<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 5, 2000
REGISTRATION NO.
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
DUANE READE INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 04-3164702 5912
(State or other jurisdiction (I.R.S. Employer (Primary Standard Industrial
of incorporation or organization) Identification No.) Classification Code Number)
</TABLE>
------------------------
440 NINTH AVENUE
NEW YORK, NEW YORK 10001
TELEPHONE: 212-273-5700
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------------
MR. ANTHONY J. CUTI
DUANE READE INC.
440 NINTH AVENUE
NEW YORK, NEW YORK 10001
TELEPHONE: 212-273-5700
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
COPIES TO:
STEVEN DELLA ROCCA, ESQ.
LATHAM & WATKINS
885 THIRD AVENUE, SUITE 1000
NEW YORK, NEW YORK 10022
TELEPHONE: 212-906-1200
TELECOPY: 212-751-4864
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: from time
to time after the effective date of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, 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, 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(d)
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. / /
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT OFFERING PRICE PER AGGREGATE OFFERING AMOUNT
SECURITIES TO BE REGISTERED TO BE REGISTERED SHARE(1) PRICE OF REGISTRATION FEE
<S> <C> <C> <C> <C>
common stock, par value $.01 per share 750,000 $25.15625 $18,867,188 $4,981
</TABLE>
------------------------------
1 Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 based on the average of the high and low prices
reported on the composite tape of the New York Stock Exchange, Inc. as of
June 29, 2000.
------------------------------
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.
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<PAGE>
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PROSPECTUS
, 2000
750,000 SHARES
DUANE READE INC.
COMMON STOCK
----------------------------------------------------------------------
THE COMPANY:
- We are the largest drug store chain in metropolitan New York. Our growth
strategy includes making opportunistic acquisitions of drug stores.
- Duane Reade Inc.
440 Ninth Avenue
New York, New York 10001
(212) 273-5700.
- Our common stock is currently traded on the New York Stock Exchange under
the symbol DRD.
THE TRANSACTION:
- This prospectus registers common stock we may issue in opportunistic
acquisitions of drug stores that we may make from time to time. These
acquisitions of businesses or assets will be made at negotiated prices.
The total number of shares issued to consummate any of these acquisitions
will be dependent on the prevailing market price of our common stock at
the time of acquisition.
- We do not expect to receive any cash proceeds when we issue common stock
registered by this prospectus.
--------------------------------------------------------------------------------
THIS INVESTMENT INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 2.
The common stock has not been approved or disapproved by the Securities and
Exchange Commission or by any State Securities Commission. Neither the
Securities and Exchange Commission nor any State Securities Commission has
passed upon the accuracy or adequacy of this prospectus. Any representation to
the contrary is a criminal offense.
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<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
WHERE YOU CAN FIND MORE INFORMATION......................... ii
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS........... ii
PROSPECTUS SUMMARY.......................................... 1
RISK FACTORS................................................ 2
INFORMATION ABOUT DUANE READE INC. INCORPORATED BY
REFERENCE................................................. 7
LEGAL MATTERS............................................... 8
EXPERTS..................................................... 8
</TABLE>
WHERE YOU CAN FIND MORE INFORMATION
Duane Reade files annual, quarterly and special reports, as well as proxy
statements and other information with the SEC. You may read and copy any of the
documents we file with the SEC at the SEC's Public Reference Room at 450 Fifth
Street, N.W., Washington, D.C. 20549 or at its Regional Offices located at 7
World Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. You may
obtain further information about the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0300. Our SEC filings are also available to the
public over the Internet at the SEC's web site at http://www.sec.gov. The SEC's
website also contains reports, proxy statements and other information regarding
registrants like Duane Reade that file electronically with the SEC.
This prospectus is part of a registration statement on Form S-4 we filed
with the SEC under the Securities Act of 1933, as amended. As permitted by SEC
rules, this prospectus does not contain all of the information included in the
registration statement and the accompanying exhibits filed with the SEC. You may
refer to the registration statement and its exhibits for more information.
You should rely only on the information provided in this prospectus and the
documents incorporated by reference in this prospectus. We have not authorized
anyone to provide you with different information. You should not assume that the
information in this prospectus is accurate as of any date other than the date on
the first page of the prospectus. We are not making an offer of our common stock
in any state or country in which the offer or sale is not permitted.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements of our intentions, beliefs, expectations or predictions for the
future, denoted by the words "believes," "expects," "may," "will," "should,"
"seeks," "pro forma," "anticipates," "intends" and similar expressions, are
forward-looking statements that reflect our current views about future events
and are subject to risks, uncertainties and assumptions. These risks,
uncertainties and assumptions include those identified in the "Risk Factors"
section of this prospectus and the following:
- our ability to compete in the drugstore industry generally and in the
metropolitan New York market;
- matters affecting retail drugstore businesses generally, such as
demographic changes, changes in costs of goods and services and labor
disturbances;
- changes in prevailing interest rates and the availability of and terms of
financing to fund growth in our business;
- liability and other claims against us;
- changes in our operating strategy or development plans;
- our ability to attract and retain qualified personnel;
- management of our cash resources, particularly in light of our substantial
leverage;
- changes in our acquisition strategy and capital expenditure plans;
- regulatory and other similar changes affecting the health care industry;
and
- industry-wide market facts and other general economic and business
conditions.
Actual results could differ materially from those projected in these
forward-looking statements as a result of these factors, many of which are
beyond our control.
ii
<PAGE>
PROSPECTUS SUMMARY
This document serves as a prospectus of Duane Reade Inc. to register 750,000
shares of our common stock that we plan to use to acquire the assets of various
drug stores from time to time. We may offer common stock from time to time in
connection with our acquisition of the assets or stock of individual drug stores
or drug store chains. The consideration for these acquisitions may consist of
any consideration permitted by applicable law, including, but not limited to,
issuances of our common stock, the assumption of liabilities, the payment of
cash, issuance of a note or other form of indebtedness or any combination of
these items.
The common stock we issue pursuant to this prospectus and applicable
prospectus supplement or post-effective amendment to acquire the assets or stock
of individual drug stores or drug store chains may be reoffered pursuant to this
prospectus by the holders thereof from time to time in transactions on the New
York Stock Exchange, in negotiated transactions, through the writing of options
on securities, or a combination of these methods of sale, at fixed prices that
may be changed, at market prices prevailing at the time of sale, at prices
relating to the prevailing market prices or at negotiated prices. These selling
holders may sell their shares of common stock to or through broker-dealers, and
the broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the selling holders or the purchasers of shares
for whom the broker-dealer may act as agent or to whom they may sell as
principal or both.
We will bear all expenses in connection with the registration of the common
stock being reoffered by selling holders, other than selling discounts and
commissions and fees and expenses of the selling holders. The terms for the
issuance of common stock may include provisions for the indemnification of the
selling holders for specified civil liabilities, including liabilities under the
Securities Act of 1933, as amended.
DUANE READE INC.
We are the largest drugstore chain in metropolitan New York, based on sales
volume, with 92 of our 153 stores located in Manhattan's high-traffic business
and residential districts as of March 25, 2000. Since opening our first store in
1960, we have successfully tailored our marketing and operating strategy to the
unique characteristics of New York, the largest and most densely populated
market in the United States.
1
<PAGE>
RISK FACTORS
THIS PROSPECTUS INCLUDES "FORWARD LOOKING STATEMENTS" WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE EXCHANGE ACT. ALTHOUGH
WE BELIEVE THAT OUR PLANS, INTENTIONS AND EXPECTATIONS REFLECTED IN OR SUGGESTED
BY SUCH FORWARD-LOOKING STATEMENTS ARE REASONABLE, WE CAN GIVE NO ASSURANCE THAT
OUR PLANS, INTENTIONS OR EXPECTATIONS WILL BE ACHIEVED. IMPORTANT FACTORS THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE FORWARD LOOKING
STATEMENTS WE MAKE IN THIS PROSPECTUS ARE SET FORTH BELOW AND ELSEWHERE IN THIS
PROSPECTUS. ALL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO US OR PERSONS ACTING
ON OUR BEHALF ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE FOLLOWING
CAUTIONARY STATEMENTS.
SUBSTANTIAL LEVERAGE--OUR SUBSTANTIAL INDEBTEDNESS REQUIRES US TO COMPLY WITH
VARIOUS FINANCIAL AND OPERATING RESTRICTIONS, AND MAY ADVERSELY AFFECT OUR
ABILITY TO OBTAIN FINANCING IN THE FUTURE AND REACT TO CHANGES IN OUR BUSINESS.
We have now and will continue to have a significant amount of indebtedness.
The following chart shows certain important credit statistics:
<TABLE>
<CAPTION>
AT MARCH 25, 2000
(DOLLARS IN THOUSANDS)
----------------------
<S> <C>
Total indebtedness (including capital leases)............... $351,455
Stockholders' equity........................................ $ 74,181
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 25, 1999 AT MARCH 25, 2000
-------------------- -----------------
<S> <C> <C>
Debt to equity ratio....................................... 5.13x 4.74x
</TABLE>
Our substantial indebtedness could have important consequences to you. These
consequences include:
- Our ability to obtain financing in the future for capital expenditures,
acquisitions, working capital or other purposes may be limited;
- A material portion of our cash flow from operations will be dedicated to
the payment of principal of and interest on our debt; and
- Our ability to withstand competitive pressures, and our flexibility to
respond to changing business and economic conditions, may be limited.
In addition, our substantial indebtedness subjects us and each of our
subsidiaries to various financial and operating restrictions and covenants which
could limit our ability to compete as well as our ability to expand. Such
covenants, among others, include:
- A limit on the amount of additional indebtedness that we may incur;
- A limit on our ability to pay dividends or make capital contributions to
our subsidiaries;
- A limit on our ability to make investments, loans and other payments,
enter into transactions with related parties and mergers and acquisitions;
and
- A requirement for us to maintain specified financial ratios and meet
specified financial tests.
Our and our subsidiaries' ability to comply with such restrictions and
covenants can be affected by events beyond our control, and there can be no
assurance that we or our subsidiaries will achieve operating results that would
permit compliance with such terms. A failure to comply with the covenants and
other terms of the indebtedness could result in events of default, which could
permit acceleration of the debt.
ADDITIONAL BORROWINGS AVAILABLE--DESPITE CURRENT INDEBTEDNESS LEVELS, WE AND OUR
SUBSIDIARIES MAY STILL BE ABLE TO INCUR SUBSTANTIALLY MORE DEBT. THIS COULD
FURTHER INCREASE THE RISKS DESCRIBED ABOVE.
2
<PAGE>
We and our subsidiaries may be able to incur substantial additional
indebtedness in the future. As of March 25, 2000, our senior credit agreement
would permit additional borrowings of up to $23.0 million. If new debt is added
to our and our subsidiaries' current debt levels, the related risks that we and
they now face could increase.
ABILITY TO SERVICE DEBT--TO SERVICE OUR INDEBTEDNESS, WE WILL REQUIRE A
SIGNIFICANT AMOUNT OF CASH. OUR ABILITY TO GENERATE CASH DEPENDS ON MANY FACTORS
BEYOND OUR CONTROL.
Our ability to make payments on and to refinance our indebtedness and to
fund planned capital expenditures will depend on our ability to generate cash in
the future. This, to some extent, is subject to general economic, financial,
competitive, legislative, regulatory and other factors that are beyond our
control.
Based on our current level of operations and anticipated growth, we believe
our cash flow from operations, available cash and available borrowings under our
senior credit agreement will be adequate to meet our future liquidity needs for
at least the next two years.
We cannot assure you, however, that we will be able to generate sufficient
cash flow from operations or that future borrowings will be available to us
under our senior credit agreement in an amount we will need to pay our
indebtedness or to fund our other liquidity needs. We may need to refinance all
or a portion of our indebtedness at or before maturity. We cannot assure you
that we will be able to refinance any portion of our indebtedness, including our
senior credit agreement, on commercially reasonable terms or at all.
Furthermore, our agreements with respect to our indebtedness, including the
senior credit agreement, contain numerous covenants that, among other things,
restrict our ability to:
- pay dividends and make certain other payments and investments;
- borrow additional funds;
- create liens; and
- sell our assets.
Failing to make debt payments or to comply with our covenants could result
in an event of default which, if not cured or waived, could have a material
adverse effect on us.
HOLDING COMPANY STRUCTURE--WE ARE DEPENDENT ON THE CASH FLOW OF OUR SUBSIDIARIES
AND DISTRIBUTIONS FROM OUR SUBSIDIARIES TO SERVICE OUR DEBT.
We are a holding company and do not have any material operations or assets
other than that we own a 99% general partnership interest of Duane Reade, a New
York general partnership, and all of the outstanding common stock of DRI
I Inc., Duane Reade International, Inc. and Duane Reade Realty, Inc. DRI I Inc.
owns the remaining 1% general partnership interest in Duane Reade. We currently
depend on the cash flow of our subsidiaries and distributions from our
subsidiaries to service our debt.
Any right that we have to participate in any distribution of the assets of
any of our subsidiaries upon liquidation, reorganization or insolvency (and your
consequent right to participate in the distribution of those assets) will be
subject to the prior claims of such subsidiary's creditors. Duane Reade is the
borrower under our senior credit agreement. All of our obligations under our
senior credit agreement are secured by substantially all of our assets and the
assets of Duane Reade, DRI I Inc., Duane Reade International, Inc. and Duane
Reade Realty, Inc.
COMPETITION--THE HIGH LEVEL OF COMPETITION IN OUR MARKETS COULD ADVERSELY AFFECT
OUR BUSINESS.
We operate in highly competitive markets. In metropolitan New York, we
compete against national, regional and local drugstore chains, discount
drugstores, supermarkets, combination food and drugstores,
3
<PAGE>
discount general merchandise stores, mass merchandisers, independent drugstores
and local merchants. Major chain competitors in the metropolitan New York market
include Rite-Aid, Genovese and CVS. Many of our competitors have greater
financial resources than we do. This competition could adversely affect our
results of operations and financial condition in the future. In addition to
competition from the foregoing, our pharmacy departments also compete with
hospitals, health maintenance organizations and mail order prescription drug
providers. Our drugstores compete, among other things, on the basis of
convenience of location and store layout, product mix, selection, customer
service and price. Competition with our pharmacy departments could also
adversely affect our results of operations and financial condition.
NET LOSSES--WE HAVE A HISTORY OF LOSSES.
We have experienced net losses for four of the past five fiscal years. We do
not expect to continue to incur net losses in the future, but events and
conditions both within and beyond our control will continue to affect our
results of operations. Factors that will affect our results of operations
include successfully continuing our growth strategy, continued performance of
our existing stores, competition and economic, financial, business and other
conditions. In the first quarter of fiscal 1998, we realized an extraordinary
loss of $23.6 million as a result of the early retirement of certain debt
securities and the repayment of a senior credit facility. If we had not realized
that loss, we would not have experienced a net loss in fiscal 1998. For the
fiscal year ended December 25, 1999, we had net income of $40.7 million, and for
the 13 weeks ended March 25, 2000, we had net income of $1.9 million.
ECONOMIC CONDITIONS AND REGIONAL CONCENTRATION--WE ARE HIGHLY DEPENDENT ON THE
ECONOMIC CONDITIONS OF METROPOLITAN NEW YORK.
Substantially all of our stores are located in the metropolitan New York
area. As a result, we are sensitive to economic and competitive conditions, the
regulatory environment and the availability of labor in that area. The success
of our future operations will be substantially affected by our ability to
compete effectively in the metropolitan New York area, and we can make no
prediction as to economic conditions in this region.
UNCERTAINTY OF LEASE RENEWALS--INABILITY TO RENEW OUR LEASES COULD ADVERSELY
AFFECT OUR BUSINESS.
We lease all of our stores. The average year of expiration of leases for
stores operating as of December 25, 1999 is 2009. Leases for 20 stores that
generated 11.6% of our net sales for fiscal 1999 are scheduled to expire before
the end of 2002. We have succeeded historically in renewing most of our store
leases when they have expired. However, we cannot assure you that we will
continue to be able to renew store leases on acceptable terms or at all. If we
are unable to renew store leases as they expire or find other favorable
locations at acceptable lease rates, our inability may adversely affect our
financial condition and results of operations.
RISKS ASSOCIATED WITH FUTURE GROWTH--WE MAY NOT BE ABLE TO REALIZE OUR PLANS FOR
CONTINUED GROWTH.
We have grown rapidly primarily through acquisitions and opening new stores.
We plan to continue to grow through these methods. Our operating complexity and
management responsibilities have and will continue to increase as we grow. Our
growth also requires that we continue to expand and improve our operating and
financial systems and to expand, train and manage our employee base. In
addition, as we continue to open new stores, we may be unable to hire a
sufficient number of qualified store personnel or successfully integrate them
into our business. Our inability to manage our growth effectively or to hire
additional qualified personnel could adversely affect our business and results
of operations.
Our expansion prospects also depend on a number of other factors, including,
among other things:
- economic conditions;
4
<PAGE>
- competition;
- consumer preferences;
- financing and working capital requirements;
- our ability to negotiate store leases on favorable terms; and
- the availability of additional warehouse space and new store locations.
In addition, as we continue with our plans to open additional stores, sales
at existing stores may decrease as customers shop at our newer stores. We may be
unable to effectively realize our plans for future growth.
RISKS ASSOCIATED WITH REGULATORY AND OTHER CHANGES IN THE HEALTH CARE
INDUSTRY--OUR OPERATIONS ARE SUBJECT TO CERTAIN TRENDS IN THE HEALTH CARE
INDUSTRY.
Pharmacy sales accounted for approximately 31.9% of our total sales for 1999
and approximately 34.7% of our total sales for the 13 weeks ended March 25,
2000. Pharmacy sales to managed care organizations, insurance companies,
employers and other third party payors accounted for approximately 81.2% of our
total pharmacy sales for 1999 and approximately 83.7% of our total pharmacy
sales for the 13 weeks ended March 25, 2000. The efforts of these third party
payors to contain costs have worked to decrease gross profit margin percentages
from sales of prescription drugs. However, we believe that penetration by these
third party payors in the metropolitan New York market will continue, and the
resulting increase in sales volume should help to mitigate the decrease in gross
profit margin percentages.
Health care reform initiatives of federal and state governments may also
affect our revenues from prescription drug sales. These initiatives include:
- proposals designed to significantly reduce spending on Medicare, Medicaid
and other government programs;
- changes in programs providing for reimbursement for the cost of
prescription drugs by managed care organizations, insurance companies,
employers and other third party payors; and
- regulatory changes relating to the approval process for prescription
drugs.
Such initiatives could lead to the enactment of federal and state
regulations that may adversely impact our prescription drug sales and,
accordingly, our results of operations.
REGULATORY MATTERS--OUR OPERATIONS ARE SUBJECT TO CERTAIN FEDERAL AND STATE LAWS
AND REGULATIONS.
Our business is subject to various federal and state regulations. For
example, the Omnibus Budget Reconciliation Act of 1990 and comparable state
regulations require our pharmacists to offer counseling, without additional
charge, to their customers about medication, dosage, delivery systems, common
side effects and other information the pharmacists deem significant. Our
pharmacists also may have a duty to warn customers regarding any potential
negative effects of a prescription drug if the warning could reduce or negate
these effects.
We are also subject to federal, state and local licensing and registration
regulations relating to, among other things, our pharmacy operations. We believe
that we have satisfied all of our licensing and registration requirements, and
we continue to actively monitor our compliance with such requirements. However,
violations of any of these regulations could result in various penalties,
including suspension or revocation of our licenses or registrations or monetary
fines, which could adversely effect our operations. Additionally, we are subject
to federal Drug Enforcement Agency regulations relating to our pharmacy
operations, including purchasing, storing and dispensing of controlled
substances.
5
<PAGE>
We are also subject to laws governing our employee relations, including
minimum wage requirements, overtime and working conditions. Increases in the
federal minimum wage rate, employee benefit costs or other costs associated with
employees could adversely affect our results of operations.
DEPENDENCE ON KEY PERSONNEL--A LOSS OF KEY PERSONNEL COULD ADVERSELY AFFECT US.
Our success depends to a large extent on our executive management team. We
have employment agreements with each of our five executive officers, but it is
possible that members of management may leave our Company, and such departures
could have a negative impact on our business. We do not maintain key-man life
insurance on any of our executive officers.
CONTINUED INFLUENCE OF PRINCIPAL STOCKHOLDERS.
Investment funds affiliated with DLJ Merchant Banking Partners II, L.P., an
affiliate of Donaldson, Lufkin & Jenrette, and some of its affiliates control
approximately 48% of our outstanding common stock. In addition, two of our six
directors are Managing Directors of DLJ Merchant Banking II, Inc., a general
partner of DLJ Merchant Banking Partners II, L.P., and one director is a Senior
Vice President of Donaldson, Lufkin & Jenrette. As a result, DLJ Merchant
Banking Partners II, L.P. has the ability (together with a small percentage of
other shareholders) to elect most of our directors and to control the vote on
all matters submitted to a vote of the holders of our common stock, including
any "going private transaction," merger, consolidation or sale of all or
substantially all of our assets. Our amended and restated certificate of
incorporation provides that any action that can be taken by a meeting of the
shareholders may be taken by written consent in lieu of a meeting.
ANTI-TAKEOVER EFFECTS
Provisions of our amended and restated certificate of incorporation and
amended and restated bylaws may inhibit changes in control in Duane Reade not
approved by our board of directors. These provisions, among other things,
(a) authorize the board of directors to issue preferred stock ranking senior to
the common stock without any action on the part of the shareholders and
(b) establish certain advance notice procedures for shareholder proposals
(including nominations of directors) to be considered at shareholders' meetings.
In addition, Section 203 of the Delaware General Corporation Law restricts
certain persons from engaging in business combinations with Duane Reade.
RESTRICTIONS ON PAYMENT OF DIVIDENDS ON COMMON STOCK
Since 1993, we have not declared or paid cash or other dividends on our
common stock and do not expect to pay dividends for the foreseeable future. Our
senior credit agreement and our senior notes indenture also contains certain
covenants that restrict our ability to pay dividends. If these restrictions are
removed, any future cash dividends will depend upon our results of operations,
financial conditions, cash requirements, the availability of a surplus and other
factors.
COLLECTIVE BARGAINING AGREEMENTS--MOST OF OUR EMPLOYEES ARE REPRESENTED BY
VARIOUS LABOR UNIONS AND ARE COVERED BY COLLECTIVE BARGAINING AGREEMENTS.
As of December 25, 1999, approximately 3,500 of our approximately 5,000
employees were represented by various labor unions and were covered by
collective bargaining agreements. These labor unions include:
- The International Brotherhood of Teamsters, Chauffeurs and Warehousemen
and Helpers of America, Local 815, which represents our distribution
facility employees. Our three year contract with this union expires on
August 31, 2002.
- The Allied Trade Council, which represents most of our store employees.
Our three-year contract with the Allied Trade Council expires on
August 31, 2001.
6
<PAGE>
- [The National Health and Human Services Employees Union AFL-CIO, Local
1199, which, as a result of our acquisition of the Rock Bottom stores,
represents store employees of 16 stores. We are currently in negotiation
with Local 1199 and expect to have a completed contract within the next
several months. The 16 stores represented by Local 1199 have been
operating uninterrupted without a contract since we acquired them.]
- Local 34A New York Joint Board, which, as a result of our acquisition of
the Rock Bottom Stores, represents store employees of 2 stores. The
contract with the Local 34A New York Joint Board expires September 21,
2002.
We have not experienced any material business interruption as a result of
labor disputes within the past 15 years, and we consider our employee relations
to be good. However, upon the expiration of any of our collective bargaining
agreements, we may be unable to negotiate new collective bargaining agreements
on terms favorable to us, and our business operations may be interrupted as a
result of labor disputes or difficulties or delays in the process of
renegotiating our collective bargaining agreements. In these events, our results
of operations could be adversely affected.
POSSIBLE VOLATILITY OF STOCK PRICE
The market price for shares of the common stock may be volatile and may
fluctuate based upon a number of factors, including many that are beyond our
control, such as Duane Reade's business performance, general industry trends,
new announcements by competitors, changes in the regulatory environment or in
general, political, market and economic conditions.
SHARES ELIGIBLE FOR FUTURE SALE
As of June 29, 2000, we had 17,584,217 shares of common stock outstanding.
The shares of common stock registered by this prospectus will be freely tradable
without restriction or further registration under the Securities Act of 1933, as
amended (the "Securities Act"), unless held by an "affiliate" of our Company, as
that term is defined under Rule 144 under the Securities Act ("Rule 144"), and
those shares will be subject to the resale limitations of Rule 144. In addition,
some of our stockholders who own 8,291,763 shares of common stock have the right
to require the Company to register the common stock held by them at any time. In
addition to these registration rights, approximately 8,535,354 shares of common
stock are eligible for sale subject to certain volume and other limitations of
Rule 144 applicable to our "affiliates". We cannot predict the effect, if any,
that market sales of shares of common stock or the availability of shares of
common stock for sale will have on the market price of the common stock from
time to time. The sale of a substantial number of shares held by the existing
stockholders, whether pursuant to a subsequent public offering or otherwise, or
the perception that such sales could occur, could adversely affect the market
price of the common stock and could materially impair our future ability to
raise capital through an offering of equity securities.
INFORMATION ABOUT DUANE READE INC. INCORPORATED BY REFERENCE
The following documents filed with the Commission pursuant to the Exchange
Act are incorporated by reference in this prospectus:
(1) Our Annual Report on Form 10-K for the year ended December 25, 1999;
(2) Our Quarterly Report on Form 10-Q for the quarter ended March 25, 2000;
(3) all other documents subsequently filed by us pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this prospectus
which shall be deemed to be a part hereof from the date of filing such
documents; and
7
<PAGE>
(4) the description of our common stock as set forth in our Registration
Statement on Form S-1, which was filed on November 29, 1997 pursuant to
Section 12 of the Exchange Act, and any amendment or report filed for the
purpose of updating such description.
Any statement contained in a document incorporated or deemed to be
incorporated by reference in this prospectus 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.
We will provide without charge to each person, including any beneficial
owner, to whom this Prospectus is delivered, upon request, a copy of any
documents incorporated into this Prospectus by reference but not delivered with
the prospectus.
REQUESTS FOR DOCUMENTS SHOULD BE SUBMITTED TO JOHN HENRY, SENIOR VICE
PRESIDENT, DUANE READE INC., 440 NINTH AVENUE, NEW YORK, NEW YORK 10001,
(212) 273-5700.
LEGAL MATTERS
The validity of the shares being offered hereby will be passed upon for us
by Latham & Watkins, New York, New York. Latham & Watkins also represented DLJ
Merchant Banking Partners II, L.P. in connection with our recapitalization in
June 1997.
EXPERTS
The consolidated financial statements incorprated in this prospectus by
reference to our Annual Report on Form 10-K for the year ended December 25, 1999
have been so incorporated in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on authority of said firm as experts in
auditing and accounting.
8
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
, 2000
DUANE READE INC.
750,000 SHARES OF COMMON STOCK
---------------------
PROSPECTUS
---------------------
--------------------------------------------------------------------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT
CONTAINED IN THIS PROSPECTUS. WE ARE OFFERING TO SELL, AND SEEKING OFFERS TO
BUY, COMMON STOCK ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED.
THE INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS OF THE DATE OF
THIS PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS PROSPECTUS OR OF ANY
SALE OF COMMON STOCK.
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--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
PART II--INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Duane Reade Inc. (the "Company") is incorporated under the laws of the State
of Delaware. Section 145 of the General Corporation Law of the State of Delaware
("Section 145") provides that a Delaware corporation may indemnify any person
who is, or is threatened to be made, a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of such corporation), by
reason of the fact that such person was an officer, director, employee or agent
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided such person acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
corporation's best interests and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that his conduct was illegal. A
Delaware corporation may indemnify any person who is, or is threatened to be
made, a party to any threatened, pending or completed action or suit by or in
the right of the corporation by reason of the fact that such person was a
director, officer, employee or agent of such corporation, or is or was serving
at the request of such corporation as a director, officer, employee or agent of
another corporation or enterprise. The indemnity may include expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
with the defense or settlement of such action or suit, provided such person
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the corporation's best interests except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation. Where an officer or director is successful on the
merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses which such officer or
director has actually and reasonably incurred.
The Company's Amended and Restated Certificate of Incorporation provides for
the indemnification of directors and officers of the Company to the fullest
extent permitted by Section 145.
In that regard, the Amended and Restated Certificate of Incorporation
provides that the Company shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director or officer of such corporation, or is or was
serving at the request of such corporation as a director, officer or member of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of such
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Indemnification in
connection with an action or suit by or in the right of such corporation to
procure a judgment in its favor is limited to payment of settlement of such an
action or suit except that no such indemnification may be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
indemnifying corporation unless and only to the extent that the Court of
Chancery of Delaware or the court in which such action or suit was brought shall
determine that, despite the adjudication of liability but in consideration of
all the circumstances of the case, such person is fairly and reasonably entitled
to indemnity for such expenses which the court shall deem proper.
II-1
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The following documents are filed as a part of this report:
Exhibits:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
5.1 Opinion of Latham & Watkins.
24.1 Consent of PricewaterhouseCoopers LLP.
24.5 Consent of Latham & Watkins (contained in Exhibit 5.1).
25.1(I) Power of Attorney for Anthony J. Cuti, John K. Henry, Nicole
S. Arnaboldi, David L. Jaffe, David W. Johnson, Carl M.
Pradelli and Kevin Roberg.
</TABLE>
(b) Financial Statement Schedules:
Schedules for which provision is made in the applicable accounting
regulations of the SEC are either not required under the related instructions,
are inapplicable or not material, or the information called for thereby is
otherwise included in the financial statements incorporated by reference and
therefore has been omitted.
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to the registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registration hereby undertakes:
(1) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to
section 13(a) or section 15(d) of the Securities Exchange Act of 1934 and
(and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof;
(2) That every prospectus that (i) is filed pursuant to paragraph (1)
immediately preceding, or (ii) that purports to meet the requirements of
section 10(a)(3) of the Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an amendment to
the registration statement and will not be used until such amendment is
effective, and that, for purposes of determining any liability under the
Securities Act of 1933, 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.
(g) The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through the use of
a prospectus which is a part of this registration
II-2
<PAGE>
statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus
will contain the information called for by Form S-4 with respect to reofferings
by persons who may be deemed underwriters, in addition to the information called
for by the other Items of Form S-4.
(h) 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 SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, 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.
(i) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of a registration statement in reliance upon Rule 430A and contained in the
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of the
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the city of New York, New York on
July 5, 2000.
<TABLE>
<S> <C> <C>
DUANE READE INC.
(Registrant)
By: /s/ JOHN K. HENRY
-----------------------------------------
John K. Henry
Name: John K. Henry
Title: Senior Vice President
and Chief Financial Officer
</TABLE>
II-4
<PAGE>
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Anthony J. Cuti and John K. Henry and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities (including his capacity as a director and/or officer of
Duane Reade Inc.), to sign any or all amendments (including post-effective
amendments) to this registration statement and any subsequent registration
statement filed pursuant to Rule 462(b) under the Securities Act of 1933, 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 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 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 and Power of Attorney have been signed on July 5, 2000 by
the following persons in the capacities indicated with respect to Duane
Reade Inc.:
<TABLE>
<CAPTION>
SIGNATURES CAPACITIES
---------- ----------
<C> <S>
/s/ ANTHONY J. CUTI
------------------------------------------- President and Chief Executive Officer and
Anthony J. Cuti Director (Principal Executive Officer)
/s/ JOHN K. HENRY
------------------------------------------- Senior Vice President--Chief Financial Officer
John K. Henry (Chief Accounting Officer)
/s/ NICOLE S. ARNABOLDI
------------------------------------------- Director
Nicole S. Arnaboldi
/s/ DAVID L. JAFFE
------------------------------------------- Director
David L. Jaffe
/s/ DAVID W. JOHNSON
------------------------------------------- Director
David W. Johnson
/s/ CARL M. PRADELLI
------------------------------------------- Director
Carl M. Pradelli
/s/ KEVIN ROBERG
------------------------------------------- Director
Kevin Roberg
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
The following documents are the exhibits to this Registration Statement on
Form S-4. For convenient reference, each exhibit is listed according to the
Exhibit Table of Regulation S-K. The page number, if any, listed opposite an
exhibit indicates the page number in the sequential numbering system in the
manually signed original of this Registration Statement on Form S-4 where such
exhibit can be found.
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NUMBER EXHIBIT NUMBER
--------------------- ------- ----------
<C> <S> <C>
5.1 Opinion of Latham & Watkins
24.1 Consent of PricewaterhouseCoopers LLP.
</TABLE>
II-6
