<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 9, 1995
REGISTRATION NO. 33-
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
THE WARNACO GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 95-4032739
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION)
</TABLE>
------------------------
90 PARK AVENUE
NEW YORK, NEW YORK 10016
(212) 661-1300
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
STANLEY P. SILVERSTEIN, ESQ.
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
THE WARNACO GROUP, INC.
90 PARK AVENUE
NEW YORK, NY 10016
(212) 661-1300
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES OF ALL COMMUNICATIONS TO:
<TABLE>
<S> <C>
KENNETH J. BIALKIN, ESQ. VALERIE FORD JACOB, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
919 THIRD AVENUE ONE NEW YORK PLAZA
NEW YORK, NY 10022 NEW YORK, NY 10004
(212) 735-3000 (212) 859-8000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement is declared effective.
------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ____________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ____________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [x]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED
MAXIMUM PROPOSED
OFFERING MAXIMUM AMOUNT OF
TITLE OF SHARES AMOUNT TO PRICE PER AGGREGATE REGISTRATION
TO BE REGISTERED BE REGISTERED(1) SHARE(2) OFFERING PRICE(2) FEE
<S> <C> <C> <C> <C>
Class A Common Stock,
par value $.01 per share 9,200,000 $21.875 $201,250,000 $69,400
</TABLE>
(1) Includes 1,200,000 shares issuable pursuant to options granted by the
Company to the Underwriters solely for the purpose of covering
over-allotments.
(2) Estimated solely for the purpose of computing the amount of the registration
fee in accordance with Rule 457(c) of the Securities Act of 1933 based on
the average of the high and low prices for shares of the Registrant's Class
A Common Stock on August 7, 1995 on the New York Stock Exchange.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
________________________________________________________________________________
<PAGE>
EXPLANATORY NOTE
This Registration Statement contains a Prospectus relating to a public
offering in the United States and Canada (the 'U.S. Offering') of an aggregate
of 6,400,000 shares of Class A Common Stock, par value $.01 per share ('Common
Stock'), of The Warnaco Group, Inc., together with separate prospectus pages
relating to a concurrent offering outside the United States and Canada (the
'International Offering') of an aggregate of 1,600,000 shares of Common Stock.
The complete Prospectus for the U.S. Offering follows immediately after this
Explanatory Note. After such Prospectus are the alternate pages for the
International Offering: a front cover page, an 'Underwriting,' a 'Legal
Matters,' an 'Experts,' an 'Available Information' and a 'Documents Incorporated
By Reference' section and a back cover page. All other pages of the Prospectus
for the U.S. Offering are to be used for both the U.S. Offering and the
International Offering.
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED AUGUST 9, 1995
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 STATE.
PROSPECTUS
8,000,000 SHARES
THE WARNACO GROUP, INC.
CLASS A COMMON STOCK
------------------------
Of the 8,000,000 shares of Class A Common Stock offered, 7,500,000 are
being offered by The Warnaco Group, Inc. and 500,000 shares are being offered by
the Selling Stockholder of the Company. See 'Selling Stockholder' and
'Underwriting.' The Company will not receive any of the proceeds from the sale
of shares of Class A Common Stock by the Selling Stockholder.
Of the 8,000,000 shares of Class A Common Stock offered, 6,400,000 shares
are being offered initially in the United States and Canada by the U.S.
Underwriters and 1,600,000 shares are being offered initially outside the United
States and Canada by the International Managers. The initial offering price and
the aggregate underwriting discount per share are identical for both Offerings.
See 'Underwriting.'
The Class A Common Stock is traded on the New York Stock Exchange under the
symbol 'WAC.' On August 8, 1995, the last sale price of the Class A Common Stock
as reported on the New York Stock Exchange was $22 per share. See 'Price Range
of Common Stock.'
FOR INFORMATION CONCERNING CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS, SEE 'RISK FACTORS' APPEARING ON PAGE 5.
------------------------
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.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO PROCEEDS TO SELLING
PUBLIC DISCOUNT(1) COMPANY(2) STOCKHOLDER(2)
<S> <C> <C> <C> <C>
Per Share............................... $ $ $ $
Total(3)................................ $ $ $ $
</TABLE>
(1) The Company and the Selling Stockholder have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See 'Underwriting.'
(2) Before deducting expenses estimated at $ payable by the Company and
$ payable by the Selling Stockholder.
(3) The Company has granted the U.S. Underwriters and the International
Managers options, exercisable within 30 days after the date hereof, to
purchase up to 960,000 and 240,000 additional shares of Class A Common
Stock, respectively, solely to cover over-allotments, if any. If such
options are exercised in full, the total Price to Public, Underwriting
Discount and Proceeds to Company will be $ , $ and $ , respectively. See
'Underwriting.'
------------------------
The shares of Class A Common Stock are offered by the several Underwriters,
subject to prior sale, when, as and if issued to and accepted by them, subject
to the approval of certain legal matters by counsel for
the Underwriters and certain other conditions. The Underwriters reserve the
right to withdraw, cancel or modify such offer and to reject orders in whole or
in part. It is expected that delivery of the shares of Class A Common Stock will
be made in New York, New York on or about , 1995.
------------------------
MERRILL LYNCH & CO.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BEAR, STEARNS & CO. INC.
MORGAN STANLEY & CO.
INCORPORATED
OPPENHEIMER & CO., INC.
------------------------
The date of this Prospectus is , 1995.
<PAGE>
[PHOTOS]
------------------------
IN CONNECTION WITH THE OFFERINGS, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS A COMMON
STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR OTHERWISE.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE>
THE COMPANY
The Warnaco Group, Inc. (the 'Company') is a leading designer, manufacturer
and marketer of a broad line of women's intimate apparel, such as bras, panties,
daywear and sleepwear and men's underwear, dress shirts, sportswear, accessories
and small leather goods. The Company's internationally recognized intimate
apparel brands include Warner's'r', Olga'r', Calvin Klein'r', Valentino
Intimo'r', Scaasi'r', Blanche'r', Van Raalte'r', White Stag'r' and Fruit of the
Loom'r'. Building on the strength of its brand names and reputation for fit and
quality, the Company has developed a significant level of repeat business and a
high degree of consumer loyalty. The Company is the leading marketer of intimate
apparel to department and specialty stores in the United States, accounting for
approximately 30% market share in bra sales over the last three years, nearly
twice its nearest competitor. In the mass merchandise segment, the Company has
built its Fruit of the Loom brand to an approximately 7% market share in bra
sales in the last two years. In March 1994, the Company acquired the worldwide
trademarks, rights and business of Calvin Klein men's underwear and, effective
January 1, 1995, the worldwide trademarks and rights for Calvin Klein women's
intimate apparel. In addition, the Company entered into a license agreement to
produce men's accessories and small leather goods under the Calvin Klein brand.
The growth potential of the Calvin Klein brand is reflected in the Company's
financial results for the second quarter of fiscal 1995, in which net revenues
for Calvin Klein men's underwear and women's intimate apparel more than doubled
compared to the second quarter of fiscal 1994. In addition to Calvin Klein, the
Company's menswear brand names include Chaps by Ralph Lauren'r', Hathaway'r' and
Catalina'r'. The Company operates 53 retail outlet stores. The Intimate Apparel,
Menswear and Retail Outlet Store divisions accounted for 75%, 20% and 5%,
respectively, of net revenues for the first six months of fiscal 1995.
The Company seeks to continue its growth strategy by capitalizing on its
highly recognized brand names worldwide while broadening its channels of
distribution and improving manufacturing efficiencies and cost controls. The key
elements of this growth strategy are:
Implement Brand Strategies to Broaden Channels of Distribution. The
Company has expanded its distribution beyond its traditional base of
department and specialty stores in the United States by (i) entering into a
license agreement with Fruit of the Loom, Inc. to distribute
moderately-priced bras, daywear and other related items through mass
merchandisers, (ii) signing an agreement with Avon Products, Inc. to
distribute Warner's and Fruit of the Loom bras on an exclusive basis and
Scaasi sleepwear throughout the United States, (iii) licensing the White
Stag and Catalina brand names to Wal-Mart on a non-exclusive basis and (iv)
developing a new line of intimate apparel under the recently acquired Van
Raalte trademark for sale in Sears stores beginning in August 1995. The
success of these strategies is reflected in the growth in Fruit of the Loom
net revenues, which increased over 95% to $64.3 million in fiscal 1994 from
fiscal 1993, and the successful launch of the Company's products through
Avon, which generated net revenues of over $50 million in fiscal 1994.
Within the department and specialty stores, the Company expects to increase
the presence of Calvin Klein by enhancing floor space and fixturing and
increasing the number of locations in which Calvin Klein women's intimate
apparel is offered from approximately 600 shares currently to approximately
900 stores by the end of fiscal 1995, and may eventually include up to
1,500 locations.
Expand Worldwide Brand Presence. The Company has increased the
presence of its products in international markets by (i) converting the
Calvin Klein businesses in Canada, Japan, Hong Kong, Taiwan and other
countries from licensing arrangements to direct sales in order to achieve
greater consistency in execution and to increase revenue growth and
profitability, (ii) marketing the Warner's brand directly in Spain,
Portugal, Italy and other countries, (iii) beginning to market the
Company's products through an exclusive joint venture with News Corporation
Limited's Satellite Television Asian Region Network ('STAR') in Asia and
the Middle East in late 1995 and (iv) extending the Valentino Intimo
intimate apparel license to a worldwide agreement.
3
<PAGE>
Improve Manufacturing Efficiencies and Cost Controls. The Company
believes that its U.S. manufacturing expertise, in addition to its expanded
Mexican and Central American manufacturing facilities, have allowed the
Company to become one of the low cost producers of intimate apparel,
worldwide. The Company expects to achieve increased efficiencies from its
manufacturing facilities and benefit from economies of scale as its
business continues to grow. Manufacturing efficiencies achieved from these
facilities have contributed significantly to an improvement in the
Company's gross margin from 31.8% for the first six months of fiscal 1994
to 33.3% for the first six months of fiscal 1995.
As a result of the ongoing implementation of these strategies, the Company
has increased net revenues to $788.8 million in fiscal 1994 from $548.1 million
in fiscal 1990. The increase in net revenues is primarily the result of the 16%
compounded annual growth rate of the Intimate Apparel Division. In the first six
months of fiscal 1995, net revenues increased 20% to $405.6 million compared to
the fiscal 1994 comparable period, driven by the Intimate Apparel Division's 27%
increase in net revenues. Income before non-recurring items, interest and income
taxes has increased to $99.2 million in fiscal 1994 from $59.9 million in fiscal
1990. Income before non-recurring items, interest and income taxes increased
over 30% to $49.9 million in the first six months of fiscal 1995 from $38.3
million in the comparable 1994 period.
The principal executive offices of the Company are located at 90 Park
Avenue, New York, New York 10016, telephone (212) 661-1300.
THE OFFERINGS
The offering of 6,400,000 shares of Class A Common Stock, par value $.01
per share (the 'Common Stock'), being offered in the United States and Canada
(the 'U.S. Offering') and the offering of 1,600,000 shares of Common Stock being
offered outside the United States and Canada (the 'International Offering') are
collectively referred to herein as the 'Offerings.' Unless otherwise indicated,
all information included in this Prospectus assumes the Underwriters'
over-allotment options are not exercised.
<TABLE>
<S> <C>
Common Stock Offered By:
The Company............................. 7,500,000 shares
Selling Stockholder..................... 500,000 shares
Common Stock Outstanding after the Offerings
(a)........................................ 49,526,912 shares
Use of Proceeds.............................. The net proceeds to the Company will be used to reduce bank
debt. Additional funds available under the Revolving
Facility (as defined below) may be used for strategic
acquisitions as well as working capital and other corporate
purposes. See 'Use of Proceeds.'
New York Stock Exchange Symbol............... 'WAC'
</TABLE>
------------
(a) Based upon shares outstanding as of August 9, 1995 and excludes 5,555,500
shares of Common Stock issuable upon exercise of outstanding employee stock
options, of which 3,968,500 are presently exercisable at an average price
of $16.74 per share.
4
<PAGE>
RISK FACTORS
Prospective investors should consider carefully the following factors, in
addition to the other information contained in this Prospectus, before
purchasing the shares of Common Stock offered hereby.
RETAIL INDUSTRY
The apparel industry is highly competitive and the Company's competitors
include manufacturers of all sizes, some of which have greater resources than
the Company. In addition, the apparel industry historically has been subject to
cyclical variation, and a downturn in the general economy or uncertainties
regarding future economic prospects that affect consumer spending habits could
have a material effect on the Company's results of operations. Over the past
several years, the Company has broadened its channels of distribution to
decrease its dependence on any one retail channel and no single customer
accounted for more than 8.5% of the Company's net revenues in fiscal 1994. See
'Business.'
DEPENDENCE ON KEY PERSONNEL
The Company believes that it has benefited substantially from the
leadership of Linda J. Wachner, the Company's Chairman, President and Chief
Executive Officer and that the loss of her services could have a significant
impact on the Company's business and its future operations. In May 1991, the
Company entered into an employment agreement with Mrs. Wachner which is
presently in effect until May 2001.
SHARES ELIGIBLE FOR FUTURE SALE
A substantial number of shares of Common Stock could be sold in the public
market following the completion of the Offerings. No predictions can be made as
to the effect, if any, that market sales of such shares or the availability of
such shares for future sale will have on the market price of shares of Common
Stock prevailing from time to time. There will be 49,526,912 shares of Common
Stock outstanding after the Offerings. Of such amount, 45,047,312 of such shares
will be tradeable without restriction and 4,479,600 of such shares may only be
sold pursuant to a registration statement under the Securities Act, or an
applicable exemption from the registration requirements of such Act, including
Rule 144 and Rule 144A thereunder. However, certain officers and directors of
the Company, including the Selling Stockholder, who will hold an aggregate of
4,479,600 shares after giving effect to the Offerings, have agreed with the
Underwriters not to sell or otherwise dispose of such shares for 90 days after
the date of this Prospectus without the prior consent of Merrill Lynch, Pierce,
Fenner & Smith Incorporated ('Merrill Lynch'), on behalf of the Underwriters.
See 'Underwriting.'
5
<PAGE>
SELECTED FINANCIAL INFORMATION
The following selected financial information for the five years ended
January 7, 1995 is derived from the audited consolidated financial statements of
the Company. References herein to fiscal years are to the Company's 52- or
53-week fiscal year (a 'fiscal year'). All fiscal years for which financial
information is included in this Prospectus had 52 weeks, except fiscal 1990 and
1993, each of which had 53 weeks. This summary data is qualified in its entirety
by the detailed information and consolidated financial statements, including
notes thereto, and management's discussion and analysis included or incorporated
by reference herein. See 'Documents Incorporated by Reference' and Annex I
hereto. The selected financial data for, and as of the end of, interim periods
are derived from the Company's unaudited interim consolidated financial
statements. Such unaudited interim consolidated financial statements include all
adjustments (consisting only of normal recurring adjustments) that the Company
considers necessary for a fair presentation of the financial position and the
results of operations as of the dates and for the periods indicated. Information
for any interim period is not necessarily indicative of results that may be
anticipated for a full year.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED
-------------------------------------------------------------- -----------------------
JANUARY 5, JANUARY 4, JANUARY 2, JANUARY 8, JANUARY 7, JULY 9, JULY 8,
1991 1992(a) 1993 1994(a) 1995(a) 1994(a) 1995
-------------------------------------------------------------- -----------------------
(IN MILLIONS, EXCEPT RATIOS AND SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues......................... $ 548.1 $ 562.5 $ 625.1 $ 703.8 $ 788.8 $ 338.0 $ 405.6
Gross profit......................... 190.8 195.4 219.3 236.4 255.8 107.4 135.0
Income before non-recurring items,
interest and income taxes.......... 59.9 70.8 89.8 92.2 99.2 38.3 49.9
Interest expense..................... 68.0 72.3 48.8 38.9 32.5 15.7 17.8
Income (loss) from continuing
operations......................... (7.9) (19.5) 47.6 53.3 63.3 18.0(d) 19.9
Preferred stock dividends paid....... 5.5 5.5 2.7 -- -- -- --
Income (loss) from continuing
operations applicable to Common
Stock.............................. (13.4) (25.0) 44.9 53.3 63.3 18.0(d) 19.9
Net income (loss) applicable to
Common Stock(b).................... (22.2) (33.9) (20.2) 24.1 63.3 18.0(d) 19.9
Common Stock dividends paid.......... -- -- -- -- -- -- 2.9
Per share amounts:(c)
Income (loss) from continuing
operations....................... (0.84) (1.31) 1.18 1.34 1.53 0.44(d) 0.48
Net income (loss).................. (1.40) (1.78) (0.53) 0.61 1.53 0.44(d) 0.48
Weighted average number of shares of
Common Stock outstanding........... 15,871,796 19,059,062 38,109,450 39,770,482 41,285,355 40,714,744 41,699,347
DIVISIONAL SUMMARY:
Net revenues:
Intimate Apparel................... $ 309.1 $ 339.7 $ 384.8 $ 423.2 $ 565.3 $ 240.5 $ 305.4
Menswear........................... 196.3 180.8 200.0 243.2 183.8 80.8 82.6
Retail Outlet Stores............... 42.7 42.0 40.3 37.4 39.7 16.7 17.6
------ ------ ------ ------ ------ ------ ------
$548.1 $562.5 $625.1 $703.8 $788.8 $338.0 $405.6
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
Percentage of net revenues:
Intimate Apparel................... 56.4% 60.4% 61.6% 60.1% 71.7% 71.1% 75.2%
Menswear........................... 35.8 32.1 32.0 34.6 23.3 23.9 20.4
Retail Outlet Stores............... 7.8 7.5 6.4 5.3 5.0 5.0 4.4
---------- ---------- ---------- ---------- ---------- ---------- ----------
100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
BALANCE SHEET DATA (AT PERIOD END):
Working capital...................... $ 69.4 $ 109.3 $ 141.5 $ 122.0 $ 104.5 $ 106.8 $ 105.0
Total assets......................... 517.3 540.5 629.6 688.6 780.6 789.0 849.0
Long-term debt (excluding current
maturities)........................ 408.2 344.8 277.6 245.5 206.8 243.9 197.3
Redeemable preferred stock........... 41.5 41.5 -- -- -- -- --
Stockholders' equity (deficit)....... (91.4) (1.7) 135.8 159.1 240.5 199.9 257.3
</TABLE>
(Footnotes on following page)
6
<PAGE>
(Footnotes from preceding page)
(a) On September 4, 1991, the Company's Board of Directors determined that the
Company should restructure its knitwear operations. The restructuring
resulted in a non-recurring charge of approximately $13 million (or $0.68
per share) in fiscal 1991. Such charge was associated with the closing of
the Company's knitwear manufacturing facilities and the liquidation of
related inventory. In October 1993, the Company decided to discontinue a
portion of its men's manufactured dress shirt and neckwear business
segment. This resulted in a non-recurring charge of $19.9 million. Also,
the Company incurred a $2.6 million non-recurring charge associated with a
previously discontinued business. The total non-recurring charge recorded
in fiscal 1993 was $22.5 million (or $0.56 per share). In fiscal 1994, the
Company incurred a $3 million (or $0.07 per share) charge related to the
California earthquake.
(b) Fiscal 1993 includes a $10.5 million charge (or $0.26 per share) for the
cumulative effect of the Company changing its method of accounting for
postretirement benefits other than pensions.
(c) All share and per share amounts have been adjusted to reflect the
two-for-one stock split effective October 3, 1994 and includes all Common
Stock and Common Stock equivalents.
(d) Income reflects the benefits of utilizing the Company's net operating loss
carryforward to offset the Company's federal income tax provision. Income
before non-recurring items, after giving effect to a full tax provision at
the Company's rate of 38%, was $14.0 million (or $0.34 per share).
7
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of 7,500,000 shares of Common
Stock by the Company in the Offerings, after deducting the underwriting discount
and estimated expenses payable by the Company, are expected to be approximately
$156,000,000 (approximately $181,200,000 if the Underwriters' over-allotment
options are exercised in full). The Company intends to use such net proceeds to
reduce bank debt under the Bank Credit Agreement, as amended, between the
Company and certain lenders (the 'Bank Credit Agreement'). Additional funds
available under the revolving credit portion of the Bank Credit Agreement (the
'Revolving Facility') may be used for strategic acquisitions, as well as
working capital and other corporate purposes. The aggregate amount of
indebtedness outstanding under the Bank Credit Agreement was approximately
$438,000,000 on August 4, 1995. The Bank Credit Agreement has a maturity date of
December 31, 1999 and, on August 4, 1995, the weighted average interest rate on
borrowings under the Bank Credit Agreement was approximately 6.4%. The Company
will not receive any of the proceeds from the sale of shares of Common Stock by
the Selling Stockholder. The Company and the Selling Stockholder have agreed to
share certain expenses incurred in connection with the Offerings.
8
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company at July 8, 1995 and, as adjusted, to give effect to the sale of
7,500,000 shares of Common Stock by the Company in the Offerings at an estimated
offering price of $22 (based on the last sales price of $22 per share of
Common Stock on August 8, 1995) and the application of the net proceeds
therefrom to repay outstanding indebtedness as described in 'Use of Proceeds.'
<TABLE>
<CAPTION>
JULY 8, 1995
-----------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Current:
Borrowing under revolving loan facility............................................ $184,620 $ 28,620
Borrowing under foreign facilities................................................. 12,434 12,434
Current portion of long-term debt.................................................. 46,681 46,681
-------- -----------
Total current................................................................. $243,735 $ 87,735
-------- -----------
-------- -----------
Long-term debt:
Term note.......................................................................... $178,000 $ 178,000
Capitalized leases/other........................................................... 19,309 19,309
-------- -----------
Total long-term debt.......................................................... 197,309 197,309
-------- -----------
Stockholders' equity:
Preferred Stock, par value $0.01 per share; 10,000,000 shares authorized; no shares
issued and outstanding............................................................ -- --
Class A Common Stock, par value $0.01 per share; 130,000,000 shares authorized;
42,026,912 shares issued and outstanding; 49,526,912 shares issued and
outstanding, as adjusted(a)....................................................... 421 496
Capital in excess of par value..................................................... 337,752 493,677
Cumulative translation adjustment.................................................. (2,449) (2,449)
Accumulated deficit................................................................ (66,952) (66,952)
Treasury stock, at cost............................................................ (5,000) (5,000)
Notes receivable for common stock issued........................................... (6,427) (6,427)
-------- -----------
Total stockholders' equity.................................................... 257,345 413,345
-------- -----------
Total capitalization..................................................... $454,654 $ 610,654
-------- -----------
-------- -----------
</TABLE>
------------
(a) Based upon shares outstanding as of August 9, 1995 and excludes 5,555,500
shares of Common Stock issuable upon exercise of outstanding employee stock
options, of which 3,968,500 are presently exercisable at an average price
of $16.74 per share.
9
<PAGE>
PRICE RANGE OF COMMON STOCK
The Company's Common Stock is listed on the New York Stock Exchange
('NYSE') under the symbol 'WAC.' The table below sets forth, for the calendar
periods indicated, the high and low sales price per share of the Company's
Common Stock as reported on the NYSE Composite Tape. Amounts have been adjusted
to reflect the two-for-one stock split on October 3, 1994.
<TABLE>
<S> <C> <C>
1992 HIGH LOW
---- ---
First Quarter................................................................ $19 $12 3/16
Second Quarter............................................................... 19 13 3/4
Third Quarter................................................................ 18 1/8 14
Fourth Quarter............................................................... 20 1/2 16 3/8
1993
First Quarter................................................................ $19 5/8 $13 3/8
Second Quarter............................................................... 18 15/16 14 13/16
Third Quarter................................................................ 17 1/16 14 3/8
Fourth Quarter............................................................... 17 13/16 14 1/4
1994
First Quarter................................................................ $15 5/8 $13 1/8
Second Quarter............................................................... 17 5/8 14 5/8
Third Quarter................................................................ 18 5/8 14 5/16
Fourth Quarter............................................................... 19 1/4 14 1/8
1995
First Quarter................................................................ $17 7/8 $14 7/8
Second Quarter............................................................... 20 3/8 16 1/2
Third Quarter (through August 8, 1995)....................................... 22 5/8 19 3/4
</TABLE>
The last sales price for the shares of Common Stock as reported on the NYSE
Composite Tape on August 8, 1995 was $22.
DIVIDEND POLICY
On June 30, 1995 the Company paid its initial dividend of $0.07 per share
of Common Stock to stockholders of record as of May 30, 1995. It is the
Company's present intent to continue paying quarterly dividends; however, the
payment of future dividends necessarily depends upon earnings, capital
requirements, financial conditions and other factors. The terms of the Bank
Credit Agreement permit the Company to pay dividends, based on the Company's
present implied senior debt rating, equal to 25% of the Company's net earnings
accumulated since fiscal 1992 through the fiscal year prior to the fiscal year
in which the dividend is being paid. The approximate amount of net earnings
available for payment of dividends as of July 8, 1995 was $84,505,000.
10
<PAGE>
BUSINESS
The Company designs, manufactures and markets a broad line of women's
intimate apparel and men's apparel and accessories sold under a variety of
internationally recognized owned and licensed brand names. The Company operates
three divisions, Intimate Apparel, Menswear and Retail Outlet Stores, which
accounted for 75%, 20% and 5%, respectively, of net revenues in the first six
months of fiscal 1995.
The Company's products are distributed to over 5,000 customers operating
more than 15,000 department, specialty, and mass merchandise stores, including
such leading retailers in the United States as Dayton-Hudson, Dillard's
Department Stores, Federated Department Stores/Macy's, J.C. Penney, Kmart,
Victoria's Secret, The May Department Stores and Wal-Mart and such leading
retailers in Canada as Eaton's and The Hudson Bay Company. The Company's
products are also distributed to such leading European retailers as Marks &
Spencer, House of Fraser, Harrods, Galeries Lafayette, Au Printemps and El Corte
Ingles.
INTIMATE APPAREL
The Company's Intimate Apparel Division designs, manufactures and markets
women's intimate apparel which includes bras, panties, daywear and sleepwear.
The Company also designs and markets men's underwear. The Company's bra brands
accounted for approximately 30% market share in bra sales over the last three
years in department and specialty stores in the United States, nearly twice its
nearest competitor. The Intimate Apparel Division markets its lines under the
following brand names:
<TABLE>
<CAPTION>
BRAND NAME PRICE RANGE TYPE OF APPAREL
----------------------------------- ----------------------------------- ---------------------------------
<S> <C> <C>
Warner's........................... upper moderate to better intimate apparel
Olga............................... better intimate apparel
Valentino Intimo................... premium intimate apparel
Calvin Klein(a).................... better intimate apparel/men's underwear
Scaasi............................. moderate sleepwear
Blanche............................ better to premium sleepwear
Van Raalte(b)...................... moderate intimate apparel
Fruit of the Loom.................. moderate intimate apparel
White Stag......................... moderate intimate apparel
</TABLE>
------------
(a) In March 1994, the Company acquired the worldwide trademarks, rights and
business of Calvin Klein men's underwear and, effective January 1, 1995,
the worldwide trademarks and rights of Calvin Klein women's intimate
apparel.
(b) Shipments to begin in August, 1995.
The Company owns the Warner's, Olga, Calvin Klein (men's underwear and
women's intimate apparel), Blanche and Van Raalte brand names and trademarks.
The Company has a license in perpetuity for the White Stag brand for women's
sportswear and intimate apparel. The Company licenses the other brand names
under which it markets its product lines. The Company also manufactures intimate
apparel on a private and exclusive label basis for certain leading specialty and
department stores. The Intimate Apparel Division's net revenues are primarily
generated by sales of the Company's own brand names. The Warner's and Olga
brands are 121 years and 54 years old, respectively, and commanded approximately
30% market share in bra sales over the last three years in department and
specialty stores in the United States. The Company also has a license with Fruit
of the Loom, Inc. for the design, manufacture and marketing of moderately-priced
bras, daywear, full slips, half slips and petticoats as well as coordinated
fashion sets (bras and panties) and certain control bottoms and sleepwear.
In March 1994, the Company acquired the worldwide trademarks, rights and
business of Calvin Klein men's underwear and, effective January 1, 1995, the
worldwide trademarks and rights for Calvin Klein women's intimate apparel. In
addition, the Company entered into a license agreement to produce men's
accessories and small leather goods under the Calvin Klein label. The growth
potential of the Calvin Klein brand is reflected in the Company's financial
results for the second quarter of fiscal 1995 in which net revenues for the
Calvin Klein brand more than doubled compared to the second quarter of fiscal
1994.
11
<PAGE>
The Intimate Apparel Division's net revenues have increased at a 16%
compounded annual growth rate since fiscal 1990 to $565.3 million in fiscal
1994. Intimate Apparel Division net revenues for the first six months of fiscal
1995 increased 27% to $305.4 million from $240.5 million in the comparable
fiscal 1994 period as the Company increased its penetration with existing
accounts, expanded sales to new customers by capitalizing on the growth in such
specialty stores as Victoria's Secret and sales of Fruit of the Loom to mass
merchandisers such as Wal-Mart, Venture and Kmart and broadened its product
lines to include men's underwear. The Intimate Apparel Division has reduced
operating expenses as a percentage of net revenues by narrowing its product
lines, controlling selling, administrative and general expenses and improving
manufacturing efficiency. The Company believes that it is one of the low cost
producers of intimate apparel, worldwide. The Intimate Apparel Division produces
over eight million dozen garments per year.
The Company's bras are sold primarily in the department and specialty
stores that have been the Company's traditional customer base for intimate
apparel. In June 1992, the Company expanded into a new channel of distribution,
mass merchandisers, with its Fruit of the Loom product line, which offers a
range of styles designed to meet the needs of the consumer profile of this
market. In late 1993 the Company further expanded its channels of distribution
by signing an agreement with Avon Products, Inc. to distribute Warner's and
Fruit of the Loom bras on an exclusive basis and Scaasi sleepwear throughout the
United States. In August 1995 the Company will begin shipping intimate apparel
to Sears under the Van Raalte label which was acquired in December 1994. The
Company also sees opportunities for continued growth in the Intimate Apparel
Division for bras specifically designed for the 'full figure' market, as well as
in the panties and daywear product lines.
The Intimate Apparel Division has subsidiaries in Canada, Mexico, the
United Kingdom, France, Belgium, Ireland, Spain and Germany. International sales
accounted for approximately 14.8% of the Intimate Apparel Division's net
revenues in fiscal 1994. Net revenues attributable to the international
divisions of the Intimate Apparel Division were $79.1 million, $84.5 million and
$84.1 million in fiscal years 1992, 1993 and 1994, respectively. In 1994 the
Company began distributing its products directly in Spain, Portugal and Italy,
having taken back these territories from its previous licensee. For the first
six months of fiscal 1995, international net revenues of the Intimate Apparel
Division have increased 14.6% to $45.4 million from $39.6 million in the first
six months of fiscal 1994.
The Company's intimate apparel products are manufactured principally in the
Company's facilities in North America, Central America, the Caribbean Basin,
United Kingdom and Ireland.
Although the Intimate Apparel Division generally markets its product lines
for three retail selling seasons (spring, fall and holiday), its sales and
revenues are somewhat seasonal with approximately 57% of net revenues and 58% of
operating income generated during the second half of the 1994 fiscal year.
MENSWEAR
The Company's Menswear Division designs, manufactures, imports and markets
moderate to better-priced dress shirts and neckwear, sportswear and men's
accessories. Management considers the Menswear Division's primary strengths to
include its strong brand recognition, product quality, reputation for fashion
styling, strong relationships with department and specialty stores and its
ability to deliver merchandise rapidly. The Menswear Division markets its lines
under the following brand names:
<TABLE>
<CAPTION>
BRAND NAME PRICE RANGE TYPE OF APPAREL
------------------------------------ ------------------------------------ ---------------------------------
<S> <C> <C>
Hathaway............................ better dress shirts, knit and woven
sportshirts and sweaters
Calvin Klein........................ better men's underwear(a) and
accessories
Chaps by Ralph Lauren............... upper moderate dress shirts, neckwear, knit and
woven sportshirts, sweaters and
sportswear
Catalina............................ moderate men's and women's sportswear,
dress shirts and furnishings
</TABLE>
------------
(a) See Intimate Apparel Division
12
<PAGE>
The Hathaway brand name is owned by the Company. The Calvin Klein brand
name for accessories and the Chaps by Ralph Lauren and Catalina brand names are
licensed by the Company.
Due to the strategic decision to discontinue $98.9 million of net revenues
in underperforming brands including Christian Dior accessories, neckwear,
sportswear and dress shirts, Golden Bear by Jack Nicklaus, Pringle and Puritan
menswear, the Menswear Division's net revenues have only decreased from $196.3
million in fiscal year 1990 to $183.8 million in fiscal year 1994. The negative
impact of these discontinued brands has been partially offset by the success of
the Chaps by Ralph Lauren brand which has increased its net revenues to $120.9
million in fiscal 1994 from $28.6 million in fiscal 1990, a compounded annual
growth rate of 43%. Chaps by Ralph Lauren net revenues for the first six months
of fiscal 1995 increased 22.5% to $60.5 million. Primarily as a result of the
strategic decision to discontinue these underperforming brands, operating
margins in the Menswear Division have increased 100 basis points to 11.5% in
fiscal 1994 from 10.5% in fiscal 1990.
International sales accounted for approximately 6% of net revenues of the
Menswear Division in fiscal 1994. Net revenues attributable to international
divisions of the Menswear Division were $12.7 million, $14.1 million and $10.2
million in fiscal years 1992, 1993 and 1994, respectively. The decrease in
international sales in fiscal 1994 compared to fiscal 1993 reflects the
Company's strategic decision to restructure its men's dress shirt and neckwear
businesses and to terminate its Christian Dior licenses.
The Menswear Division's sportswear is sourced principally from the Far
East. The Menswear Division manufactures its dress shirts in North America and
sources certain styles of dress shirts in the Far East and in Central America.
Accessories are sourced in the United States, Europe and the Far East. Neckwear
is sourced primarily in the United States.
The Menswear Division, like the Intimate Apparel Division, generally
markets its apparel products for three retail selling seasons (spring, fall and
holiday). The Menswear Division introduces new styles, fabrics and colors based
upon consumer preferences, market trends and to coincide with the appropriate
retail selling season. The sales of the Menswear Division's product lines follow
individual seasonal shipping patterns ranging from one season to three seasons,
with multiple releases in some of the Division's more fashion-oriented lines.
Consistent with industry and consumer buying patterns, approximately 56% of the
Menswear Division's net revenues and 67% of the Menswear Division's operating
profit are generated in the second half of the calendar year, reflecting the
strength of the fall and holiday shopping seasons.
RETAIL OUTLET STORES DIVISION
The Company's Retail Outlet Store Division operates 53 retail outlet
stores, of which 35 carry intimate apparel only, three carry menswear only and
15 carry both lines. The Company's business strategy with respect to its Retail
Outlet Stores Division is to provide a channel for disposing of the Company's
excess and irregular inventory, thereby limiting its exposure to off-price
retailers without increasing the total number of stores to any significant
extent. The Company's retail outlet stores are situated in areas where they
generally do not conflict with the Company's principal channels of distribution.
The Company's newer retail outlet stores are principally intimate apparel stores
located in outlet malls.
INTERNATIONAL OPERATIONS
The Company has subsidiaries in Canada and Mexico in North America and in
the United Kingdom, Ireland, Belgium, France, Spain and Germany in Europe which
engage in sales and marketing activities. With the exception of the fluctuation
of local currencies against the United States dollar, the Company does not
believe that the operations in Canada and western Europe are subject to risks
which are significantly different from those of its domestic operations. Mexico
has historically been subject to high rates of inflation and currency
restrictions which may, from time to time, impact the Mexican operation. The
recent devaluation of the Mexican peso has had a favorable impact on the
Company. The Company also sells directly to customers in Mexico which represents
less than 1% of the Company's total sales. The Company maintains manufacturing
facilities in Mexico, Honduras, Costa Rica, the Dominican Republic, Canada,
Ireland and the United Kingdom and warehousing facilities in
13
<PAGE>
Canada, Mexico, the United Kingdom and Spain. The majority of the Company's
imported purchases are invoiced in United States dollars and, therefore, are not
subject to short-term currency fluctuations.
MANAGEMENT
The executive officers of the Company, their ages and their positions are
set forth below.
<TABLE>
<CAPTION>
NAME AGE POSITION
--------------------------------------------------- --- ---------------------------------------------------
<S> <C> <C>
Linda J. Wachner................................... 49 Director, Chairman of the Board,
President and Chief Executive Officer
William S. Finkelstein............................. 47 Director, Senior Vice President and Chief Financial
Officer
Stanley P. Silverstein............................. 43 Vice President, General Counsel and Secretary
Wallis H. Brooks................................... 39 Vice President and Controller
</TABLE>
Mrs. Wachner has been a Director, President and Chief Executive Officer of
the Company since August 1987, and the Chairman of the Board since August 1991.
Mrs. Wachner was a Director and President of the Company from March 1986 to
August 1987. Mrs. Wachner held various positions, including President and Chief
Executive Officer, with Max Factor and Company from December 1978 to October
1984. Mrs. Wachner also serves as a Director of The Travelers Group, Inc. and
the Chairman and Chief Executive Officer of Authentic Fitness Corporation.
Mr. Finkelstein has been Senior Vice President of the Company since May
1992 and a Director and Chief Financial Officer of the Company since May 1995.
Mr. Finkelstein served as Vice President and Controller of the Company between
November 1988 and May 1992 and as Vice President of Finance of the Company's
Activewear and Olga Divisions from March 1988 until his appointment as
Controller of the Company. Mr. Finkelstein served as Vice President and
Controller of SPI Pharmaceuticals Inc. from February 1986 to March 1988 and held
various financial positions, including Assistant Corporate Controller with Max
Factor and Company, between 1977 and 1985. Mr. Finkelstein also serves as a
Director of Authentic Fitness Corporation and Herman's Sporting Goods, Inc.
Mr. Silverstein has been Vice President, General Counsel and Secretary of
the Company since December 1990. Mr. Silverstein served as Assistant Secretary
of the Company from June 1986 until his appointment as Secretary in January
1987.
Mr. Brooks has been Vice President and Controller of the Company since May
1995. Mr. Brooks served as Senior Vice President and Chief Financial Officer of
Authentic Fitness Corporation from November 1993 through April 1995. Mr. Brooks
held various financial positions including Treasurer of the Company from
November 1988 through September 1993. Prior to joining the Company, Mr. Brooks
was associated with the international accounting and auditing firm Ernst &
Young, LLP from 1984 to 1988.
OTHER KEY EMPLOYEES
The following managers of the Company's divisions are considered by the
Company to be key employees.
Alexander Cannon has been President of the Chaps by Ralph Lauren Division
of the Company since September 1994. Mr. Cannon joined the Company in December
1987 as Designer for Furnishings, Chaps by Ralph Lauren Division and served
successively as Vice President Merchandising and Design for Sportswear and Dress
Furnishings and Executive Vice President, Chaps by Ralph Lauren Division until
his appointment as Division President.
Joseph DiPonti has been President of the Company's Olga Division since
1991. Prior to that time, he was associated with Sara Lee Foundations, an
intimate apparel manufacturer, for 19 years, most recently serving as President
of that company. Before joining Sara Lee Foundations in the U.S., Mr. DiPonti
was President of Canadelle, the Sara Lee intimate apparel division in Canada.
14
<PAGE>
Edward Johnson has served as President of the Company's Retail Outlet Store
Division since November 1989. Mr. Johnson served as General Merchandise Manager
and Buyer with the Retail Outlet Stores Divison from October 1987 until his
appointment as Divisional President. Before joining the Company, Mr. Johnson
held several buying and store management positions with J W Robinson's in Los
Angeles, California.
John Kourakos has been President of the Company's Calvin Klein Men's
Underwear and Accessories and Calvin Klein Women's Intimate Apparel Divisions
since March 1994. Prior to the Company's acquisition of the Calvin Klein
men's underwear and women's intimate apparel businesses, Mr. Kourakos served as
President of CK Jeans and Sportswear and Calvin Klein Underwear from 1987 to
1994. Mr. Kourakos served in various capacities with Biderman Industries from
1980 to 1987 including Executive Vice President of Merchandise for Calvin Klein
Men's Wear.
Maurice Reznick has served as President of the Company's Warner's Division
since March of 1994. Mr. Reznick served as Vice President of Sales for the
Warner's and Valentino Divisions of the Company from January 1994 until his
appointment as Division President. Prior to joining the Company, Mr. Reznick
served as Vice President of National Sales, Playtex and Jogbra by Champion from
1992 to 1994 and held various sales positions, including Vice President of Sales
for Vanity Fair Mills from 1977 to 1992.
SELLING STOCKHOLDER
The following table sets forth certain information concerning the
beneficial ownership of Common Stock by the Selling Stockholder as of August 9,
1995 and as adjusted to reflect the sale in the Offerings of 500,000 shares of
Common Stock offered by the Selling Stockholder.
<TABLE>
<CAPTION>
OWNERSHIP PRIOR OWNERSHIP
TO THE OFFERINGS AFTER THE OFFERINGS
----------------------------- -----------------------------
NO. OF PERCENT OF NO. OF NO. OF PERCENT OF
SHARES OF COMMON SHARES SHARES OF COMMON
NAME OF BENEFICIAL OWNER COMMON STOCK(a) STOCK(a) BEING OFFERED COMMON STOCK(a) STOCK(a)
----------------------------------- --------------- ---------- ------------- --------------- ----------
<S> <C> <C> <C> <C> <C>
Linda J. Wachner(b) ............... 7,002,000 15.5% 500,000 6,502,000 12.3%
Chairman, President and Chief
Executive Officer
</TABLE>
------------
(a) Includes 3,175,000 shares of Common Stock which are presently issuable upon
the exercise of options held by the Selling Stockholder.
(b) Includes 50,000 shares of Common Stock held by the Linda J. Wachner
Charitable Trust of which Mrs. Wachner is the Trustee. Mrs. Wachner has the
sole power to vote and no power to dispose of such 50,000 shares.
15
<PAGE>
CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
TO NON-U.S. STOCKHOLDERS
The following is a general discussion of certain United States federal
income and estate tax consequences of the ownership and disposition of shares of
Common Stock by 'Non-U.S. Holders.' In general, a 'Non-U.S. Holder' is an
individual or entity other than (i) a citizen or resident of the United States,
(ii) a corporation, partnership or other entity created or organized in the
United States or under the laws of the United States or of any State, or (iii)
an estate or trust, the income of which is includible in gross income for United
States federal income tax purposes regardless of its source. This discussion is
for general information only and does not consider any specific facts or
circumstances that may apply to a particular Non-U.S. Holder. Furthermore, the
following discussion is based on current provisions of the Internal Revenue Code
of 1986, as amended (the 'Code'), and administrative and judicial
interpretations as of the date hereof, all of which are subject to change. EACH
PROSPECTIVE NON-U.S. HOLDER IS URGED TO CONSULT ITS OWN TAX ADVISER WITH RESPECT
TO THE UNITED STATES FEDERAL INCOME AND ESTATE TAX CONSEQUENCES OF OWNING AND
DISPOSING OF SHARES OF COMMON STOCK, AS WELL AS ANY TAX CONSEQUENCES ARISING
UNDER THE LAWS OF ANY STATE, LOCAL OR OTHER TAXING JURISDICTION.
DIVIDENDS
In general, dividends paid to a Non-U.S. Holder will be subject to United
States withholding tax at a 30% rate (or a lower rate prescribed by an
applicable tax treaty) unless the dividends are either (i) effectively connected
with a trade or business carried on by the Non-U.S. Holder within the United
States or (ii) if certain income tax treaties apply, attributable to a United
States permanent establishment maintained by the Non-U.S. Holder. Dividends
effectively connected with such a trade or business or attributable to such a
permanent establishment generally will not be subject to U.S. withholding tax
(if the Non-U.S. Holder timely and properly files certain forms, including
Internal Revenue Service Form 4224, with the payor of the dividend) and
generally will be subject to United States federal income tax on a net income
basis, in the same manner as if the Non-U.S. Holder were a resident of the
United States. A Non-U.S. Holder that is a corporation may be subject to an
additional branch profits tax at a rate of 30% (or such lower rate as may be
specified by an applicable treaty) on the repatriation from the United States of
its 'effectively connected earnings and profits,' subject to certain
adjustments. For purposes of the withholding discussed above and in order to
determine the applicability of a tax treaty providing for a lower rate of
withholding, dividends paid to an address in a foreign country are presumed
under current Treasury regulations to be paid to a resident of that country,
absent knowledge to the contrary. However, if Treasury regulations proposed in
1984 are finally adopted, Non-U.S. Holders would be required to file certain
forms to obtain the benefit of any applicable tax treaty providing for a lower
rate of withholding tax on dividends. Such forms would contain the Non-U.S.
Holder's name and address and an official statement by the competent authority
(as designated in the applicable treaty) in the foreign country attesting to the
Non-U.S. Holder's status as a resident thereof.
GAIN ON DISPOSITION
A Non-U.S. Holder generally will not be subject to United States federal
income tax (and no tax will generally be withheld) on any gain recognized upon
the disposition of Common Stock unless (i) the Company is or has been a 'U.S.
real property holding corporation' for United States federal income tax purposes
(which the Company does not believe that it has been, is or is likely to become)
and the Non-U.S. Holder disposing of the Common Stock owned, directly or
constructively, at any time during the five-year period preceding the
disposition, more than five percent of the Common Stock; (ii) the gain is
effectively connected with the conduct of a trade or business within the United
States of the Non-U.S. Holder or, if certain tax treaties apply, attributable to
a permanent establishment maintained within the United States by the Non-U.S.
Holder, (iii) in the case of a Non-U.S. Holder who is a non-resident alien
individual and who holds shares as a capital asset, such individual is present
in the United States for 183 days or more in the taxable year of the
disposition, and either (a) such individual has a
16
<PAGE>
'tax home,' for U.S. federal income tax purposes, in the United States, and the
gain from the disposition is not attributable to an office or other fixed place
of business maintained by such individual in a foreign country, or (b) the gain
from the disposition is attributable to an office or fixed place of business
maintained by such individual in the United States; or (iv) the Non-U.S. Holder
is subject to tax pursuant to provisions of the Code applicable to certain
United States expatriates.
FEDERAL ESTATE TAX
Shares of Common Stock owned or treated as owned by an individual who is
not a citizen or resident (as defined for United States federal tax purposes) of
the United States at the time of death will be includible in the individual's
gross estate for United States federal estate tax purposes unless an applicable
estate tax treaty provides otherwise, and therefore may be subject to United
States federal estate tax.
BACKUP WITHHOLDING, INFORMATION RETURN AND INFORMATION REPORTING REQUIREMENTS
The Company must make an information return annually to the Internal
Revenue Service and to each Non-U.S. Holder of the amount of dividends paid to,
and the tax withheld with respect to, each Non-U.S. Holder. These information
return requirements apply regardless of whether withholding was reduced or
eliminated by an applicable tax treaty. Copies of these information returns may
also be made available under the provisions of a specific treaty or agreement to
the tax authorities in the country in which the Non-U.S. Holder resides or is
established.
United States backup withholding (which generally is imposed at the rate of
31% on certain payments to persons who fail to furnish the information required
under the United States information reporting requirements) and information
reporting generally will not apply to dividends that are subject to the 30%
withholding discussed above or are not so subject because a tax treaty applies,
and are paid on Common Stock to a Non-U.S. Holder at an address outside the
United States.
The payment of proceeds from the disposition of Common Stock by a Non-U.S.
Holder to or through the United States office of a broker will be subject to
information reporting and backup withholding at a rate of 31 percent unless the
owner certifies, among other things, its status as a Non-U.S. Holder under
penalties of perjury or otherwise establishes an exemption. The payment of
proceeds from the disposition by a Non-U.S. Holder of Common Stock to or through
a non-U.S. office of a non-U.S. broker will generally not be subject to backup
withholding and information reporting. However, in the case of proceeds from a
disposition of Common Stock paid to or through a non-U.S. office of a broker
that is (i) a United States person, (ii) a 'controlled foreign corporation' for
U.S. federal income tax purposes or (iii) a foreign person 50 percent or more of
whose gross income from all sources for a certain three-year period was
effectively connected with a United States trade or business, (a) backup
withholding will not apply unless such broker has actual knowledge that the
owner is not a Non-U.S. Holder, and (b) information reporting will apply unless
the broker has documentary evidence in its files of the owner's status as a
Non-U.S. Holder (and the broker has no actual knowledge to the contrary) or the
owner otherwise establishes an exemption.
Any amounts withheld under the backup withholding rules from payments to a
Non-U.S. Holder will be refunded or credited against the Non-U.S. Holder's
United States federal income tax liability, if any, provided that the required
information is furnished to the Internal Revenue Service.
The backup withholding and information reporting rules are currently under
review by the Treasury Department, and their application to the Common Stock is
subject to change.
17
<PAGE>
UNDERWRITING
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Donaldson, Lufkin &
Jenrette Securities Corporation, Bear, Stearns & Co. Inc., Morgan Stanley & Co.
Incorporated and Oppenheimer & Co., Inc. are acting as representatives (the
'U.S. Representatives') of the U.S. Underwriters. Subject to the terms and
conditions set forth in the United States Purchase Agreement (the 'U.S. Purchase
Agreement') among the Company, the Selling Stockholder and each of the
Underwriters named below (the 'U.S. Underwriters'), and concurrently with the
sale of 1,600,000 shares of Common Stock to the International Managers (as
defined below), the Company and the Selling Stockholder severally have agreed to
sell to each of the U.S. Underwriters, and each of the U.S. Underwriters
severally has agreed to purchase, the aggregate number of shares of Common Stock
set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
U.S. UNDERWRITERS SHARES
------------------------------------------------------------------ ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.......................................
Donaldson, Lufkin & Jenrette Securities Corporation..............
Bear, Stearns & Co. Inc..........................................
Morgan Stanley & Co. Incorporated................................
Oppenheimer & Co., Inc...........................................
---------
Total............................................. 6,400,000
---------
---------
</TABLE>
The Company and the Selling Stockholder have also entered into an
International Purchase Agreement (the 'International Purchase Agreement' and,
together with the U.S. Purchase Agreement, the 'Purchase Agreements') with
Merrill Lynch International Limited, Donaldson, Lufkin & Jenrette Securities
Corporation, Bear, Stearns International Limited, Morgan Stanley & Co.
International Limited and UBS Limited (the 'Lead Managers'), and certain other
underwriters outside the United States and Canada (the 'International Managers'
and, together with the U.S. Underwriters, the 'Underwriters'). Subject to the
terms and conditions set forth in the International Purchase Agreement, and
concurrently with the sale of 6,400,000 shares of Common Stock to the U.S.
Underwriters pursuant to the U.S. Purchase Agreement, the Company and the
Selling Stockholder severally have agreed to sell to the International Managers,
and the International Managers severally have agreed to purchase, an aggregate
of 1,600,000 shares of Common Stock. The offering price per share and the total
underwriting discount per share are identical under the U.S. Purchase Agreement
and the International Purchase Agreement.
In each Purchase Agreement, the several U.S. Underwriters and the several
International Managers, respectively, have agreed, subject to the terms and
conditions set forth in such Purchase Agreement, to purchase all of the shares
of Common Stock being sold pursuant to such Purchase Agreement if any of such
shares of Common Stock being sold pursuant to such Purchase Agreement are
purchased. Under certain circumstances, the commitments of non-defaulting U.S.
Underwriters or International Managers (as the case may be) may be increased.
The sale of Common Stock to the U.S. Underwriters is conditioned upon the sale
of shares of Common Stock to the International Managers.
The U.S. Representatives have advised the Company and the Selling
Stockholder that the U.S. Underwriters propose initially to offer the shares of
Common Stock to the public at the public offering price set forth on the cover
page of this Prospectus and to certain dealers at such price less a concession
not in excess of $ per share of Common Stock. The U.S. Underwriters may allow,
and such dealers may reallow, a discount not in excess of $ per share of Common
Stock on sales to certain other dealers. After the public offering, the public
offering price, concession and discount may be changed.
18
<PAGE>
The Company has granted an option to the U.S. Underwriters, exercisable
during the 30-day period after the date of this Prospectus, to purchase up to an
aggregate of 960,000 additional shares of Common Stock at the public offering
price set forth on the cover page hereof, less the underwriting discount. The
U.S. Underwriters may exercise this option only to cover over-allotments, if
any, made on the sale of shares of Common Stock offered hereby. To the extent
that the U.S. Underwriters exercise this option, each U.S. Underwriter will be
obligated, subject to certain conditions, to purchase approximately the number
of additional shares of Common Stock proportionate to such U.S. Underwriter's
initial amount reflected in the foregoing table. The Company has also granted an
option to the International Managers, exercisable during the 30-day period after
the date of this Prospectus, to purchase up to an aggregate of 240,000
additional shares of Common Stock to cover over-allotments, if any, on terms
similar to those granted to the U.S. Underwriters.
The U.S. Representatives have advised the Company and the Selling
Stockholder that the U.S. Underwriters and the International Managers have
entered into an Intersyndicate Agreement (the 'Intersyndicate Agreement') that
provides for the coordination of their activities. Pursuant to the
Intersyndicate Agreement, the U.S. Underwriters and the International Managers
are permitted to sell shares of Common Stock to each other for purposes of
resale at the public offering price, less an amount not greater than the selling
concession. Under the terms of the Intersyndicate Agreement, the International
Managers and any dealer to whom they sell shares of Common Stock will not offer
to sell or sell shares of Common Stock to persons who are United States or
Canadian persons or to persons they believe intend to resell to persons who are
United States or Canadian persons, and the U.S. Underwriters and any dealer to
whom they sell shares of Common Stock will not offer to sell or sell shares of
Common Stock to non-United States or non-Canadian persons or to persons they
believe intend to resell to non-United States or non-Canadian persons, except,
in each case, for transactions pursuant to the Intersyndicate Agreement.
The Company, the Selling Stockholder and certain officers and directors of
the Company have agreed that they will not, directly or indirectly, for a period
of 90 days following the date of the Prospectus, except with the prior consent
of Merrill Lynch, on behalf of the Underwriters, sell, offer to sell, grant any
option for the sale of, or otherwise dispose of, any Common Stock. Calvin Klein,
Inc., which is the beneficial owner of 566,497 shares of Common Stock, has
agreed that it will not, directly or indirectly, until October 30, 1995, except
with prior consent of Merrill Lynch, on behalf of the Underwriters, sell,
offer to sell, grant any option for the sale of, or otherwise dispose of, any
Common Stock.
The Company and the Selling Stockholder have agreed to indemnify the U.S.
Underwriters and the International Managers against certain liabilities,
including liabilities under the Securities Act.
Oppenheimer Capital, a U.S. money manager and an affiliate of Oppenheimer &
Co., Inc. holds approximately 5.9 million shares of the Company's Common Stock
in connection with its money management activities. Because Oppenheimer & Co.,
Inc. may be deemed to be an affiliate of the Company, the U.S. Offering will be
conducted in accordance with Schedule E to the Bylaws of the National
Association of Securities Dealers, Inc.
LEGAL MATTERS
Certain legal matters with respect to the Common Stock and the validity of
the Common Stock offered hereby will be passed upon for the Company by Stanley
P. Silverstein, Esq., Vice President, General Counsel and Secretary of the
Company, and by Skadden, Arps, Slate, Meagher & Flom, New York, New York.
Certain legal matters will be passed upon for the Underwriters by Fried, Frank,
Harris, Shriver & Jacobson (a partnership which includes professional
corporations), New York, New York. Mr. Silverstein owns 26,400 shares of Common
Stock and options to acquire 64,000 shares of Common Stock.
19
<PAGE>
EXPERTS
The consolidated financial statements of The Warnaco Group, Inc.
incorporated by reference in this Prospectus from the Company's Annual Report
(Form 10-K) for the fiscal year ended January 7, 1995, have been audited by
Ernst & Young, LLP, independent auditors, as set forth in their report, included
therein and incorporated herein by reference. Such financial statements are
incorporated herein by reference in reliance upon such firm as experts in
accounting and auditing.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
'Commission') a Registration Statement (which term shall encompass any
amendments thereto) on Form S-3 (the 'Registration Statement') under the
Securities Act of 1933, as amended (the 'Securities Act'), for the registration
of the Common Stock. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement, certain items of which are contained in exhibits to the
Registration Statement as permitted by the rules and regulations of the
Commission. For further information with respect to the Company and the Common
Stock, reference is made to the Registration Statement, including the exhibits
thereto, and the financial statements and notes filed or incorporated by
reference as a part thereof. Statements made in this Prospectus concerning the
contents of any document referred to herein are not necessarily complete. With
respect to each such document filed with the Commission as an exhibit to the
Registration Statement, reference is made to the exhibit for a more complete
description of the matter involved, and each such statement shall be deemed
qualified in its entirety by such reference. The Registration Statement and the
exhibits thereto filed by the Company with the Commission may be inspected at
the public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, or at its regional offices located
at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World
Trade Center, 13th Floor, New York, New York 10048. Copies of such material can
be obtained from the public reference section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. Such materials can
also be inspected at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005.
The Company is subject to the periodic reporting and other informational
requirements of the Securities Exchange Act of 1934, as amended (the 'Exchange
Act'), and, in accordance therewith, files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information filed with the Commission may be inspected and copied at the
locations described above. The Company will furnish all reports and other
information required by the periodic reporting and informational requirements of
the Exchange Act to the Commission and will furnish copies of such reports and
other information to the holders of the Common Stock.
20
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed by the Company with the Commission pursuant
to the Exchange Act are hereby incorporated by reference herein:
1. The Company's Annual Report on Form 10-K for the year ended January
7, 1995.
2. The Company's Current Report on Form 8-K, dated May 18, 1995.
3. The Company's Proxy Statement for the Company's 1995 Annual Meeting
of Shareholders held on May 11, 1995.
4. The Company's Quarterly Report on Form 10-Q for the quarter ended
April 8, 1995.
5. The Company's Quarterly Report on Form 10-Q for the quarter ended
July 8, 1995 (attached as Annex I to this Prospectus).
6. All other reports filed by the Company pursuant to Section 13(a) or
15(d) of the Exchange Act since January 7, 1995.
7. The description of the Common Stock which is contained in the
Company's Form 8-A dated September 10, 1991, including any
amendments or reports filed for the purpose of updating such
description.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act prior to the termination of the offering of the shares
of Common Stock hereunder shall be deemed to be incorporated by reference herein
and to be part hereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is incorporated or deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of any such person, a
copy of any and all of the documents that are incorporated by reference in this
Prospectus (other than exhibits to such documents unless such exhibits are
specifically incorporated by reference into such documents). Requests for such
copies should be directed to Stanley P. Silverstein, Vice President, General
Counsel and Secretary, The Warnaco Group, Inc., 90 Park Avenue, New York, New
York 10016, telephone (212) 661-1300.
21
<PAGE>
ANNEX I
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JULY 8, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________________ TO __________________
COMMISSION FILE NUMBER 1-4715
------------------------
THE WARNACO GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C>
DELAWARE 95-4032739
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER IDENTIFICATION NO.)
OF INCORPORATION OR ORGANIZATION)
</TABLE>
90 PARK AVENUE
NEW YORK, NEW YORK 10016
(ADDRESS OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
(212) 661-1300
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
------------------------
COPIES OF ALL COMMUNICATIONS TO:
THE WARNACO GROUP, INC.
90 PARK AVENUE
NEW YORK, NEW YORK 10016
ATTENTION: VICE PRESIDENT AND GENERAL COUNSEL
------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
[x] Yes [ ] No
The number of shares outstanding of the registrant's Class A Common Stock
as of August 7, 1995 is as follows: 42,026,912
________________________________________________________________________________
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE WARNACO GROUP, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
JULY 8, JANUARY 7,
1995 1995
----------- -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets:
Cash............................................................................... $ 2,147 $ 3,791
Accounts receivable -- net......................................................... 143,724 148,659
Inventories:
Finished goods..................................................................... 181,645 131,450
Work in process.................................................................... 64,289 60,513
Raw materials...................................................................... 67,696 60,220
----------- -----------
Total inventories............................................................. 313,630 252,183
Other current assets.................................................................... 27,644 15,892
----------- -----------
Total current assets.......................................................... 487,145 420,525
Property, plant and equipment -- net of accumulated depreciation of $73,308 and
$68,203............................................................................... 84,766 80,932
Intangible and other assets -- net...................................................... 277,075 279,096
----------- -----------
$ 848,986 $ 780,553
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Borrowing under revolving credit facility.......................................... $ 184,620 $ 115,679
Current portion of long term debt.................................................. 46,681 50,315
Borrowing under foreign credit facilities.......................................... 12,434 9,822
Accounts payable and accrued liabilities........................................... 136,538 137,624
Federal and other income taxes..................................................... 1,883 2,611
----------- -----------
Total current liabilities..................................................... 382,156 316,051
Long-term debt.......................................................................... 197,309 206,792
Other long-term liabilities............................................................. 12,176 17,238
Stockholders' equity:
Preferred stock; $.01 par value.................................................... -- --
Common stock; $.01 par value....................................................... 421 421
Capital in excess of par value..................................................... 337,752 337,872
Cumulative translation adjustment.................................................. (2,449) (1,732)
Accumulated deficit................................................................ (66,952) (83,897)
Treasury stock, at cost............................................................ (5,000) (5,000)
Notes receivable for common stock issued........................................... (6,427) (7,192)
----------- -----------
Total stockholders' equity.................................................... 257,345 240,472
----------- -----------
$ 848,986 $ 780,553
----------- -----------
----------- -----------
</TABLE>
This statement should be read in conjunction with the accompanying Notes to
Consolidated Condensed Financial Statements.
2
<PAGE>
THE WARNACO GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SECOND QUARTER ENDED SIX MONTHS ENDED
---------------------- ----------------------
JULY 8, JULY 9, JULY 8, JULY 9,
1995 1994 1995 1994
-------- -------- -------- --------
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
<S> <C> <C> <C> <C>
Net revenues......................................... $210,395 $190,302 $405,551 $338,033
Cost of goods sold................................... 142,176 133,312 270,508 230,667
-------- -------- -------- --------
Gross profit......................................... 68,219 56,990 135,043 107,366
Selling, administrative and general expenses......... 43,800 38,846 85,135 69,106
-------- -------- -------- --------
Income before loss on California earthquake.......... 24,419 18,144 49,908 38,260
Loss on California earthquake........................ -- -- -- 3,000
-------- -------- -------- --------
Income before interest and income taxes.............. 24,419 18,144 49,908 35,260
Interest expense..................................... 9,475 8,308 17,835 15,713
-------- -------- -------- --------
Income before income taxes........................... 14,944 9,836 32,073 19,547
Provision for income taxes........................... 5,679 750 12,188 1,500
-------- -------- -------- --------
Net income........................................... $ 9,265 $ 9,086(1) $ 19,885 $ 18,047(1)
-------- -------- -------- --------
-------- -------- -------- --------
Net income per share................................. $ 0.22 $ 0.22(1) $ 0.48 $ 0.44(1)
-------- -------- -------- --------
-------- -------- -------- --------
Weighted average number of common shares
outstanding........................................ 42,003 41,671 41,699 40,715
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
------------
(1) Net income and net income per share before the loss on the California
earthquake and after a normalized provision for income taxes at an effective
income tax rate of 38% was $6,098 or $0.15 per share for the second quarter
of fiscal 1994 and $13,979 or $0.34 per share for the first six months of
fiscal 1994.
This statement should be read in conjunction with the accompanying Notes to
Consolidated Condensed Financial Statements
3
<PAGE>
THE WARNACO GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
SIX MONTHS ENDED
--------------------
JULY 8, JULY 9,
1995 1994
-------- --------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Cash flow from operations:
Net income........................................................................... $ 19,885 $ 18,047
Non-cash items included in net income:
Depreciation and amortization................................................... 9,400 9,365
Interest........................................................................ 831 545
Income taxes paid.................................................................... (1,758) (2,605)
Net change in other operating accounts............................................... (68,337) (59,655)
Other................................................................................ (2,615) (3,889)
-------- --------
Cash used in operations......................................................... (42,594) (38,192)
Cash flow from investing activities:
Proceeds from the sale of fixed and other assets..................................... 5,942 115
Purchase of property, plant and equipment............................................ (9,858) (9,882)
Payment for purchase of Calvin Klein underwear businesses and trademarks............. (5,000) (33,103)
Repurchase of Calvin Klein license -- Canada......................................... (6,200) --
-------- --------
Cash used in investing activities............................................... (15,116) (42,870)
Cash flow from financing activities:
Borrowings under revolving credit facility........................................... 65,598 81,056
Net proceeds from sale of common stock and repayment of notes receivable from
stockholders........................................................................ 644 988
Proceeds from other financing........................................................ 5,955 8,626
Cash dividends paid.................................................................. (2,922) --
Increase in deferred financing costs................................................. (92) (405)
Repayments of debt................................................................... (13,117) (9,111)
-------- --------
Cash provided from financing activities......................................... 56,066 81,154
-------- --------
Increase (decrease) in cash............................................................... (1,644) 92
Cash at beginning of period............................................................... 3,791 4,651
-------- --------
Cash at end of period..................................................................... $ 2,147 $ 4,743
-------- --------
-------- --------
Net change in other operating accounts:
Accounts receivable.................................................................. $ 4,935 $(18,001)
Inventories.......................................................................... (61,447) (3,898)
Other current assets................................................................. (11,752) (6,025)
Accounts payable and accrued liabilities............................................. (1,103) (33,231)
Income taxes payable................................................................. 1,030 1,500
-------- --------
$(68,269) $(59,655)
-------- --------
-------- --------
</TABLE>
This statement should be read in conjunction with the accompanying Notes to
Consolidated Condensed Financial Statements.
4
<PAGE>
THE WARNACO GROUP, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. In the opinion of the Company, the accompanying consolidated condensed
financial statements contain all the adjustments (all of which were of a
normal recurring nature) necessary to present fairly the financial
position of the Company as of July 8, 1995 as well as its results of
operations and cash flows for the periods ended July 8, 1995 and July 9,
1994. Operating results for interim periods may not be indicative of
results for the full fiscal year.
2. Certain amounts for prior periods have been reclassified to be
comparable with the current period presentation.
3. In February 1995, the Company terminated the license agreement for the
production of men's underwear and women's intimate apparel bearing the
Calvin Klein name in Canada. The Company will directly design, produce
and market Calvin Klein men's underwear and women's intimate apparel in
Canada. The cost of terminating the license agreement before its
expiration in the year 2000 was $6.2 million.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
STATEMENT OF OPERATIONS
(SELECTED DATA)
<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
------------------ ------------------
JULY 8, JULY 9, JULY 8, JULY 9,
1995 1994 1995 1994
------- ------- ------- -------
(IN MILLIONS, EXCEPT RATIOS)
<S> <C> <C> <C> <C>
Net revenues............................................................... $ 210.4 $ 190.3 $ 405.6 $ 338.0
Cost of goods sold......................................................... 142.2 133.3 270.5 230.7
------- ------- ------- -------
Gross profit............................................................... 68.2 57.0 135.0 107.4
% of net revenues..................................................... 32.4% 29.9% 33.2% 31.8%
Selling, administrative and general expenses............................... 43.8 38.8 85.1 69.2
Loss on California earthquake.............................................. -- -- -- 3.0
------- ------- ------- -------
Income before interest and income taxes.................................... 24.4 18.1 49.9 35.2
% of net revenues..................................................... 11.6% 9.5% 12.3% 10.4%
Interest expense........................................................... 9.5 8.3 17.8 15.7
Provision for income taxes................................................. 5.7 0.7 12.2 1.5
------- ------- ------- -------
Net income................................................................. $9.3 $9.1 $19.9 $18.0
------- ------- ------- -------
------- ------- ------- -------
Income before loss on California earthquake and after giving effect to a
normalized tax provision of 38%.......................................... $9.3 $6.1 $19.9 $14.0
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
Net revenues in the second quarter of fiscal 1995 were $210.4 million,
10.6% higher than the $190.3 million recorded in the second quarter of fiscal
1994. Net revenues for the first six months of fiscal 1995 were $405.6 million,
20.0% higher than the $338.0 million recorded in the first six months of fiscal
1994.
Intimate Apparel Division net revenues increased 12.4% in the second
quarter of fiscal 1995 to $159.0 million from $141.4 million in the second
quarter of fiscal 1994. The increase was achieved despite the comparison to the
launch of Avon in the second quarter of fiscal of 1994 where Avon sales were
$15.3 million higher. Excluding the Avon launch, Intimate Apparel Division net
revenues increased 27.9% in the second quarter of fiscal 1995 compared to fiscal
1994. Calvin Klein net revenues are up 121% due to the successful launch of the
women's intimate apparel business on January 1, 1995 and improved market
penetration in the men's underwear business. Fruit of the Loom net revenues
increased 54.9% and international net revenues increased 12.8% over the prior
year period. Intimate Apparel Division net revenues in the first six months of
fiscal 1995 increased 27% to $305.4 million from the $240.5 recorded in the
first six months of fiscal 1994. The higher net revenues reflect increases in
all brands including an increase of 227% in Calvin Klein net revenues, which
compares a full six months in fiscal 1995 to 3 1/2 months in fiscal 1994,
increases in domestic Warner's and Olga net revenues of 10.6%, international net
revenues of 11.5% and Fruit of the Loom of 28.7%.
Menswear Division net revenues increased 3.6% to $40.8 million from the
$39.4 million in the second quarter of fiscal 1994. Included in 1994 are brands
that have been discontinued of Puritan, Dior and Nicklaus. Excluding the
discontinued brands from the prior year's net revenues, Menswear Division net
revenues in the second quarter of fiscal 1995 increased 11.8% over the second
quarter of fiscal 1994 primarily due to an increase of 16.5% in Chaps. Menswear
Division net revenues for the first six months of fiscal 1995 increased 2.2% to
$82.6 million compared to $80.8 million. Excluding the discontinued brands,
Menswear Division net revenues increased 16.9% compared to the first six months
of fiscal 1994 due primarily to an increase in Chaps by Ralph Lauren of 22.5%.
6
<PAGE>
Gross profit in the second quarter of fiscal 1995 increased 19.7% to $68.2
million from the $57.0 million recorded in the second quarter of fiscal 1994.
Gross profit as a percentage of net revenues improved 250 basis points to 32.4%
in the second quarter of fiscal 1995 from 29.9% in the comparable fiscal 1994
period. The increase in gross profit as a percentage of net revenues reflects
increased manufacturing efficiencies and a more favorable mix of regular price
sales. Gross profit for the first six months of fiscal 1995 increased 25.8% to
$135.0 million compared to the $107.4 million in the first six months of fiscal
1994. Gross profit as a percentage of net revenues increased to 33.3% in the
first six months of fiscal 1995 compared to 31.8% in the first six months of the
prior year. The increase in gross profit reflects manufacturing efficiencies and
the more favorable mix as noted above.
Selling, administrative and general expenses increased to $43.8 million
(20.8% of net revenues) from the $38.8 million (20.4% of net revenues) recorded
in the second quarter of fiscal 1994. The increase in selling, administrative
and general expenses reflect the increased sales volume noted above and an
increase in marketing expenses of 50 basis points to support the launch of
Calvin Klein women's intimate apparel. This was partially offset by an
improvement in selling and administrative expenses. Selling, administrative and
general expenses for the first six months of fiscal 1995 increased to $85.1
million (21.0% of net revenues) from $69.1 million (20.4% of net revenues)
recorded in the first six months of fiscal 1994. The increase in selling,
administrative and general expenses in the first six months of fiscal 1995
compared to fiscal 1994 reflects higher sales volume and the increase in
marketing expenses noted above.
Interest expense increased to $9.5 million in the second quarter of fiscal
1995 from $8.3 million recorded in the second quarter of fiscal 1994. Interest
expense increased to $17.8 million in the first six months of fiscal 1995 from
$15.7 million recorded in the first half of fiscal 1994. The increase in
interest expense is due primarily to an increase in interest rates of over 200
basis points since the end of the first half of fiscal 1994. The Company has
purchased interest rate swap agreements which effectively fix the interest rate
on $275 million of the Company's approximately $400 million of debt at an all-in
interest rate of 6.25% through 1996 which limits the impact of future increases
in interest rates.
The provision for income taxes for the second quarter of fiscal 1995 was
$5.7 million compared to $0.7 million in the second quarter of fiscal 1994. The
Company's effective tax rate for the first six months of fiscal 1995 was 38%
compared to 7% for the first six months of fiscal 1994. The increase in
effective tax rate in 1995 compared to 1994 reflects the utilization of the
Company's net operating loss carryforwards in the first six months of fiscal
1994, which offset the Company's 1994 federal income tax provision, leaving only
a 7% state tax provision.
The first quarter of fiscal 1994 includes a non-recurring loss of $3.0
million, related to the deductible portion of the Company's insurance policy on
the January 17th California earthquake which temporarily shut down the Olga
Division's distribution center.
Net income for the second quarter of 1995 was $9.3 million compared to $9.1
million in the second quarter of fiscal 1994. Income for the second quarter of
fiscal 1994, adjusted to reflect a normalized tax provision of 38%, was $6.1
million. Net income for the second quarter of fiscal 1995 of $10.6 million is
51.9% higher than the fully taxed income of $6.1 million recorded in the second
quarter of fiscal 1994. Net income for the first six months of fiscal 1995 of
$19.9 million was 42.2% higher than the fully taxed income before the loss on
the California earthquake of $14.0 million recorded in the first six months of
fiscal 1994.
CAPITAL RESOURCES AND LIQUIDITY
Consistent with the Company's goal of providing increased shareholder
value, on May 11, 1995, the Company declared a quarterly cash dividend of $0.07
per share. The dividend of $2.9 million was paid on June 30, 1995 to
shareholders of record as of May 30, 1995.
The Company's liquidity requirements arise primarily from its debt service
requirements and the funding of the Company's working capital needs, primarily
inventory and accounts receivable. The Company's borrowing requirements are
seasonal, with peak working capital needs generally arising at the end of the
second quarter and during the third quarter of the fiscal year. The Company
typically
7
<PAGE>
generates nearly all of its operating cash flow in the fourth quarter of the
fiscal year reflecting third and fourth quarter shipments and the sale of
inventory built during the first half of the fiscal year.
Cash used by operations in the first six months of fiscal 1995 was $42.6
million compared to a use of $38.2 million in the comparable 1994 period. The
use of cash in the first six months of the Company's fiscal year is a result of
seasonal increases in working capital, primarily inventory. The slight increase
in cash used in operations in the first six months of fiscal 1995 compared to
fiscal 1994 reflects higher investment in working capital, primarily inventory,
to support the increased sales volume in the second half of fiscal 1995, as well
as the strong growth of the Calvin Klein business. The increased investment in
inventory was partially offset by increased net income and an improvement in
accounts receivable where days sales outstanding was reduced by 6 days to 51
days.
The Company anticipates filing a Registration Statement with the Securities
and Exchange Commission to sell 7,500,000 shares of its common stock in an
underwritten public offering on August 9, 1995. The estimated net proceeds from
the proposed offering are expected to be approximately $150 million which will
be used to repay certain amounts outstanding under the Company's Bank Credit
Agreement. Additional funds available under the Company's revolving facility
may be used for strategic acquisitions as well as for working capital and other
corporate purposes. The Company believes that the funds available under its
existing credit arrangements and cash flow to be generated from future
operations will be sufficient to meet working capital and capital expenditure
needs of the Company, including dividend, interest and principal payments on
outstanding debt obligations, for the foreseeable future.
8
<PAGE>
PART II -- OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's annual meeting of shareholders was held on May 11, 1995. The
following matters were voted upon by the shareholders:
(1) Election of Directors
(a) Mr. William S. Finkelstein was elected to the Board of
Directors to serve a three year term expiring at the 1998
Annual Meeting of Stockholders. 35,836,891 votes were cast for
the election of Mr. Finkelstein, none against and 165,290
withheld, abstained and broker non votes.
(b) Mr. Stewart A. Resnick was re-elected to the Board of Directors
to serve a three year term expiring at the 1998 Annual Meeting
of Stockholders. 35,867,561 votes were cast for the election of
Mr. Resnick, none against and 103,690 withheld, abstained and
broker non votes.
(2) The shareholders approved a proposed amendment to the Company's
Restated Certificate of Incorporation which increased the number
of authorized shares of common stock of the Company from
65,000,000 to 130,000,000. 34,315,509 votes were cast for the
amendment, 1,641,010 shares were cast against the amendment,
14,862 votes were withheld, abstained and broker non votes.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
11.1 -- Earnings per share.
(b) Reports on Form 8-K.
The Company's current report on Form 8-K was filed with the
Securities and Exchange Commission on May 18, 1995. The report discussed
the Board of Directors decision to replace Ernst & Young LLP as the
Company's independent auditors with Price Waterhouse LLP.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE WARNACO GROUP, INC.
Date: August 9, 1995 By /s/ WILLIAM S. FINKELSTEIN
...................................
(WILLIAM S. FINKELSTEIN)
DIRECTOR, SENIOR VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER
PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER
Date: August 9, 1995 By /s/ WALLIS H. BROOKS
...................................
(WALLIS H. BROOKS)
VICE PRESIDENT AND
CORPORATE CONTROLLER
10
<PAGE>
_____________________________________ _____________________________________
NO DEALER, SALESPERSON OR ANY OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THE SELLING STOCKHOLDER OR THE U.S. UNDERWRITERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY, THE CLASS A COMMON STOCK IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO
WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH
IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Company.................................... 3
The Offerings.................................. 4
Risk Factors................................... 5
Selected Financial Information................. 6
Use of Proceeds................................ 8
Capitalization................................. 9
Price Range of Common Stock.................... 10
Dividend Policy................................ 10
Business....................................... 11
Management..................................... 14
Selling Stockholder............................ 15
Certain United States Federal Tax Consequences
to Non-U.S. Stockholders..................... 16
Underwriting................................... 18
Legal Matters.................................. 19
Experts........................................ 20
Available Information.......................... 20
Documents Incorporated by Reference............ 21
Annex I: Quarterly Report on Form 10-Q for the
fiscal quarter ended July 8, 1995
</TABLE>
8,000,000 SHARES
THE WARNACO GROUP, INC.
CLASS A COMMON STOCK
------------------------
PROSPECTUS
------------------------
MERRILL LYNCH & CO.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BEAR, STEARNS & CO. INC.
MORGAN STANLEY & CO.
INCORPORATED
OPPENHEIMER & CO., INC.
, 1995
_____________________________________ _____________________________________
<PAGE>
ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED AUGUST 9, 1995
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 STATE.
PROSPECTUS
8,000,000 SHARES
THE WARNACO GROUP, INC.
CLASS A COMMON STOCK
------------------------
Of the 8,000,000 shares of Class A Common Stock offered, 7,500,000 are
being offered by The Warnaco Group, Inc. and 500,000 shares are being offered by
the Selling Stockholder of the Company. See 'Selling Stockholder' and
'Underwriting.' The Company will not receive any of the proceeds from the sale
of shares of Class A Common Stock by the Selling Stockholder.
Of the 8,000,000 shares of Class A Common Stock offered, 1,600,000 shares
are being offered initially outside the United States and Canada by the
International Managers and 6,400,000 shares are being offered initially in the
United States and Canada by the U.S. Underwriters. The initial offering price
and the aggregate underwriting discount per share are identical for both
Offerings. See 'Underwriting.'
The Class A Common Stock is traded on the New York Stock Exchange under the
symbol 'WAC.' On August 8, 1995, the last sale price of the Class A Common Stock
as reported on the New York Stock Exchange was $22 per share. See 'Price Range
of Common Stock.'
FOR INFORMATION CONCERNING CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS, SEE 'RISK FACTORS' APPEARING ON PAGE 5.
------------------------
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.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO PROCEEDS TO SELLING
PUBLIC DISCOUNT(1) COMPANY(2) STOCKHOLDER(2)
<S> <C> <C> <C> <C>
Per Share............................... $ $ $ $
Total(3)................................ $ $ $ $
</TABLE>
(1) The Company and the Selling Stockholder have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See 'Underwriting.'
(2) Before deducting expenses estimated at $ payable by the Company
and $ payable by the Selling Stockholder.
(3) The Company has granted the International Managers and the U.S.
Underwriters options, exercisable within 30 days after the date hereof, to
purchase up to 240,000 and 960,000 additional shares of Class A Common
Stock, respectively, solely to cover over-allotments, if any. If such
options are exercised in full, the total Price to Public, Underwriting
Discount and Proceeds to Company will be $ , $ and $ , respectively. See
'Underwriting.'
------------------------
The shares of Class A Common Stock are offered by the several Underwriters,
subject to prior sale, when, as and if issued to and accepted by them, subject
to the approval of certain legal matters by counsel for the Underwriters and
certain other conditions. The Underwriters reserve the right to withdraw, cancel
or modify such offer and to reject orders in whole or in part. It is expected
that delivery of the shares of Class A Common Stock will be made in New York,
New York on or about , 1995.
------------------------
MERRILL LYNCH INTERNATIONAL LIMITED
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BEAR, STEARNS INTERNATIONAL LIMITED
MORGAN STANLEY & CO.
INTERNATIONAL
UBS LIMITED
------------------------
The date of this Prospectus is , 1995.
<PAGE>
ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS
UNDERWRITING
Merrill Lynch International Limited, Donaldson, Lufkin & Jenrette
Securities Corporation, Bear, Stearns International Limited, Morgan Stanley &
Co. International Limited and UBS Limited are acting as lead managers (the 'Lead
Managers') of the International Managers. Subject to the terms and conditions
set forth in an international purchase agreement (the 'International Purchase
Agreement') among the Company, the Selling Stockholder and each of the
underwriters named below (the 'International Managers'), and concurrently with
the sale of 6,400,000 shares of Common Stock to the U.S. Underwriters (as
defined below), the Company and the Selling Stockholder severally have agreed to
sell to the International Managers, and each of the International Managers
severally has agreed to purchase, the aggregate number of shares of Common Stock
set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL MANAGERS SHARES
------------------------------------------------------------------- ---------
<S> <C>
Merrill Lynch International Limited...............................
Donaldson, Lufkin & Jenrette Securities Corporation...............
Bear, Stearns International Limited...............................
Morgan Stanley & Co. International Limited........................
UBS Limited.......................................................
---------
Total.............................................. 1,600,000
---------
---------
</TABLE>
The Company and the Selling Stockholder have also entered into a purchase
agreement (the 'U.S. Purchase Agreement' and, together with the International
Purchase Agreement, the 'Purchase Agreements'), with certain underwriters in the
United States and Canada (the 'U.S. Underwriters' and, together with the
International Managers, the 'Underwriters') for whom Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Donaldson, Lufkin & Jenrette Securities
Corporation, Bear, Stearns & Co. Inc., Morgan Stanley & Co. Incorporated and
Oppenheimer & Co., Inc. are acting as U.S. Representatives. Subject to the terms
and conditions set forth in the U.S. Purchase Agreement, and concurrently with
the sale of 1,600,000 shares of Common Stock to the International Managers
pursuant to the International Purchase Agreement, the Company and the Selling
Stockholder have agreed to sell to the U.S. Underwriters, and the U.S.
Underwriters severally have agreed to purchase, an aggregate of 6,400,000 shares
of Common Stock. The offering price per share and the total underwriting
discount per share are identical under the International Purchase Agreement and
the U.S. Purchase Agreement.
In each Purchase Agreement, the several International Managers and the
several U.S. Underwriters, respectively, have agreed, subject to the terms and
conditions set forth in such Purchase Agreement, to purchase all of the shares
of Common Stock being sold pursuant to such Purchase Agreement if any such
shares of Common Stock being sold pursuant to such Purchase Agreement are
purchased. Under certain circumstances, the commitments of non-defaulting
International Managers or U.S. Underwriters (as the case may be) may be
increased. The sale of Common Stock to the International Managers is conditioned
upon the sale of the shares of Common Stock to the U.S. Underwriters.
The Lead Managers have advised the Company and the Selling Stockholder that
the International Managers propose initially to offer the shares of Common Stock
to the public at the public offering price set forth on the cover page of this
Prospectus and to certain dealers at such price less a concession not in excess
of $ per share of Common Stock. The International Managers may allow, and
such dealers may reallow, a discount not in excess of $ per share of Common
Stock on sales to certain other dealers. After the public offering, the public
offering price, concession and discount may be changed.
18
<PAGE>
ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS
The Company has granted an option to the International Managers,
exercisable during the 30-day period after the date of this Prospectus, to
purchase up to an aggregate of 240,000 additional shares of Common Stock at the
public offering price set forth on the cover page hereof, less the underwriting
discount. The International Managers may exercise this option only to cover
over-allotments, if any, made on the sale of shares of Common Stock offered
hereby. To the extent that the International Managers exercise this option, each
International Manager will be obligated, subject to certain conditions, to
purchase the number of additional shares of Common Stock proportionate to such
International Manager's initial amount reflected in the foregoing table. The
Company also has granted an option to the U.S. Underwriters, exercisable during
the 30-day period after the date of this Prospectus, to purchase up to an
aggregate of 960,000 additional shares of Common Stock to cover over-allotments,
if any, on terms similar to those granted to the International Managers.
The Lead Managers have advised the Company and the Selling Stockholder that
the International Managers and the U.S. Underwriters have entered into an
Intersyndicate Agreement (the 'Intersyndicate Agreement') that provides for the
coordination of their activities. Pursuant to the Intersyndicate Agreement, the
International Managers and the U.S. Underwriters are permitted to sell shares of
Common Stock to each other for purposes of resale at the public offering price,
less an amount not greater than the selling concession. Under the terms of the
Intersyndicate Agreement, the U.S. Underwriters and any dealer to whom they sell
shares of Common Stock will not offer to sell or sell shares of Common Stock to
persons who are non-United States and non-Canadian persons or to persons they
believe intend to resell to persons who are non-United States and non-Canadian
persons, and the International Managers and any dealer to whom they sell shares
of Common Stock will not offer to sell or sell shares of Common Stock to persons
who are United States persons or Canadian persons or to persons they believe
intend to resell to United States persons or Canadian persons, except in each
case for transactions pursuant to such agreement.
Each International Manager has agreed that (i) it has not offered or sold,
and it will not offer or sell, in the United Kingdom by means of any document
any shares of Common Stock other than to persons whose ordinary business it is
to buy or sell shares or debentures, whether as principal or agent, except in
circumstances which do not constitute an offer to the public within the meaning
of the Companies Act of 1985, (ii) it has complied and will comply with all
applicable provisions of the Financial Services Act of 1986 (the 'Financial
Services Act') with respect to anything done by it in relation to the Common
Stock in, from or otherwise involving the United Kingdom and (iii) it has only
issued or passed on and will only issue or pass on to any person in the United
Kingdom any document received by it in connection with the issuance of Common
Stock if that person is of a kind who is described in Article 9(3) of the
Financial Services Act of 1986 (Investment Advertisements) (Exemptions) Order
1988.
Purchasers of the shares offered hereby may be required to pay stamp taxes
and other charges in accordance with the laws and practice of the country of
purchase, in addition to the offering price set forth on the cover page hereof.
The Company, the Selling Stockholder and certain officers and directors of
the Company have agreed that they will not, directly or indirectly, for a period
of 90 days following the date of this Prospectus, except with the prior consent
of Merrill Lynch, on behalf of the Underwriters, sell, offer to sell, grant any
option for the sale of, or otherwise dispose of, any Common Stock. Calvin Klein,
Inc., which is the beneficial owner of 566,497 shares of Common Stock, has
agreed that it will not, directly or indirectly, until October 30, 1995, except
with prior consent of Merrill Lynch, on behalf of the Underwriters, sell, offer
to sell, grant any option for the sale of, or otherwise dispose of, any Common
Stock.
The Company and the Selling Stockholder have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act.
19
<PAGE>
ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS
LEGAL MATTERS
Certain legal matters with respect to the Common Stock offered hereby and
the validity of the Common Stock offered hereby will be passed upon for the
Company by Stanley P. Silverstein, Esq. Vice President, General Counsel and
Secretary of the Company, and by Skadden, Arps, Slate, Meagher & Flom, New York,
New York. Certain legal matters will be passed upon for the Underwriters by
Fried, Frank, Harris, Shriver & Jacobson (a partnership which includes
professional corporations), New York, New York. Mr. Silverstein owns 26,400
shares of Common Stock and options to acquire 64,000 shares of Common Stock.
EXPERTS
The consolidated financial statements of The Warnaco Group, Inc.
incorporated by reference in this Prospectus from the Company's Annual Report
(Form 10-K) for the fiscal year ended January 7, 1995, have been audited by
Ernst & Young, LLP, independent auditors, as set forth in their report, included
therein and incorporated herein by reference. Such financial statements are
incorporated herein by reference in reliance upon such firm as experts in
accounting and auditing.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
'Commission') a Registration Statement (which term shall encompass any
amendments thereto) on Form S-3 (the 'Registration Statement') under the
Securities Act of 1933, as amended (the 'Securities Act'), for the registration
of the Common Stock. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement, certain items of which are contained in exhibits to the
Registration Statement as permitted by the rules and regulations of the
Commission. For further information with respect to the Company and the Common
Stock, reference is made to the Registration Statement, including the exhibits
thereto, and the financial statements and notes filed or incorporated by
reference as a part thereof. Statements made in this Prospectus concerning the
contents of any document referred to herein are not necessarily complete. With
respect to each such document filed with the Commission as an exhibit to the
Registration Statement, reference is made to the exhibit for a more complete
description of the matter involved, and each such statement shall be deemed
qualified in its entirety by such reference. The Registration Statement and the
exhibits thereto filed by the Company with the Commission may be inspected at
the public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, or at its regional offices located
at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World
Trade Center, 13th Floor, New York, New York 10048. Copies of such material can
be obtained from the public reference section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. Such materials can
also be inspected at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005.
The Company is subject to the periodic reporting and other informational
requirements of the Securities Exchange Act of 1934, as amended (the 'Exchange
Act'), and, in accordance therewith, files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information filed with the Commission may be inspected and copied at the
locations described above. The Company will furnish all reports and other
information required by the periodic reporting and informational requirements of
the Exchange Act to the Commission and will furnish copies of such reports and
other information to the holders of the Common Stock.
20
<PAGE>
ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed by the Company with the Commission pursuant
to the Exchange Act are hereby incorporated by reference herein:
1. The Company's Annual Report on Form 10-K for the year ended January
7, 1995.
2. The Company's Current Report on Form 8-K, dated May 18, 1995.
3. The Company's Proxy Statement for the Company's 1995 Annual Meeting
of Shareholders held on May 11, 1995.
4. The Company's Quarterly Report on Form 10-Q for the quarter ended
April 8, 1995.
5. The Company's Quarterly Report on Form 10-Q for the quarter ended
July 8, 1995 (attached as Annex I to this Prospectus).
6. All other reports filed by the Company pursuant to Section 13(a) or
15(d) of the Exchange Act since January 7, 1995.
7. The description of the Common Stock which is contained in the
Company's Form 8-A dated September 10, 1991, including any
amendments or reports filed for the purpose of updating such
description.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act prior to the termination of the offering of the shares
of Common Stock hereunder shall be deemed to be incorporated by reference herein
and to be part hereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is incorporated or deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of any such person, a
copy of any and all of the documents that are incorporated by reference in this
Prospectus (other than exhibits to such documents unless such exhibits are
specifically incorporated by reference into such documents). Requests for such
copies should be directed to Stanley P. Silverstein, Vice President, General
Counsel and Secretary, The Warnaco Group, Inc., 90 Park Avenue, New York, New
York 10016, telephone (212) 661-1300.
21
<PAGE>
ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS
_____________________________________ _____________________________________
NO DEALER, SALESPERSON OR ANY OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THE SELLING STOCKHOLDER OR THE INTERNATIONAL MANAGERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY, THE CLASS A COMMON STOCK IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO
WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET
FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
THERE ARE RESTRICTIONS ON THE OFFER AND SALE OF CLASS A COMMON STOCK OFFERED
HEREBY IN THE UNITED KINGDOM. ALL APPLICABLE PROVISIONS OF THE FINANCIAL
SERVICES ACT OF 1986 AND THE COMPANIES ACT OF 1985 WITH RESPECT TO ANYTHING
DONE BY ANY PERSON IN RELATION TO THE CLASS A COMMON STOCK IN, FROM OR OTHERWISE
INVOLVING THE UNITED KINGDOM MUST BE COMPLIED WITH. SEE 'UNDERWRITING.'
IN THE PROSPECTUS, REFERENCES TO 'DOLLARS' AND '$' ARE TO UNITED STATES
DOLLARS.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Company.................................... 3
The Offerings.................................. 4
Risk Factors................................... 5
Selected Financial Information................. 6
Use of Proceeds................................ 8
Capitalization................................. 9
Price Range of Common Stock.................... 10
Dividend Policy................................ 10
Business....................................... 11
Management..................................... 14
Selling Stockholder............................ 15
Certain United States Federal Tax Consequences
to Non-U.S. Stockholders..................... 16
Underwriting................................... 18
Legal Matters.................................. 20
Experts........................................ 20
Available Information.......................... 20
Documents Incorporated by Reference............ 21
Annex I: Quarterly Report on Form 10-Q for the
fiscal quarter ended July 8, 1995
</TABLE>
8,000,000 SHARES
THE WARNACO GROUP, INC.
CLASS A COMMON STOCK
------------------------
PROSPECTUS
------------------------
MERRILL LYNCH INTERNATIONAL LIMITED
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BEAR, STEARNS INTERNATIONAL LIMITED
MORGAN STANLEY & CO.
INTERNATIONAL
UBS LIMITED
, 1995
_____________________________________ _____________________________________
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee................................ $69,400
Printing and Engraving............................................................. **
Legal Fees and Expenses............................................................ **
National Association of Securities Dealers fees.................................... 20,625
Blue Sky Qualifications and Expenses (including counsel fees)...................... **
New York Stock Exchange fees....................................................... **
Transfer Agent and Registrar fees.................................................. **
Miscellaneous...................................................................... **
-------
Total......................................................................... $
-------
-------
</TABLE>
------------
* All amounts except registration and National Association of Securities
Dealers fees are estimates.
** To be provided by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Reference is made to Section 102(b)(7) of the Delaware General Corporation
Law (the 'DGCL'), which enables a corporation in its original certificate of
incorporation or an amendment thereto to eliminate or limit the personal
liability of a director for violations of the director's fiduciary duty, except
(i) for any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) pursuant to Section
174 of the DGCL (providing for liability of directors for unlawful payment of
dividends or unlawful stock purchases or redemptions) or (iv) for any
transaction from which a director derived an improper personal benefit. The
Company has adopted an amendment to its Certificate of Incorporation, which
eliminates the liability of directors to the extent permitted by Section
102(b)(7) of the DGCL.
Reference is made to Section 145 of the DGCL which provides that a
corporation may indemnify directors and officers as well as other employees and
individuals against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement in connection with specified actions, suits or
proceedings, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation (a 'derivative action'));
if they acted in good faith and in a manner they reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe their conduct
was unlawful. A similar standard is applicable in the case of derivative
actions, except that indemnification only extends to expenses (including
attorneys' fees) incurred in connection with defense or settlement of such
action, and the statute requires court approval before there can be any
indemnification where the person seeking indemnification has been found liable
to the corporation. The statute provides that it is not exclusive of other
indemnification that may be granted by a corporation's charter, by-laws,
disinterested director vote, stockholder vote, agreement or otherwise. The
Bylaws of the Company provide for indemnification of its directors and officers
to the fullest extent permitted by Delaware law.
Reference is made to the Restated Certificate of Incorporation of the
Company and Article VIII of the Bylaws of the Company.
In addition, the Company maintains a directors' and officers' liability
insurance policy and has entered into indemnification agreements with each of
its executive officers and directors.
II-1
<PAGE>
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
---------- ------------------------------------------------------------------------------------------------------------
<S> <C>
1.1 -- Form of U.S. Purchase Agreement*
1.2 -- Form of International Purchase Agreement*
4.1 -- Restated Certificate of Incorporation of the Company. (Incorporated herein by reference to Exhibit 3.1 to
the Company's Registration Statement on Form S-1, File No. 33-45877.)
4.2 -- Amendment to Restated Certificate of Incorporation of the Company. (Incorporated by reference to Exhibit
3.1 to the Company's Form 10-Q filed on August 11, 1993.)
4.3 -- Amendment to Restated Certificate of Incorporation of the Company.*
4.4 -- By-Laws of the Company. (Incorporated herein by reference to Exhibit 3.2 to the Company's Registration
Statement on Form S-1, File No. 33-45877.)
4.5 -- Registration Rights Agreement, dated as of March 14, 1994 between the Company and CKI. (Incorporated
herein by reference to Exhibit 4.1 to the Company's Form 10-Q filed on May 24, 1994.)
5.1 -- Opinion of Stanley P. Silverstein, General Counsel of the Company, regarding the legality of the shares
of Common Stock being offered hereby.*
23.1 -- Consent of Ernst & Young, L.L.P. independent auditors.
23.2 -- Consent of Stanley P. Silverstein, General Counsel of the Company (included in Exhibit 5.1).
24.1 -- Power of Attorney (included on signature page).
</TABLE>
------------
* To be filed by amendment.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) That, for purposes of determining any liability under the
Securities Act, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(b) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared
effective.
(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.
(b) 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 (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in 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.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on August 9, 1995.
THE WARNACO GROUP, INC.
(Registrant)
By /s/ LINDA J. WACHNER
...................................
LINDA J. WACHNER
CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Linda J. Wachner, William S. Finkelstein and
Stanley P. Silverstein, and each of them, his or her true and lawful
attorneys-in-fact and agents, with full powers of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement (including any related registration
statement filed under Rule 462), and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents or any of them, or
their or his or her substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
------------------------------------------ -------------------------------------------- -------------------
<S> <C> <C>
/s/ LINDA J. WACHNER Chairman of the Board; Director; President August 9, 1995
......................................... and Chief Executive Officer (Principal
(LINDA J. WACHNER) Executive Officer)
/s/ WILLIAM S. FINKELSTEIN Director; Senior Vice President and Chief August 9, 1995
......................................... Financial Officer (Principal Financial
(WILLIAM S. FINKELSTEIN) Officer and Principal Accounting Officer)
/s/ JOSEPH A. CALIFANO, JR. Director August 9, 1995
.........................................
(JOSEPH A. CALIFANO, JR.)
/s/ ANDREW G. GALEF Director August 9, 1995
.........................................
(ANDREW G. GALEF)
Director
.........................................
(STEWART A. RESNICK)
/s/ ROBERT D. WALTER Director August 9, 1995
.........................................
(ROBERT D. WALTER)
</TABLE>
II-3
STATEMENT OF DIFFERENCES
The registered trademark shall be expressed as............. 'r'
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE NO.
-------- ------------------------------------------------------------------------------------------------ --------
<S> <C> <C>
1.1 -- Form of U.S. Purchase Agreement*.............................................................
1.2 -- Form of International Purchase Agreement*....................................................
4.1 -- Restated Certificate of Incorporation of the Company. (Incorporated herein by reference to
Exhibit 3.1 to the Company's Registration Statement on Form S-1, File No. 33-45877.)..........
4.2 -- Amendment to Restated Certificate of Incorporation of the Company. (Incorporated by reference
to Exhibit 3.1 to the Company's Form 10-Q filed on August 11, 1993.)..........................
4.3 -- Amendment to Restated Certificate of Incorporation of the Company.*..........................
4.4 -- By-Laws of the Company. (Incorporated herein by reference to Exhibit 3.2 to the Company's
Registration Statement on Form S-1, File No. 33-45877.).......................................
4.5 -- Registration Rights Agreement, dated as of March 14, 1994 between the Company and CKI.
(Incorporated herein by reference to Exhibit 4.1 to the Company's Form 10-Q filed on May 24,
1994.)........................................................................................
5.1 -- Opinion of Stanley P. Silverstein, General Counsel of the Company, regarding the legality of
the shares of Common Stock being offered hereby*..............................................
23.1 -- Consent of Ernst & Young, L.L.P. independent auditors........................................
23.2 -- Consent of Stanley P. Silverstein, General Counsel of the Company (included in Exhibit
5.1)..........................................................................................
24.1 -- Power of Attorney (included on signature page)...............................................
</TABLE>
------------
* To be filed by amendment.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-3) and related prospectus of The Warnaco Group, Inc. for the
registration of 9,200,000 shares of its Common Stock and to the incorporation by
reference therein of our report dated February 23, 1995, with respect to the
consolidated financial statements and schedules of The Warnaco Group, Inc.
included in its Annual Report (Form 10-K) for the year ended January 7, 1995,
filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
New York, New York
August 8, 1995
