or similar agreements or arrangements intended to protect the
Company against fluctuations in interest or currency exchange rates or commodity
prices, (e) all reimbursement obligations of the Company with respect to letters
of credit, bankers' acceptances or similar facilities issued for the account of
the Company, (f) indebtedness of others of the kinds described in the preceding
clauses (a), (b), (c), (d) and (e) that the Company has assumed, guaranteed or
otherwise assured the payment thereof, directly or indirectly, and/or (g)
deferrals, renewals, extensions and refundings of, or bonds, debentures, notes
or other evidences of indebtedness issued in exchange for, or amendments,
modifications or supplements to, or covenants and other obligations of the
Company in connection with, the indebtedness described in the preceding clauses
(a) through (f) whether or not there is any notice to or consent of the holders
of Notes; except (i) indebtedness and advances among the Company and its direct
and indirect subsidiaries; and (ii) any particular indebtedness, deferral,
renewal, extension or refunding, if it is expressly stated in the governing
terms or in the assumption thereof that the indebtedness involved is not Senior
Debt.
No payment on account of principal, premium if any, or interest on the
Notes may be made if there shall have occurred (i) a default in the payment of
the principal of, premium, if any, interest (including a default under any
repurchase or redemption obligation) with respect to any Senior Debt or (ii) any
other event of default with respect to any Senior Debt, permitting the holders
thereof to accelerate the maturity thereof, and such event of default shall not
have been cured or waived or shall not have ceased to exist after written notice
of such event of default shall have been given to the Company and the Trustee by
any holder of Senior Debt. Upon the acceleration of the principal due on the
Notes or payment or distribution of assets of the Company to creditors upon any
dissolution, winding up, liquidation or reorganization, whether voluntary or
involuntary, or in bankruptcy, insolvency, receivership or other proceedings,
all principal, premium, if any and interest due on all Senior Debt must be paid
in full before the holders of the Notes are entitled to receive any payment. By
reason of such subordination, in the event of insolvency, creditors of the
Company who are holders of Senior Debt may recover more, ratably, than the
holders of the Notes, and such subordination may result in a reduction or
elimination of payments to the holders of the Notes.
The Indenture does not limit the Company's ability to incur Senior Debt or
any other indebtedness or the ability of any subsidiary of the Company to incur
any indebtedness or other liabilities.
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<PAGE> 17
OPTIONAL REDEMPTION
The Notes may not be redeemed prior to April 17, 2001. Thereafter, the
Notes may be redeemed, in whole or in part, at the option of the Company, upon
not less than 30 nor more than 60 days' prior notice as provided under
"-- Notices" below, at the redemption prices set forth below. Such redemption
prices (expressed as a percentage of principal amount) are as follows for the
12-month period beginning on April 17, 2001 and on April 15 of the years
following 2001:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
----------
<S> <C>
2001........................................................ 103.1429%
2002........................................................ 102.3571
2003........................................................ 101.5714
2004........................................................ 100.7857
</TABLE>
and thereafter at a redemption price equal to 100% of the principal amount, in
each case together with accrued interest to the date of redemption.
No sinking fund is provided for the Notes.
REPURCHASE AT OPTION OF HOLDERS UPON A CHANGE OF CONTROL
If a Change of Control (as defined) occurs, each holder of Notes shall have
the right, at the holder's option, to require the Company to repurchase all of
such holder's Notes, or any portion of the principal amount thereof that is
equal to $1,000 or an integral multiple of $1,000 in excess thereof, on the date
(the "Repurchase Date") that is 45 days after the date of the Company Notice (as
defined), at a price equal to 100% of the principal amount of the Notes to be
repurchased, together with interest accrued to the Repurchase Date (the
"Repurchase Price").
The Company may, at its option, in lieu of paying the Repurchase Price in
cash, pay the Repurchase Price in Common Stock valued at 95% of the average of
the last reported sale price of the Common Stock for the five consecutive
Trading Days ending on and including the third Trading Day preceding the
Repurchase Date; provided that payment may not be made in Common Stock unless
the Company satisfies certain conditions prior to the Repurchase Date as
provided in the Indenture.
Within 30 days after the occurrence of a Change of Control, the Company is
obligated to give to all holders of the Notes notice, as provided in the
Indenture (the "Company Notice"), of the occurrence of such Change of Control
and of the repurchase right arising as a result thereof. The Company must also
deliver a copy of the Company Notice to the Trustee. To exercise the repurchase
right, a holder of Notes must deliver on or before the 30th day after the date
of the Company Notice irrevocable written notice to the Trustee of the holder's
exercise of such right, together with the Notes with respect to which the right
is being exercised.
A Change of Control shall be deemed to have occurred at such time after the
original issuance of the Notes as there shall occur:
(a) the acquisition by any Person (including any syndicate or group
deemed to be a "person" under Section 13 (d) (3) of the Exchange Act) of
beneficial ownership, directly or indirectly, through a purchase, merger,
or other acquisition transaction or series of transactions, of shares of
capital stock of the Company entitling such Person to exercise 50% or more
of the total voting power of all shares of capital stock of the Company
entitled to vote generally in elections of directors, other than any such
acquisition by the Company, any subsidiary of the Company, or any employee
benefit plan of the Company; or
(b) any consolidation of the Company with, or merger of the Company
into, any other Person, any merger of another Person into the Company, or
any conveyance, sale, transfer, or lease of all or substantially all of the
assets of the Company to another Person (other than (i) any such
transaction (x) which does not result in any reclassification, conversion,
exchange, or cancellation of outstanding shares of capital stock of the
Company, and (y) pursuant to which the holders of the Common Stock
immediately prior to such transaction are entitled to exercise, directly or
indirectly, 50% or more of the
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<PAGE> 18
total voting power of all shares of capital stock entitled to vote
generally in the election of directors of the continuing or surviving
corporation immediately after such transaction, and (ii) any merger which
is effected solely to change the jurisdiction of incorporation of the
Company and results in a reclassification, conversion, or exchange of
outstanding shares of Common Stock solely into shares of Common Stock);
provided, however, that a Change of Control shall not be deemed to have occurred
if the last reported sale price per share of the Common Stock for any five
Trading Days within the period of 10 consecutive Trading Days ending immediately
after the later of the Change of Control or the public announcement of the
Change of Control (in the case of a Change of Control under clause (a) above) or
ending immediately before the Change of Control (in the case of a Change of
Control under clause (b) above) shall equal or exceed 105% of the Conversion
Price of the Notes in effect on each such Trading Day. "Beneficial owner" shall
be determined in accordance with Rule 13d-3 promulgated by the SEC under the
Exchange Act, as in effect on the date of original execution of the Indenture.
The Company's ability to repurchase Notes upon the occurrence of a Change
of Control is subject to limitations. There can be no assurance that the Company
would have the financial resources or be able to arrange financing on acceptable
terms to pay the Repurchase Price for all the Notes as to which the purchase
right is exercised. Further, any repurchase in connection with a Change of
Control could, depending on the circumstances and absent a waiver from the
holders of Senior Debt, be blocked by the subordination provisions of the Notes.
See "-- Subordination." The agreements relating to the Company's current Senior
Debt would limit the Company's ability to repurchase the Notes. Failure by the
Company to repurchase the Notes when required may result in an Event of Default
with respect to the Notes (and with respect to Senior Debt) whether or not such
repurchase is permitted by the subordination provisions. See "-- Events of
Default."
Rule 13e-4 under the Exchange Act requires the dissemination of certain
information to Securityholders in the event of an issuer tender offer and may
apply in the event that the repurchase option becomes available to holders of
the Notes. The Company will comply with this rule to the extent applicable at
that time.
The foregoing provisions would not necessarily afford holders of the Notes
protection in the event of highly leveraged or other transactions involving the
Company that may adversely affect holders.
MERGERS AND SALES OF ASSETS BY THE COMPANY
The Company may not consolidate with or merge into any other Person or,
directly or indirectly, convey, transfer, sell, lease, or otherwise dispose of
its properties and assets substantially as an entirety to any Person (other than
a conveyance, sale, transfer, or lease to a wholly-owned subsidiary), and the
Company may not permit any Person (other than a wholly-owned subsidiary) to
consolidate with or merge into the Company or convey, transfer, lease, or
otherwise dispose of all or substantially all of its properties and assets
substantially as an entirety to the Company, unless (a) the Person formed by
such consolidation or into which the Company is merged or the Person to which
the properties and assets of the Company are so conveyed, transferred, sold, or
leased is a corporation, limited liability company, partnership, or trust
organized and existing under the laws of the United States, any State thereof,
or the District of Columbia and has expressly assumed the due and punctual
payment of the principal of, premium, if any, and interest on the Notes and the
performance of the other covenants of the Company under the Indenture, (b)
immediately after giving effect to such transaction, no Event of Default, and no
event which, after notice or lapse of time or both, would become an Event of
Default, shall have occurred and be continuing, and (c) the Company has provided
to the Trustee an Officer's Certificate and opinion of counsel if required by
the Indenture.
EVENTS OF DEFAULT
The following are Events of Default under the Indenture: (a) failure to pay
principal or the Redemption Price of any Note when due, whether or not such
payment is prohibited by the subordination provisions of the Indenture; (b)
failure to pay any interest (including Liquidated Damages) on any Note when due,
continuing for 30 days, whether or not such payment is prohibited by the
subordination provisions of the Indenture; (c) failure to provide a Company
Notice in the event of a Change of Control; (d) failure to perform any other
17
<PAGE> 19
covenant or warranty of the Company in the Indenture, continuing for 60 days
after written notice as provided in the Indenture; (e) any indebtedness for
money borrowed by the Company in an aggregate principal amount in excess of
$5,000,000 is not paid at final maturity or the payment thereof is accelerated
and such default in payment or acceleration is not cured or rescinded within 30
days after written notice as provided in the Indenture; and (f) certain events
of bankruptcy, insolvency or reorganization. Subject to the provisions of the
Indenture relating to the duties of the Trustee in case an Event of Default
shall occur and be continuing, the Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the request or
direction of any of the holders, unless such holders shall have offered to the
Trustee reasonable indemnity. Subject to such provisions for the indemnification
of the Trustee, the holders of a majority in aggregate principal amount of the
Outstanding Notes will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee.
If an Event of Default (other than an Event of Default specified in
subsections (a), (b), and (f) above) occurs and is continuing, either the
Trustee shall, at the written request of the holders of not less than 25% in
aggregate principal amount of the Outstanding Notes, or the holders of not less
than 25% in aggregate principal amount of the Outstanding Notes may directly, by
notice in writing to the Company, declare the principal of all the Notes to be
due and payable immediately, and upon any such declaration such principal and
any accrued interest and any unpaid Liquidated Damages thereon will become
immediately due and payable. If an Event of Default specified in subsections (a)
or (b) occurs and is continuing, the holder of any Outstanding Note may, by
notice in writing to the Company (with a copy to the Trustee), declare the
principal of such Note to be due and payable immediately, and upon any such
declaration such principal and (subject to the Indenture) any accrued interest
and Liquidated Damages thereon will become immediately due and payable. If an
Event of Default specified in subsection (f) occurs and is continuing, the
principal and any accrued interest, together with any Liquidated Damages
thereon, on all of the then Outstanding Notes shall ipso facto become due and
payable immediately without any declaration or other Act on the part of the
Trustee or any holder.
At any time after a declaration of acceleration has been made but before a
judgment or decree based on acceleration, the holders of a majority in aggregate
principal amount of Outstanding Notes may, under certain circumstances, rescind
and annul such acceleration if all Events of Default, other than the nonpayment
of accelerated principal and interest have been cured or waived as provided in
the Indenture.
No holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such holder shall
have previously given to the Trustee written notice of a continuing Event of
Default and unless also the holders of at least 25% in aggregate principal
amount of the Outstanding Notes shall have made written request, and offered
reasonable indemnity, to the Trustee to institute such proceeding as trustee,
and the Trustee shall not have received from the holders of a majority in
aggregate principal amount of the Outstanding Notes a direction inconsistent
with such request and shall have failed to institute such proceeding within 60
days. However, such limitations do not apply to a suit instituted by a holder of
a Note for the enforcement of payment of the principal of, premium, if any, or
interest on such Note on or after the respective due dates expressed in such
Note or of the right to convert such Note in accordance with the Indenture.
The Company will be required to furnish to the Trustee annually a statement
as to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance.
MEETINGS, MODIFICATION, AND WAIVER
The Indenture contains provisions for convening meetings of the holders of
Notes to consider matters affecting their interests.
Modifications and amendments of the Indenture may be made, and certain past
defaults by the Company may be waived, (i) with the written consent of the
holders of not less than a majority in aggregate principal amount of the Notes
at the time Outstanding or (ii) by the adoption of a Resolution, at a meeting of
holders of the Notes at which a quorum is present, by the holders of at least
66 2/3% in aggregate principal amount of
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<PAGE> 20
the Outstanding Notes represented at such meeting. However, no such modification
or amendment may, without the consent of the holder of each outstanding Note
affected thereby, (a) change the Stated Maturity of the principal of, or any
installment of interest on, any Note, (b) reduce the principal amount of, or the
premium, if any, or rate of interest on, any Note, (c) reduce the amount payable
upon redemption or repurchase, (d) modify the provisions with respect to the
repurchase right of the holders in a manner adverse to the holders, (e) change
the place or currency of payment of principal of, premium, if any, or interest
on, any Note (including any payment of any Liquidated Damages or the Repurchase
Price in respect of such Note), (f) impair the right to institute suit for the
enforcement of any payment on or with respect to any Note, (g) modify the
obligation of the Company to maintain an office or agency in New York City, (h)
except as otherwise permitted by the Indenture or contemplated by provisions
concerning consolidation, merger, conveyance, transfer, sale or lease of all or
substantially all of the property and assets of the Company, adversely affect
the right of holders to convert any of the Notes or to require the Company to
repurchase any Note other than as provided in the Indenture, (i) modify the
subordination provisions in a manner adverse to the holders of the Notes, (j)
reduce the above-stated percentage of Outstanding Notes necessary to modify or
amend the Indenture, (k) reduce the percentage of aggregate principal amount of
Outstanding Notes necessary for waiver of compliance with certain provisions of
the Indenture or for waiver of certain defaults, (1) reduce the percentage in
aggregate principal amount of Outstanding Notes required for the adoption of a
Resolution or the quorum required at any meeting of holders of Notes at which a
Resolution is adopted, (m) modify the obligation of the Company to deliver
information required under Rule 144A to permit resales of Notes and Common Stock
issuable upon conversion thereof in the event the Company ceases to be subject
to certain reporting requirements under the U.S. securities laws or (n) modify
any provisions relating to subordination of the Notes, conversion of the Notes
or repurchase upon a Change of Control in a manner adverse to the holders of the
Notes. The quorum at any meeting called to adopt a Resolution will be persons
holding or representing a majority in aggregate principal amount of the Notes at
the time Outstanding and, at any reconvened meeting adjourned for lack of
quorum, 25% of such aggregate principal amount.
The holders of a majority in aggregate principal amount of the Outstanding
Notes may waive compliance by the Company with certain restrictive provisions of
the Indenture. The holders of a majority in aggregate principal amount of the
Outstanding Notes also may waive any past default under the Indenture, except a
default in the payment of principal, premium, if any, or interest.
TRANSFER, EXCHANGE, AND WITHDRAWAL
The Company has initially appointed the Trustee as security registrar and
transfer agent, acting through its Corporate Trust Office in New York City. The
Company reserves the right to vary or terminate the appointment of the security
registrar or of any transfer agent or to appoint additional or other transfer
agents or to approve any change in the office through which any security
registrar or any transfer agent acts.
In the event of a redemption of the Notes for any of the reasons set forth
below under "-- Optional Redemption," the Company will not be required (a) to
register the transfer or exchange of Notes for a period of 15 days immediately
preceding the date notice is given identifying the serial numbers of the Notes
called for such redemption or (b) to register the transfer of or exchange any
Registered Note, or portion thereof, called for redemption.
PURCHASE AND CANCELLATION
The Company or any subsidiary may at any time and from time to time
purchase Notes at any price in the open market or otherwise.
All Notes surrendered for payment, redemption, repurchase, registration of
transfer or exchange or conversion shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee. All Notes so delivered to the
Trustee shall be canceled promptly by the Trustee. No Notes shall be
authenticated in lieu of or in exchange for any Notes canceled as provided in
the Indenture. Unless otherwise requested by the Company and confirmed in
writing, the Trustee shall, from time to time but not less than once annually,
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<PAGE> 21
destroy all canceled Notes and deliver to the Company a certificate of
destruction, which certificate shall specify the number, principal amount and,
in the case of Notes the form of each canceled Note so destroyed.
TITLE
The Company and the Trustee may treat the registered owner (as reflected in
the Security Register) of any Note as the absolute owner thereof (whether or not
such Note shall be overdue) for the purpose of making payment and for all other
purposes.
NOTICES
Notice to holders of the Notes will be given by mail to the addresses of
such holders as they appear in the Security Register. Such notices will be
deemed to have been given on the date of such mailing.
Notice of a redemption of Notes will be given at least once not less than
30 nor more than 60 days prior to the redemption date (which notice shall be
irrevocable) and will specify the redemption date.
REPLACEMENT OF NOTES
Notes that become mutilated, destroyed, stolen or lost will be replaced by
the Company at the expense of the holder upon delivery to the Trustee of the
mutilated Notes or evidence of the loss, theft or destruction thereof
satisfactory to the Company and the Trustee. In the case of a lost, stolen or
destroyed Note, indemnity satisfactory to the Trustee and the Company may be
required at the expense of the holder of such Note before a replacement Note
will be issued.
PAYMENT OF STAMP AND OTHER TAXES
The Company shall pay all stamp and other duties, if any, which may be
imposed by the United States or United Kingdom or any political subdivision
thereof or taxing authority thereof or therein with respect to the issuance of
the Notes. The Company will not be required to make any payment with respect to
any other tax, assessment or governmental charge imposed by any government or
any political subdivision thereof or taxing authority therein.
SATISFACTION AND DISCHARGE
The Company may discharge its payment obligations under the Indenture while
Notes remain outstanding if (a) all outstanding Notes have become due and
payable or will become due and payable at their scheduled maturity within one
year, (b) all outstanding Notes are scheduled for redemption within one year or
(c) all outstanding Notes are delivered to the Trustee for conversion in
accordance with the Indenture and in the case of (a) or (b) above, the Company
has deposited with the Trustee an amount sufficient to pay and discharge the
entire indebtedness on all outstanding Notes on the date of their scheduled
maturity or the scheduled date of redemption.
GOVERNING LAW
The Indenture and the Notes are governed by and construed in accordance
with the laws of the State of New York.
THE TRUSTEE
In case an Event of Default shall occur (and shall not be cured), the
Trustee will be required to use the degree of care of a prudent person in the
conduct of his own affairs in the exercise of its powers. Subject to such
provisions, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request of any of the holders of
Notes, unless they shall have offered to the Trustee reasonable security or
indemnity.
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<PAGE> 22
DESCRIPTION OF CAPITAL STOCK
The following table sets forth certain information regarding the Company's
authorized classes and series of capital stock as of October 31, 1998. Each
class and series is listed in descending order of preference in liquidation. As
of October 31, 1998 the Company's (i) Subordinated Serial Preferred was held by
222 holders of record, (ii) Subordinated Cumulative Preferred was held by 289
holders of record, (iii) Employees' Subordinated Convertible Preferred was held
by 1,290 holders of record, and (iv) Common Stock was held by 10,091 holders of
record.
<TABLE>
<CAPTION>
COMMON VOTES
SHARES SHARES CONVERTIBLE PER
AUTHORIZED OUTSTANDING RATIO SHARE
---------- ----------- ----------- -----
<S> <C> <C> <C> <C>
Subordinated Serial Preferred (Aggregate)............. 3,000,000(1) N/A N/A N/A
$2.30 Series 1...................................... 64,368 37,128 0.83 1
$4.75 Series 3...................................... 40,449 19,369 2.112
$4.75 Series 4...................................... 53,764 16,412 1.52 1
Series 6............................................ 400,000 -- -- 100
$1.50 Subordinated Cumulative Preferred............... 5,000,000 30,017 -- --
Employees' Subordinated Convertible Preferred......... 5,000,000 83,022 1.00(2) 1
Common Stock.......................................... 80,000,000 25,292,175 N/A 1
</TABLE>
- ---------------
(1) The Company's charter permits the board of directors to issue Subordinated
Serial Preferred Stock in as many series, each with as many shares and such
rights and preferences, as the board may designate.
(2) Conversion rights with respect to the employees' Subordinated Convertible
Preferred Stock have been suspended. Also convertible into $1.50
Subordinated Cumulative Preferred.
COMMON STOCK
Holders of Common Stock are entitled to one vote for each share held and to
share ratably in the net assets of the Company, if any, in the event of a
liquidation, dissolution, or winding up of the Company, after payment of all
amounts due holders of the Company's preferred stock. Holders of Common Stock
have no cumulative voting, redemption, conversion, or preemptive rights.
After payment, or declaration and setting aside for payment, of the full
cumulative dividends for all prior and then current dividend periods on all
outstanding shares of preferred stock, cash dividends on Common Stock may be
declared and paid when and as determined by the board of directors, subject to
restrictions imposed by the Company's charter and certain credit agreements. See
"-- Certain Restrictions." The Company has not paid cash dividends on its Common
Stock since 1973.
CERTAIN RESTRICTIONS
The Company's Charter and the Company's Revolver contain restrictions on
the payment of dividends on and the redemption of shares. The Revolver limits
cash dividends on Common Stock and most redemption or other acquisitions of the
Company's capital stock for cash to an aggregate amount equal to $5 million plus
50%, if positive, and minus 100%, if negative, of the Company's net earnings,
after January 31, 1995.
CERTAIN ANTI-TAKEOVER MEASURES
The Company's shareholders' rights plan grants to common shareholders the
right to purchase, at a specified exercise price, a fraction of a share of
Subordinated Serial Preferred Stock, Series 6, in the event of an acquisition
of, or an announced tender offer for, 10% or more of the Company's outstanding
Common Stock. Upon any such event, each right also entities the holder (other
than the person making such acquisition or tender offer) to purchase, at the
exercise price, shares of Common Stock having a market value of twice the
exercise price. In the event the Company is acquired in a transaction in which
the Company is not the surviving corporation, each right would entitle its
holder to purchase, at the exercise price, shares of the acquiring company
having a market value of twice the exercise price. The rights expire in
September 2000, are
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<PAGE> 23
redeemable under certain circumstances at $.01 per right and are subject to
exchange for one share of Common Stock or an equivalent amount of preferred
stock at any time after the event which makes the rights exercisable and before
a majority of the Common Stock is acquired.
The Company's charter provides that in order to effect certain mergers or
other business transactions with a beneficial owner of 10% or more of the
Company's voting securities (an "Interested Shareholder"), affirmative votes at
least equal to the sum of the votes entitled to be cast by holders of shares
beneficially owned by the Interested Shareholder plus 67% of the votes entitled
to be cast by all other holders of voting stock, voting together as a class,
would be required, unless (i) the transaction is approved by a majority of
directors who are unaffiliated with the Interested Shareholder and who either
were directors before such owner acquired 10% of such securities or were chosen
by a majority of such directors, or (ii) certain fair price, form of
consideration, and procedural requirements are met.
The Company's bylaws provide that acquisitions of the Company's shares are
to be governed by the Tennessee Control Share Acquisition Act pursuant to which
a shareholder acquiring as little as one-fifth of the voting power of a
Tennessee corporation that has certain minimum shareholder contacts within the
State of Tennessee may lose the right to vote the acquired shares, unless voting
rights are approved by other shareholders. The bylaws also permit the Company,
pursuant to the provisions of the Tennessee Control Share Acquisition Act, at
the Company's option, to redeem at fair value all control shares, if a person
making a control share acquisition fails to file a control share acquisition
statement or is not accorded voting rights by other shareholders.
The Company is also subject to the Tennessee Business Combination Act
pursuant to which an Interested Shareholder is prohibited from engaging in
mergers or other business transactions with the Company for a period of five
years after the Interested Shareholder's share acquisition date, unless the
transaction by which the Interested Shareholder becomes an Interested
Shareholder or the business combination or other transaction with the Interested
Shareholder is approved by the board prior to such share acquisition date.
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
The following is a summary of certain United States federal income and
estate tax considerations relating to the purchase, ownership and disposition of
the Notes and of Common Stock into which Notes may be converted, but does not
purport to be a complete analysis of all the potential tax considerations
relating thereto. This summary is based on laws, regulations, rulings and
decisions now in effect (or, in the case of certain United States Treasury
Regulations ("Treasury Regulations"), now in proposed form), all of which are
subject to change, possibly on a retroactive basis. This summary deals only with
holders who hold Notes and Common Stock into which Notes may be converted as
"capital assets" (within the meaning of Section 1221 of the Internal Revenue
Code of 1986, as amended (the "Code") ) and does not address tax considerations
applicable to investors who may be subject to special tax rules, including, but
not limited to, banks, tax-exempt organizations, insurance companies, dealers in
securities or currencies, persons who hold Notes as a position in a hedging
transaction, "straddle" or "conversion transaction" for tax purposes, or persons
who have a "functional currency" other than the U.S. dollar. The Company has not
sought any ruling from the Internal Revenue Service (the "IRS") with respect to
the statements made and the conclusions reached in the following summary, and
there can be no assurance that the IRS will agree with such statements and
conclusions. INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE
APPLICATION OF THE UNITED STATES FEDERAL INCOME AND ESTATE TAX LAWS TO THEIR
PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF
ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX
TREATY.
UNITED STATES HOLDERS
As used herein, the term "United States Holder" means the beneficial owner
of a Note or Common Stock who for United States federal income tax purposes is
(i) a citizen or resident of the United States,
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<PAGE> 24
(ii) treated as a domestic corporation or domestic partnership, or (iii) an
estate or trust other than a "foreign estate" or "foreign trust" as defined in
Section 7701(a)(31) of the Code.
PAYMENT OF INTEREST
Interest on a Note generally will be includable in the income of a United
States Holder as ordinary income at the time such interest is received or
accrued, in accordance with such Holder's method of accounting for United States
federal income tax purposes.
MARKET DISCOUNT
If a United States Holder purchases a Note for an amount that is less than
its stated redemption price at maturity, such United States Holder will be
treated as having purchased such Note at a "market discount" unless such market
discount is less than one-fourth of one percent of the stated redemption price
of the Note at maturity, multiplied by the number of complete years to maturity
(after the United States Holder acquired the Note).
Under the market discount rules, a United States Holder will be required to
treat any partial principal payment on a Note, or any gain realized on the sale,
exchange, retirement or other disposition of a Note, as ordinary income to the
extent of the lesser of (i) the amount of such payment or realized gain or (ii)
the market discount which has not previously been included in income and is
treated as having accrued on such Note at the time of such payment or
disposition. Market discount will be considered to accrue ratably during the
period from the date of acquisition to the maturity date of the Note, unless the
United states Holder elects to accrue market discount on a constant yield basis.
Once made, such an election is irrevocable.
A United States Holder may elect to include market discount in income
currently as it accrues (on either a ratable or constant yield basis), in which
case the rules described above regarding the treatment as ordinary income of
gain upon the disposition of the Note and upon the receipt of certain cash
payments, and the rule stated below regarding deferral of interest deductions,
will not apply. Generally, such currently included market discount is treated as
ordinary interest for United States federal income tax purposes. Such an
election will apply to all debt instruments with market discount acquired by the
United States Holder on or after the first day of the taxable year to which such
election applies and may be revoked only with the consent of the IRS.
A United States Holder may be required to defer the deduction of all or a
portion of the interest paid or accrued on any indebtedness incurred or
maintained to purchase or carry a Note with market discount until the maturity
of the Note or certain earlier dispositions, because a current deduction is only
allowed to the extent that the interest expense exceeds the portion of market
discount allocable to the days during the taxable year in which the Note was
held by the United States Holder.
BOND PREMIUM
If a United States Holder purchases a debt instrument for an amount in
excess of its stated redemption price at maturity, such United States Holder
will be considered to have purchased the debt instrument with "amortizable bond
premium," generally equal in amount to such excess, but reduced by the value of
any conversion features attached to the debt instrument. A United States Holder
may elect to amortize bond premium using a constant yield method over the
remaining term of the debt instrument and may offset interest otherwise required
to be included in respect of the debt instrument during any taxable year by the
amortized amount for the taxable year. Any election to amortize bond premium
applies to all taxable debt obligations then owned and thereafter acquired by
the United States Holder on or after the first day of the taxable year to which
such election applies, and may be revoked only with the consent of the IRS.
The conversion features of the Notes will affect a United States Holder's
calculation of amortizable bond premium. As noted in the preceding paragraph,
the amount of amortizable bond premium generally equals the excess of the United
States Holder's tax basis in the debt instrument over the debt instrument's
stated redemption price at maturity, but reduced by the value of the conversion
features of the debt instrument.
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<PAGE> 25
Accordingly, the value of the conversion features of the Notes must be excluded
from the calculation of amortizable bond premium. Treasury Regulations provide
that the value of the conversion features of a particular debt instrument is
determined as of the time of acquisition by subtracting from the cost of the
debt instrument the assumed price at which the debt instrument would be
purchased on the open market if it did not have the conversion features. This
assumed price of the debt instrument without conversion features is determined
by comparing the yields on which debt instruments of a similar character, but
not having conversion features, are sold on the open market and adjusting the
price of the debt instrument in question to this yield.
Recently issued Treasury Regulations clarify the treatment of bond premium.
These regulations describe the constant yield method under which such premium is
amortized and provide that the resulting offset to interest income generally can
be taken into account only as a United States Holder takes the corresponding
interest income into account under such United States Holder's regular
accounting method. If the bond premium allocable to an accrual period exceeds
the qualified stated interest allocable to such period, the excess is treated by
the United States Holder as a bond premium deduction. However, the bond premium
deduction for the accrual period is limited to the amount by which the United
States Holder's total interest inclusions on the debt instrument in prior
accrual periods exceed the total amount treated by such Holder as a bond premium
deduction on the debt instrument in prior accrual periods. Any amounts not
deductible in an accrual period may be carried forward to the next accrual
period and treated as bond premium allocable to that period. In the case of
instruments like the Notes that may be redeemed prior to maturity, the
regulations provide that the premium is calculated by assuming that the Company
will exercise or not exercise its redemption rights in the manner that maximizes
the United States Holder's yield. If the assumption based on maximizing the
United States Holder's yield is that the Company's redemption rights will be
exercised at a particular redemption date, and contrary to that assumption the
Company does not exercise its redemption rights on that date, the Notes will be
treated (for purposes of the bond premium rules only) as retired and reacquired
by the United States Holder at the redemption price at which the Notes could
have been redeemed on such date. The Notes deemed to have been reissued will
again be subject to the amortizable bond premium rules with respect to the
remaining dates on which the Notes are redeemable. On the other hand, if the
assumption based on maximizing the Holder's yield is that the Company's
redemption rights will not be exercised on a particular redemption date, and
contrary to that assumption the Company does in fact exercise its redemption
rights on that date, the United States Holder may deduct the excess (if any) of
the adjusted acquisition price (cost minus previously amortized bond premium)
over the redemption price. The regulations are effective for debt instruments
acquired on or after March 2, 1998. If a United States Holder elects to amortize
bond premium for the taxable year containing such effective date, the
regulations will apply to all the United States Holder's debt instruments held
on or after the first day of that taxable year.
SALE, EXCHANGE, OR REDEMPTION OF THE NOTES
Upon the sale, exchange or redemption of a Note, a United States Holder
generally will recognize capital gain or loss equal to the difference between
(i) the amount of cash proceeds and the fair market value of any property
received on the sale, exchange or redemption (except to the extent such amount
is attributable to accrued interest income, which is taxable as ordinary income)
and (ii) such Holder's adjusted tax basis in the Note. If there is accrued
market discount on the Note, such accrued market discount is treated as ordinary
income to the extent of gain realized on the sale, exchange or redemption. For
purposes of determining capital gain or loss, a United States Holder's adjusted
tax basis in a Note generally will equal the cost of the Note to such Holder,
increased by accrued market discount, if any, if the United States Holder has
included such market discount in income, reduced by any principal payments
received by such Holder, and further reduced by amortizable bond premium, if
any, deducted with respect to such Note. The tax rate applicable to such a
capital gain will depend, among other things, upon the United States Holder's
holding period for the Notes that are sold, exchanged or redeemed.
24
<PAGE> 26
CONVERSION OF THE NOTES
A United States Holder generally will not recognize any income, gain or
loss upon conversion of a Note into Common Stock except to the extent of
ordinary income recognized with respect to accrued and unpaid interest on the
Note at that time. A United States Holder also will recognize capital gain or
loss upon the receipt of cash in lieu of a fractional Share of Common Stock
equal to the amount of cash received less the Holder's tax basis in such
fractional share. Such Holder's tax basis in the Common Stock received on
conversion of a Note will be the same as such Holder's adjusted tax basis in the
Note at the time of conversion (reduced by any basis allocable to a fractional
share interest), and the holding period for the Common Stock received on
conversion will generally include the holding period of the Note converted. If
there is accrued market discount on the Note at the time of the conversion, the
Common Stock that is received will be treated as retaining that amount of
accrued market discount until disposition of the Common Stock, at which time the
accrued market discount will be treated as ordinary income to the extent of gain
realized on such disposition.
DIVIDENDS
Dividends paid on the Common Stock generally will be includable in the
income of a United States Holder as ordinary income to the extent of the
Company's current or accumulated earnings and profits, then as a tax-free return
of capital to the extent of a Holder's tax basis in the Common Stock and
thereafter as gain from the sale or exchange of such stock.
In general, a dividend distribution to a corporate Holder will qualify for
the 70% dividends received deduction if the Holder owns less than 20% of the
voting power or value of the Company's stock (other than certain non-voting,
non-convertible, non-participating preferred stock). A corporate Holder that
owns 20% or more of the voting power and value of the Company's stock (other
than certain non-voting, non-convertible, non-participating preferred stock)
generally will qualify for an 80% dividends received deduction. The dividends
received deduction is subject, however, to certain holding period, taxable
income and other limitations.
SALE OF COMMON STOCK
Upon the sale or exchange of Common Stock, a United States Holder generally
will recognize capital gain or loss equal to the difference between (i) the
amount of cash and the fair market value of any property received upon the sale
or exchange and (ii) such United States Holder's adjusted tax basis in the
Common Stock. If the Common Stock retains accrued market discount upon
conversion of the Note (as discussed above under "-- Conversion of the Notes"),
such accrued market discount will be treated as ordinary income to the extent of
gain realized on the sale or exchange. The capital gain that would otherwise be
recognized is reduced by the amount of accrued market discount that is treated
as ordinary income on the sale or exchange. The tax rate applicable to capital
gain recognized will depend, among other things, upon the Holder's holding
period for the Shares of Common Stock that are sold or exchanged. A United
States Holder's basis and holding period in Common Stock received upon
conversion of a Note are determined as discussed above under "-- Conversion of
the Notes."
ADJUSTMENT OF CONVERSION PRICE
Treasury Regulations promulgated under Section 305 of the Code would treat
Holders of the Notes as having received a constructive distribution from the
Company in the event that the conversion ratio of the Notes were adjusted if (i)
as a result of such adjustment, the proportionate interest (measured by the
quantum of Common Stock into or for which the Notes are convertible or
exchangeable) of the Holders of the Notes in the assets or earnings and profits
of the Company were increased, and (ii) the adjustment was not made pursuant to
a bona fide, reasonable anti-dilution formula. An adjustment in the conversion
ratio would not be considered made pursuant to such formula if the adjustment
was made to compensate for certain taxable distributions with respect to the
Common Stock. Thus, under certain circumstances, a reduction in the conversion
price for the Holders may result in deemed dividend income to Holders to the
extent of the Company's current or accumulated earnings and profits.
25
<PAGE> 27
INFORMATION REPORTING AND BACKUP WITHHOLDING TAX
In general, information reporting requirements will apply to payments of
principal, premium, if any, and interest on a Note, payments of dividends on
Common Stock, payments of the proceeds of the sale of a Note and payments of the
proceeds of the sale of Common Stock to certain noncorporate United States
Holders, and a 31% backup withholding tax may apply to such payments if (i) the
United States Holder fails to furnish or certify his correct taxpayer
identification number to the payor in the manner required, (ii) the Company is
notified by the IRS that the United States Holder has failed to report payments
of interest and dividends properly or that the taxpayer identification number
furnished to the Company is incorrect, or (iii) under certain circumstances, the
United States Holder fails to certify that he has not been notified by the IRS
that he is subject to backup withholding for failure to report interest and
dividend payments. Any amounts withheld under the backup withholding rules from
a payment to a United States Holder will be allowed as a credit against such
Holder's United States federal income tax and may entitle the Holder to a
refund, provided that the required information is furnished to the IRS.
NON UNITED STATES HOLDERS
As used herein, the term "Non United States Holder" means any beneficial
owner of a Note or Common Stock that is not a United States Holder. The rules
governing the United States federal income and estate taxation of a Non United
States Holder are complex and no attempt will be made herein to provide more
than a summary of such rules. NON UNITED STATES HOLDERS SHOULD CONSULT WITH
THEIR OWN TAX ADVISORS TO DETERMINE THE EFFECT OF FEDERAL, STATE, LOCAL AND
FOREIGN TAX LAWS WITH REGARD TO AN INVESTMENT IN THE NOTES AND COMMON STOCK,
INCLUDING ANY REPORTING REQUIREMENTS.
PAYMENT OF INTEREST
Generally, payment of interest on a Note by the Company or any Paying Agent
to a Non United States Holder will qualify for the "portfolio interest
exemption" and therefore will not be subject to United States federal income tax
or withholding tax, provided that such interest income is not effectively
connected with a United States trade or business of the Non United States Holder
and provided that the Non United States Holder (i) does not actually or
constructively own 10% or more of the combined voting power of all classes of
stock of the Company entitled to vote, (ii) is not a controlled foreign
corporation related to the Company actually or constructively through stock
ownership, (iii) is not a bank receiving interest on a loan entered into in the
ordinary course of business and (iv) either (a) provides a Form W-8 (or a
suitable substitute form) signed under penalties of perjury that includes its
name and address and certifies as to its Non United States Holder status in
compliance with applicable law and regulations, or (b) a securities clearing.
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business holds the Note and
provides a statement to the Company or its agent under penalties of perjury in
which it certifies that such a Form W-8 (or a suitable substitute) has been
received by it from the Non United States Holder or qualifying intermediary and
furnishes the Company or its agent with a copy thereof.
Recently released Treasury Regulations provide alternative methods for
satisfying the certification requirements described in clause (iv) above. Based
on an IRS Notice issued on March 30, 1998, the Treasury Regulations generally
will be effective for payments made after December 31, 1999, subject to certain
transition rules. Non United States Holders are urged to consult their own tax
advisors regarding the new Treasury Regulations.
Except to the extent that an applicable treaty otherwise provides, a Non
United States Holder generally will be taxed in the same manner as a United
States Holder with respect to interest if the interest income is effectively
connected with a United States trade or business of the Non United States
Holder. Effectively connected interest received by a corporate Non United States
Holder may also, under certain circumstances, be subject to an additional
"branch profits tax" at a 30% rate (or, if applicable, a lower treaty rate).
Even though such effectively connected interest is subject to income tax, and
may be subject to the branch profits tax, it is not subject to withholding tax
if the Holder delivers IRS Form 4224 annually to the payor.
26
<PAGE> 28
Interest income of a Non United States Holder that is not effectively
connected with a United States trade or business and that does not qualify for
the portfolio interest exemption described above will generally be subject to a
withholding tax at a 30% rate (or, if applicable, a lower treaty rate).
SALE, EXCHANGE, OR REDEMPTION OF THE NOTES
A Non United States Holder of a Note will generally not be subject to
United States federal income tax or withholding tax on any gain realized on the
sale, exchange or redemption of the Note (including the receipt of cash in lieu
of fractional shares upon conversion of a Note into Common Stock) unless (1) the
gain is effectively connected with a United States trade or business of the Non
United States Holder, (2) in the case of a Non United States Holder who is an
individual, such Holder is present in the United States for a period or periods
aggregating 183 days or more during the taxable year of the disposition, and
either such Holder has a "tax home" in the United States or the disposition is
attributable to an office or other fixed place of business maintained by such
Holder in the United States, (3) the Holder is subject to tax pursuant to the
provisions of the Code applicable to certain United States expatriates, or (4)
the Company is a United States real property holding corporation (see discussion
under "-- United States Foreign Investment in Real Property Tax Act" below).
CONVERSION OF THE NOTES
In general, no United States federal income tax or withholding tax will be
imposed upon the conversion of a Note into Common Stock by a Non United States
Holder except with respect to the receipt of cash in lieu of fractional shares
by Non United States Holders upon conversion of a Note where any of the
conditions described above under "-- Non United States Holders -- Sale, Exchange
or Redemption of the Notes" is satisfied.
SALE OR EXCHANGE OF COMMON STOCK
A Non United States Holder of Common Stock will generally not be subject to
United States federal income tax or withholding tax on any gain realized on the
sale or exchange of the Common Stock unless (1) the gain is effectively
connected with a United States trade or business of the Non United States
Holder, (2) in the case of a Non United States Holder who is an individual, such
Holder is present in the United States for a period or periods aggregating 183
days or more during the taxable year of the disposition, and either such Holder
has a "tax home" in the United States or the disposition is attributable to an
office or other fixed place of business maintained by such Holder in the United
States, (3) the Holder is subject to tax pursuant to the provisions of the Code
applicable to certain United States expatriates, or (4) the Company is a United
States real property holding corporation. See "-- United States Foreign
Investment in Real Property Tax Act."
DIVIDENDS
Dividends paid (or deemed paid, as described above under "-- United States
Holders -- Dividends") on Common Stock to a Non United States Holder (excluding
dividends that are effectively connected with the conduct of a trade or business
in the United States by such Holder and are taxable as described below) will be
subject to United States federal withholding tax at a 30% rate (or lower rate
provided under any applicable income tax treaty). Except to the extent that an
applicable tax treaty otherwise provides, a Non United States Holder will be
taxed in the same manner as a United States Holder on dividends paid (or deemed
paid) that are effectively connected with the conduct of a trade or business in
the United States by the Non United States Holder, If such Non United States
Holder is a foreign corporation, it may also be subject to a United States
branch profits tax on such effectively connected income at a 30% rate or such
lower rate as may be specified by an applicable income tax treaty. Even though
such effectively connected dividends are subject to income tax, and may be
subject to the branch profits tax, they will not be subject to U.S. withholding
tax if the Holder delivers IRS Form 4224 annually to the payor.
27
<PAGE> 29
Under currently applicable Treasury Regulations, dividends paid to an
address in a foreign country are presumed to be paid to a resident of that
country (unless the payor has knowledge to the contrary) for purposes of the
withholding discussed above and for purposes of determining the applicability of
a tax treaty rate. Under recently issued Treasury Regulations, however, Non
United States Holders of Common Stock who wish to claim the benefit of an
applicable treaty rate would be required to satisfy certain certification
requirements. Based on an IRS Notice issued on March 30, 1998, the new Treasury
Regulations generally will be effective for payments made after December 31,
1999. Non United States Holders are urged to consult their own tax advisors
regarding the new Treasury Regulations.
DEATH OF A NON UNITED STATES HOLDER
A Note held by an individual who is not a citizen or resident of the United
States at the time of death will not be includable in the decedent's gross
estate for United States federal estate tax purposes, provided that such Holder
or beneficial owner did not at the time of death actually or constructively own
10% or more of the combined voting power of all classes of stock of the Company
entitled to vote, and provided that, at the time of death, payments with respect
to such Note would not have been effectively connected with the conduct by such
Non United States Holder of a trade or business within the United States.
Common Stock actually or beneficially held (other than through a bona fide
foreign corporation) by a Non United States Holder at the time of his or her
death (or previously transferred subject to certain retained rights or powers)
will be subject to United States federal estate tax unless otherwise provided by
an applicable estate tax treaty.
INFORMATION REPORTING AND BACKUP WITHHOLDING TAX
United States information reporting requirements and backup withholding tax
will not apply to payments on a Note to a Non United States Holder if the
statement described in "Non United States Holders -- Payment of Interest" is
duly provided by such Holder, provided that the payor does not have actual
knowledge that the Holder is a United States person.
Information reporting requirements and backup withholding tax will not
apply to any payment of the proceeds of the sale of a Note or any payment of the
proceeds of the sale of Common Stock effected outside the United States by a
foreign office of a "broker" (as defined in applicable Treasury Regulations),
unless such broker (i) is a United States person, (ii) derives 50% or more of
its gross income for certain periods from the conduct of a trade or business in
the United States or (iii) is a controlled foreign corporation as to the United
States. Payment of the proceeds of any such sale effected outside the United
States by a foreign office of any broker that is described in (i), (ii) or (iii)
of the preceding sentence will not be subject to backup withholding tax, but
will be subject to information reporting requirements unless such broker has
documentary evidence in its records that the beneficial owner is a Non United
States Holder and certain other conditions are met, or the beneficial owner
otherwise establishes an exemption. Payment of the proceeds of any such sale to
or through the United States office of a broker is subject to information
reporting and backup withholding requirements, unless the beneficial owner of
the Note provides the statement described in "Non United States
Holders -- Payment of Interest" or otherwise establishes an exemption.
Recently released Treasury Regulations make certain modifications to the
withholding, backup withholding and information reporting rules described above.
Based on an IRS Notice issued on March 30, 1998, the new Treasury Regulations
will generally be effective for payments made after December 31, 1999, subject
to certain transition rules. Prospective investors are urged to consult their
own tax advisors regarding the new Treasury Regulations.
UNITED STATES FOREIGN INVESTMENT IN REAL PROPERTY TAX ACT
Under the Foreign Investment in Real Property Tax Act ("FIRPTA"), any
person who acquires a "United States real property interest" (as described
below) from a foreign person must deduct and withhold a tax equal to 10% of the
amount realized by the foreign transferor. In addition, a foreign person who
disposes of a United States real property interest generally is required to
recognize gain or loss that is subject to United
28
<PAGE> 30
States federal income tax. A "United States real property interest" generally
includes any interest (other than an interest solely as a creditor) in a United
States corporation unless it is established under specific procedures that the
corporation is not (and was not for the prior five-year period) a "United States
real property holding corporation." The Company does not believe that it is a
United States real property holding corporation as of the date hereof, although
it has not conducted or obtained an appraisal of its assets to determine whether
it is now or will be a United States real property holding corporation. If it is
not established that the Company is not a United States real property holding
corporation, then, unless an exemption applies, both the Common Stock and the
Notes would be treated as United States real property interests. As discussed
below, however, an exemption should apply to the Common Stock and the Notes
except with respect to a Non United States Holder whose beneficial ownership of
Common Stock or Notes exceeds 5% of the total fair market value of the Common
Stock.
An interest in a United States corporation generally will not be treated as
a United States real property interest if, at any time during the calendar year,
any class of stock of the corporation is "regularly traded" on an established
securities market (the "regularly-traded exemption"). The Company believes that
the Company's Common Stock is regularly traded on an established securities
market within the meaning of the applicable regulations, although there can be
no assurance that the Common Stock will remain regularly traded. The remainder
of this discussion assumes that the Common Stock is and will remain regularly
traded on an established securities market.
The regularly-traded exemption is not available to a regularly traded
interest (such as the Common Stock) if such interest is owned by a person who
beneficially owns (actually or constructively) more than 5% of the total fair
market value of that class of interests at any time during the five-year period
ending on the date of disposition of such interest or other applicable
determination date. Accordingly, except with respect to a sale or other
disposition of Common Stock by a Non United States Holder whose aggregate
beneficial ownership has exceeded that 5% threshold, no withholding or income
taxation under the FIRPTA rules should be required with respect to the sale,
exchange or other disposition of Common Stock by a Non United States Holder.
The regularly-traded exemption will apply to a "non-regularly traded class
of interests" in a United States corporation that is convertible into a
regularly traded class of interests in the corporation unless, on the date such
non-regularly traded interest was acquired by its present holder, such interest
had a fair market value greater than the fair market value on that date of 5% of
the regularly traded class of the corporation's stock into which it is
convertible. (Interests of a nonregularly traded class acquired over a period of
time will be aggregated and valued as of the date of the subsequent acquisition
for purposes of applying the 5% test described above.) Accordingly, except with
respect to the sale, exchange, conversion or redemption of the Notes by a Non
United States Holder whose aggregate actual or constructive ownership of such
Notes on an applicable determination date had a fair market value greater than
5% of the Common Stock, no withholding or income taxation under the FIRPTA rules
should be required with respect to the sale, exchange, conversion or redemption
of Notes by a Non United States Holder. The foregoing discussion assumes that
the Notes constitute interests that are nonregularly traded interests
convertible into a regularly traded class of interests. If the Notes were to
become regularly traded, the regularly-traded exemption might not apply to Notes
owned by a person who beneficially owns (actually or constructively) more than
5% of the total fair market value of the Notes at any time during the five year
period ending on the date of disposition of the Notes or other applicable
determination date.
Any investor that may approach or exceed any of the 5% ownership thresholds
discussed above, either alone or in conjunction with related persons, should
consult its own tax advisor concerning the United States tax consequences that
may result. A Non United States Holder who sells or otherwise disposes of Notes
may be required to inform its transferee whether such Notes constitute a United
States real property interest.
29
<PAGE> 31
SELLING SECURITYHOLDERS
The Notes were originally issued by the Company in a private placement on
April 9, 1998 to Goldman, Sachs & Co., NationsBanc Montgomery Securities LLC and
SBC Warburg Dillon Read Inc. (the "Initial Purchasers"). The Notes were resold
by the Initial Purchasers in transactions exempt from the registration
requirements of the Securities Act in the United States to persons reasonably
believed by the Initial Purchasers to be "qualified institutional buyers" (as
defined in Rule 144A under the Securities Act).
The following table sets forth certain information with respect to the
Selling Securityholders and the respective principal amount of Notes and
Conversion Shares beneficially owned by each Selling Securityholder that may be
offered pursuant to this Prospectus. Such information was obtained from the
Selling Securityholders and the Trustee. Since the date they provided such
information, the Selling Securityholders may have sold, transferred, or
otherwise disposed of all or a portion of their Notes in transactions exempt
from the registration provisions of the Securities Act. Except as otherwise
indicated, to the knowledge of the Company, all persons listed below have sole
voting and investment power with respect to their securities. Except as noted
below, none of the Selling Securityholders owned directly any Common Stock prior
to the Offering. The term "Selling Securityholders" includes the holders listed
below and the beneficial owners of the Notes and their transferees, pledgees,
donees or other successors.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
SELLING PRINCIPAL AMOUNT OF NOTES OFFERED COMMON STOCK
SECURITYHOLDERS OF NOTES OWNED HEREBY OFFERED HEREBY(1)
- --------------- ---------------- ---------------- -----------------
<S> <C> <C> <C>
Alexandra Global Investment..................... $ 6,250,000 $ 6,250,000 296,983
Argent Classic Convertible Arbitrage Fund
L.P........................................... $10,500,000 $10,500,000 498,931
Argent Classic Convertible Arbitrage Fund
(Bermuda) L.P................................. $ 6,200,000 $ 6,200,000 294,607
Arkansas Teacher Retirement System.............. $ 651,000 $ 651,000 30,934
Associated Electric & Gas Insurance Services
Limited....................................... $ 270,000 $ 270,000 12,830
Bear Stearns Securities Corp.................... $ 3,625,000 $ 3,625,000 172,250
BNP Arbitrage SNC(2)............................ $ 750,000 $ 750,000 35,638
BT Holdings (New York), Inc.(3)................. $ 1,500,000 $ 1,500,000 71,276
Carrigaholt Capital (Bermuda) L.P............... $ 445,000 $ 445,000 21,145
Castle Convertible Fund, Inc.................... $ 1,000,000 $ 1,000,000 47,517
Century National Insurance Company.............. $ 690,000 $ 690,000 32,787
CFW-C, L.P...................................... $ 8,380,000 $ 8,380,000 398,194
Chrysler Insurance Company -- Total Return...... $ 20,000 $ 20,000 950
Columbia Healthcare Corp........................ $ 301,000 $ 301,000 14,303
Deutsche Bank AG................................ $ 7,975,000 $ 7,975,000 378,950
First Mercury Insurance Company -- Total
Return........................................ $ 24,800 $ 24,800 1,178
Fort Dearborn Life Insurance Company............ $ 120,000 $ 120,000 5,702
Goldman, Sachs & Company........................ $ 500,000 $ 500,000 23,758
Highbridge Capital Corporation.................. $ 6,350,000 $ 6,350,000 301,734
Key Asset Management, Inc., as agent for the
Victory Convertible Securities Fund........... $ 750,000 $ 750,000 35,638
LDG Limited..................................... $ 530,000 $ 530,000 25,184
Missouri State Employee Retirement System....... $ 548,000 $ 548,000 26,039
Morgan Stanley Dean Witter Convertible
Securities Trust.............................. $ 3,600,000 $ 3,600,000 171,062
Morgan Stanley Dean Witter Income Builder
Fund.......................................... $ 4,400,000 $ 4,400,000 209,076
Morgan Stanley Dean Witter Variable Income
Builder Fund.................................. $ 1,000,000 $ 1,000,000 47,517
NationsBanc Montgomery Securities LLC........... $ 7,000,000 $ 7,000,000 332,621
Paloma Securities L.L.C......................... $ 4,000,000 $ 4,000,000 190,069
Q Investments, L.P.............................. $ 3,325,000 $ 3,325,000 157,995
R(2) Investments, LDC........................... $ 2,700,000 $ 2,700,000 128,297
</TABLE>
30
<PAGE> 32
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
SELLING PRINCIPAL AMOUNT OF NOTES OFFERED COMMON STOCK
SECURITYHOLDERS OF NOTES OWNED HEREBY OFFERED HEREBY(1)
- --------------- ---------------- ---------------- -----------------
<S> <C> <C> <C>
The Class 1C Company, Ltd....................... $ 430,000 $ 430,000 21,432
The Concordia Retirement Plan of the Lutheran
Church -- Missouri Synod...................... $ 2,000,000 $ 2,000,000 95,034
TQA Arbitrage Fund, L.P......................... $ 850,000 $ 850,000 40,390
TQA Leverage Fund, L.P.......................... $ 795,000 $ 795,000 37,776
TQA Vantage Fund, Ltd........................... $ 2,090,000 $ 2,090,000 99,311
TQA Vantage Plus Fund, Ltd...................... $ 565,000 $ 565,000 26,847
Westfield Life Insurance Company................ $ 300,000 $ 300,000 14,255
</TABLE>
- ---------------
(1) The shares of Common Stock offered hereby are calculated on an "as
converted" basis using the conversion rate described on the cover page of
this Prospectus.
(2) Owns 6,300 shares of Common Stock, excluding the Conversion Shares offered
hereby.
(3) Owns 4,000 shares of Common Stock, excluding the Conversion Shares offered
hereby.
None of the Selling Securityholders has, or within the past three years has
had, any position, office or other material relationship with the Company or any
of its predecessors or affiliates. Because the Selling Securityholders may,
pursuant to this Prospectus, offer all or some portion of the Notes or the
Conversion Shares they presently hold, no estimate can be given as to the amount
of the Notes or the Conversion Shares that will be held by the Selling
Securityholders upon termination of any such sales. In addition, the Selling
Securityholders identified above may have sold, transferred or otherwise
disposed of all or a portion of their Notes, in transactions exempt from the
registration requirements of the Securities Act, since the date on which they
provided the information regarding their Notes. See "Plan of Distribution."
Only Selling Securityholders identified above who beneficially own the
Notes and the underlying Conversion Shares set forth opposite each such Selling
Securityholder's name in the foregoing table on the effective date of the
Registration Statement of which this Prospectus forms a part may sell such Notes
or Conversion Shares pursuant to the Registration Statement. The Company may
from time to time, in accordance with the Registration Rights Agreement, include
additional Selling Securityholders in supplements to this Prospectus.
31
<PAGE> 33
PLAN OF DISTRIBUTION
The Notes and Conversion Shares may be sold from time to time in one or
more transactions at fixed prices, at prevailing market prices at the time of
sale, at varying prices determined at the time of sale or at negotiated prices.
The sale of the Notes and Conversion Shares may be effected in transactions
(which may involve crosses or block transactions) (i) on any national securities
exchange or quotation service on which the Notes and Conversion Shares may be
listed or quoted at the time of sale, (ii) in the over-the-counter market, (iii)
in transactions otherwise than on such exchanges or in the over-the-counter
market or (iv) through the writing and exercise of options. At the time a
particular offering or sale of the Notes and Conversion Shares is made, this
Prospectus will be amended or supplemented, if necessary, to set forth the name
of the Selling Securityholder, the aggregate amount of Notes and/or number of
Conversion Shares being offered and the terms of the offering, including the
name or names of any underwriters, broker/dealers or agents, any discounts,
commissions and other terms constituting compensation from the Selling
Securityholders and any discounts, commissions or concessions allowed or
reallowed to paid broker/dealers.
The Selling Securityholders, and any underwriters, paid broker/dealer or
agents that participate in the distribution of Notes and Conversion Shares may
be deemed to be "underwriters" within the meaning of the Securities Act, and any
profit on the sale of such securities and any discounts, commissions,
concessions or other compensation received by any such underwriter,
broker/dealer or agent may be deemed to be underwriting discounts and
commissions under the Securities Act. The Selling Securityholders may indemnify
any underwriter, broker/dealer or agent that participates in transactions
involving the sale of the Notes and Conversion Shares against certain
liabilities, including liabilities under the Securities Act.
To comply with the securities laws of certain jurisdictions, if applicable,
the Notes and the Conversion Shares will be offered or sold in such
jurisdictions only through registered or licensed brokers or dealers. In
addition, in certain jurisdictions the Notes and the Conversion Shares may not
be offered or sold unless they have been registered or qualified for sale in
such jurisdictions or an exemption from registration or qualification is
available and is complied with.
Pursuant to the Registration Rights Agreement, the Company will pay all
expenses of the registration of the Notes and Conversion Shares offered hereby
including, without limitation, all registration and filing fees and expenses and
fees and expenses of compliance with federal securities or state blue sky laws;
provided, however, that the Selling Securityholders will pay all brokers'
commissions and underwriting discounts and commissions, if any. The Selling
Securityholders will be indemnified by the Company against certain civil
liabilities, including certain liabilities under the Securities Act or the
Exchange Act or otherwise, or will be entitled to contribution in connection
therewith. The Company will be indemnified by the Selling Securityholders
severally against certain civil liabilities, including certain liabilities under
the Securities Act or otherwise, or will be entitled to contribution in
connection therewith.
EXPERTS
The audited financial statements incorporated by reference in this
Prospectus have been audited by PricewaterhouseCoopers LLP, independent
accountants, as stated in their report appearing herein. (On July 1, 1998, Price
Waterhouse, LLP became PricewaterhouseCoopers LLP.)
32
<PAGE> 34
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
SEC registration fee........................................ $ 30,533
Accounting fees and expenses................................ 25,000
Legal fees and expenses..................................... 50,000
Printing fees and expenses.................................. 25,000
Miscellaneous fees and expenses............................. 25,000
--------
Total............................................. $155,533
========
</TABLE>
- ---------------
* All of the above expenses except the SEC registration fee are estimated. All
of the above expenses will be paid by the Company. The above expenses do not
include expenses incurred by the Company in connection with the private
placement of the Notes to the Initial Purchasers.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Tennessee Business Corporation Act ("TBCA") provides that a corporation
may indemnify any director or officer against liability incurred in connection
with a proceeding if (i) the director or officer acted in good faith, (ii) the
director or officer reasonably believed, in the case of conduct in his or her
official capacity with the corporation, that such conduct was in the
corporation's best interest, or, in all other cases, that his or her conduct was
not opposed to the best interests of the corporation, and (iii) in connection
with any criminal proceeding, the director or officer had no reasonable cause to
believe that his or her conduct was unlawful. In actions brought by or in the
right of the corporation, however, the TBCA provides that no indemnification may
be made if the director or officer is adjudged to be liable to the corporation.
Similarly, the TBCA prohibits indemnification in connection with any proceeding
charging improper personal benefit to a director or officer, if such director or
officer is adjudged liable on the basis that a personal benefit was improperly
received. In cases where the director or officer is wholly successful, on the
merits or otherwise, in the defense of any proceeding instigated because of his
or her status as a director or officer of a corporation, the TBCA mandates that
the corporation indemnify the director or officer against reasonable expenses
incurred in the proceeding. Notwithstanding the foregoing, the TBCA provides
that a court of competent jurisdiction, upon application, may order that a
director or officer be indemnified for reasonable expense if, in consideration
of all relevant circumstances, the court determines that such individual is
fairly and reasonably entitled to indemnification, whether or not the standard
of conduct set forth above was met.
The Restated Charter of the Company, as amended, (the "Charter") and its
Amended and Restated Bylaws (the "Bylaws") provide that the Company will
indemnify from liability, and advance expenses to, any present or former
director or officer of the Company to the fullest extent allowed by the TBCA, as
amended from time to time, or any subsequent law, rule, or regulation adopted in
lieu thereof. Additionally, the Charter provides that no director of the Company
will be personally liable to the Company or any of its shareholders for monetary
damages for breach of any fiduciary duty except for liability arising from (i)
any breach of a director's duty of loyalty to the Company or its shareholders,
(ii) acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) any unlawful distributions, or (iv)
receiving any improper personal benefit.
The Company also maintains directors and officers insurance policies on
customary terms and conditions in amounts and covering such matters as the
Company deems prudent.
II-1
<PAGE> 35
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
4.1 -- Form of 5 1/2% Convertible Subordinated Note due April 15,
2005 (incorporated by reference to Exhibit 4.1 to the
Company's Current Report on Form 8-K, dated April 15, 1998).
4.2 -- Indenture, dated as of April 9, 1998, between Genesco Inc.
and United States Trust Company of New York (incorporated by
reference to Exhibit 4.2 to the Company's Current Report on
Form 8-K, dated April 15, 1998).
5* -- Opinion of Bass, Berry & Sims PLC.
10 -- Registration Rights Agreement, dated as of April 19, 1998,
by and among Genesco Inc., Goldman, Sachs & Co., NationsBanc
Montgomery Securities LLC, and SBC Warburg Dillon Read Inc.
(incorporated by reference to Exhibit 10 to the Company's
Current Report on Form 8-K, dated April 15, 1998)
12 -- Statement Regarding Computation of the Ratio of Earnings to
Fixed Charges.
23.1 -- Consent of PricewaterhouseCoopers LLP.
23.2* -- Consent of Bass, Berry & Sims PLC.
24* -- Power of Attorney
25 -- Statement of Eligibility of Trustee under the Trust
Indenture Act of 1939 on Form T-1.
</TABLE>
- ---------------
* Previously filed.
ITEM 17 UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made of
the securities offered hereby, a post-effective amendment to this Registration
Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
Registration Statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement;
provided, however, that the undertakings in paragraph (i) and (ii) above do not
apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in this Registration Statement;
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof; and
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered hereby which remain unsold at the termination
of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-2
<PAGE> 36
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by 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 hereunder, the Registrant will, unless in the opinion of its counsel
the question has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-3
<PAGE> 37
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to be signed on its behalf by the undersigned,
thereunto duly authorized, in the city of Nashville, State of Tennessee, on
November 4, 1998.
GENESCO INC.
By: /s/ ROGER G. SISSON
------------------------------------
Roger G. Sisson
Secretary and General Counsel
Pursuant to the requirements of the Securities Act of 1933, this Amendment
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* President, Chief Executive November 4, 1998
- ----------------------------------------------------- Officer of the Company and
Ben T. Harris Director (Principal
Executive Officer)
* Senior Vice November 4, 1998
- ----------------------------------------------------- President -- Finance
James S. Gulmi Chief Financial Officer
(Principal Financial
Officer)
* Chairman of the Board of November 4, 1998
- ----------------------------------------------------- Directors
David M. Chamberlain
* Chief Accounting Officer November 4, 1998
- -----------------------------------------------------
Paul D. Williams
* Director November 4, 1998
- -----------------------------------------------------
W. Lipscomb Davis, Jr.
* Director November 4, 1998
- -----------------------------------------------------
Joel C. Gordon
* Director November 4, 1998
- -----------------------------------------------------
William A. Williamson, Jr.
* Director November 4, 1998
- -----------------------------------------------------
Kathleen Mason
* Director November 4, 1998
- -----------------------------------------------------
William S. Wire, II
* Director November 4, 1998
- -----------------------------------------------------
Gary M. Witkin
* /s/ ROGER G. SISSON
- -----------------------------------------------------
Roger G. Sisson,
Attorney-in-fact
</TABLE>
II-4
<PAGE> 38
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<C> <C> <S>
4.1 -- Form of 5 1/2% Convertible Subordinated Note due April 15,
2005 (incorporated by reference to Exhibit 4.1 to the
Company's Current Report on Form 8-K, dated April 15, 1998)
4.2 -- Indenture, dated as of April 9, 1998, between Genesco Inc.
and United States Trust Company of New York (incorporated by
reference to Exhibit 4.2 to the Company's Current Report on
Form 8-K, dated April 15, 1998)
5* -- Opinion of Bass, Berry & Sims PLC
10 -- Registration Rights Agreement, dated as of April 19, 1998,
by and among Genesco Inc., Goldman, Sachs & Co., NationsBanc
Montgomery Securities LLC, and SBC Warburg Dillon Read Inc.
(incorporated by reference to Exhibit 10 to the Company's
Current Report on Form 8-K, dated April 15, 1998)
12 -- Statement Regarding Computation of the Ratio of Earnings to
Fixed Charges
23.1 -- Consent of PricewaterhouseCoopers LLP
23.2* -- Consent of Bass, Berry & Sims PLC
24* -- Power of Attorney
25 -- Statement of Eligibility of Trustee under the Trust
Indenture Act of 1939 on Form T-1
</TABLE>
- ---------------
* Previously filed.
II-5
<PAGE> 1
EXHIBIT 12
GENESCO INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Fiscal Year Six Months Ended
----------------------------------------------------------- ------------------------------
Earnings: 1994 1995 1996 1997 1998 August 2, 1997 August 1, 1998
- --------- ---------- ----------- ----------- ----------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings (loss) before income taxes,
discontinued operations,
extraordinary loss and cumulative
effect of change in accounting (29,788) (17,757) (3,756) 10,132 8,860 6,376 10,166
principle .........................
Add
Portion of rents representative of
the interest factor................ 8,766 8,971 8,906 9,663 11,670 5,375 6,844
Interest expense................... 10,672 11,533 9,942 9,858 9,771 4,856 4,793
Interest on capitalized leases..... 1,659 1,470 189 96 20 17 1
Amortization of debt expense....... 459 498 461 431 403 217 276
Earnings available for fixed charges.. (8,232) 4,715 15,742 30,180 30,724 16,841 22,080
======= ====== ====== ====== ====== ====== ======
Fixed Charges:
- --------------
Portion of rents representative of the
interest factor....................... 8,766 8,971 8,906 9,663 11,670 5,375 6,844
Interest expense ..................... 10,672 11,533 9,942 9,858 9,771 4,856 4,793
Interest on capitalized leases........ 1,659 1,470 189 96 20 17 1
Amortization of debt expense.......... 459 498 461 431 403 217 276
Fixed charges......................... 21,556 22,472 19,498 20,048 21,864 10,465 11,914
======= ====== ====== ====== ====== ====== ======
Ratio of earnings to fixed charges.... - - - 1.51x 1.41x 1.61x 1.85x
Amount by which fixed charges
exceed earnings available for fixed 29,788 17,757 3,756
charges...............................
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Amendment No. 1 to the Registration Statement on Form
S-3 of our report dated February 24, 1998 appearing on page 30 of Genesco
Inc.'s Annual Report on Form 10-K for the year ended January 31, 1998. We also
consent to the reference to us under the heading "Experts" in such Prospectus.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Nashville, Tennessee
October 30, 1998
<PAGE> 1
Exhibit 25
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
--------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
--------------------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) _______
--------------------------
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I. R. S. Employer
if not a U. S. national bank) Identification No.)
114 West 47th Street 10036
New York, New York (Zip Code)
(Address of principal
executive offices)
--------------------------
GENESCO INC.
(Exact name of REGISTRANT as specified in its charter)
Tennessee 62-0211340
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
1415 Murfreesboro Road 37217-2895
Nashville, Tennessee (Zip code)
(Address of principal executive offices)
--------------------------
5 1/2% Convertible Subordinated Notes due 2005
(Titles of the indenture securities)
================================================================================
<PAGE> 2
- 2 -
GENERAL
1. General Information
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System).
Federal Deposit Insurance Corporation, Washington, D. C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. Affiliations with the Obligor
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15.
The registrant is currently not in default under any of its outstanding
securities for which United States Trust Company of New York is Trustee.
Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14
and 15 of Form T-1 are not required under General Instruction B.
16. List of Exhibits
T-1.1 -- Organization Certificate, as amended, issued by the State of
New York Banking Department to transact business as a Trust
Company, is incorporated by reference to Exhibit T-1.1 to
Form T-1 filed on September 15, 1995 with the Commission
pursuant to the Trust Indenture Act of 1939, as amended by
the Trust Indenture Reform Act of 1990 (Registration No.
33-97056).
<PAGE> 3
- 3 -
16. List of Exhibits
(cont'd)
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
T-1.4 -- The By-Laws of United States Trust Company of New York, as
amended, is incorporated by reference to Exhibit T-1.4 to
Form T-1 filed on September 15, 1995 with the Commission
pursuant to the Trust Indenture Act of 1939, as amended by
the Trust Indenture Reform Act of 1990 (Registration No.
33-97056).
T-1.6 -- The consent of the trustee required by Section 321(b) of the
Trust Indenture Act of 1939, as amended by the Trust Indenture
Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the trustee
pursuant to law or the requirements of its supervising or
examining authority.
NOTE
As of July 29, 1998, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U. S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States
Trust Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility, as to matters
peculiarly within the knowledge of the obligor or its directors, the
trustee has relied upon information furnished to it by the obligor and
will rely on information to be furnished by the obligor and the trustee
disclaims responsibility for the accuracy or completeness of such
information.
---------------------
<PAGE> 4
- 4 -
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, United States Trust Company of New York, a corporation
organized and existing under the laws of the State of New York, has
duly caused this statement of eligibility to be signed on its behalf by
the undersigned, thereunto duly authorized, all in the City of New
York, and State of New York, on the 29th day of July.
UNITED STATES TRUST COMPANY OF
NEW YORK, Trustee
By: /s/ Patricia Stermer
--------------------------------
Patricia Stermer
Assistant Vice President
<PAGE> 5
EXHIBIT T-1.6
The consent of the trustee required by Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
September 1, 1995
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
/s/Gerard F. Ganey
----------------------------
By: Gerard F. Ganey
Senior Vice President
<PAGE> 6
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
MARCH 31, 1998
($ IN THOUSANDS)
<TABLE>
<S> <C>
ASSETS
- -------
Cash and Due from Banks $ 303,692
Short-Term Investments 325,044
Securities, Available for Sale 650,954
Loans 1,717,101
Less: Allowance for Credit Losses 16,546
Net Loans 1,700,555
Premises and Equipment 58,868
Other Assets 120,865
TOTAL ASSETS $3,159,978
==========
LIABILITIES
- -----------
Deposits:
Non-Interest Bearing $ 602,769
Interest Bearing 1,955,571
----------
Total Deposits 2,558,340
Short-Term Credit Facilities 293,185
Accounts Payable and Accrued Liabilities 136,396
TOTAL LIABILITIES $2,987,921
==========
STOCKHOLDER'S EQUITY
- --------------------
Common Stock 14,995
Capital Surplus 49,541
Retained Earnings 105,214
Unrealized Gains on Securities
Available for Sale (Net of Taxes) 2,307
----------
TOTAL STOCKHOLDER'S EQUITY 172,057
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $3,159,978
==========
</TABLE>
I, Richard E. Brinkmann, Senior Vice President & Comptroller of the named bank
do hereby declare that this Statement of Condition has been prepared in
conformance with the instructions issued by the appropriate regulatory authority
and is true to the best of my knowledge and belief.
Richard E. Brinkmann, SVP & Controller
May 6, 1998
