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Rule 424(b)(1)
File No.333-06751
PROSPECTUS
203,066 SHARES
CHIC BY H.I.S, INC.
COMMON STOCK
All of the shares of Common Stock, par value $.01 per share ("Common
Stock"), of Chic by H.I.S, Inc. (the "Company") offered hereby (the
"Offering") may be sold from time to time by the selling stockholder named
herein (the "Selling Stockholder") in transactions on the New York Stock
Exchange (the "NYSE") or otherwise at prices and on terms prevailing at the
time of sale, at prices related to the then-current market price or in
negotiated transactions or otherwise. See "Plan of Distribution." The
aggregate proceeds to the Selling Stockholder from the sale of the Common
Stock offered hereby will be the purchase price thereof, less the aggregate
brokerage commissions, agent's discount or underwriter's discount, if any, and
the expenses of distribution not borne by the Company. The Company will not
receive any of the proceeds from the sale of Common Stock offered hereby. All
expenses incurred in connection with this Offering, estimated at $15,854, will
be borne by the Company, other than any commissions or discounts paid or
allowed by the Selling Stockholder to underwriters, dealers, brokers or
agents.
All of the shares of Common Stock offered hereby have been
"restricted securities" under the Securities Act of 1933, as amended (the
"Securities Act"), prior to their registration under the registration
statement of which this Prospectus is a part.
The Common Stock is traded on the NYSE under the symbol "JNS." On
July 3, 1996, the last reported sales price of the Common Stock on the NYSE
was $5.00 per share.
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SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD
BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is July 5, 1996
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RISK FACTORS
The Private Securities Litigation Reform Act of 1995 provides a
"safe harbor" for forward-looking statements. Except for the historical
information contained or incorporated by reference in this Prospectus, the
matters discussed or incorporated by reference herein are forward-looking
statements. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results,
performance, or achievements of the Company, or industry results, to be
materially different from any future results, performance, or achievements
expressed or implied by such forward-looking statements. Such factors
include, among others, the risk factors set forth below as well as the
following: general economic and business conditions; industry capacity;
fashion, apparel and other industry trends; competition; overseas expansion;
the loss of major customers; changes in demand for the Company's products;
cost and availability of raw materials; changes in business strategy or
development plans; quality of management; and availability, terms and
deployment of capital. Special attention should be paid to such
forward-looking statements including, but not limited to, statements relating
to the Company's ability to obtain sufficient financial resources to meet its
capital expenditures and working capital needs, financial risks associated
with customers experiencing financial difficulties, the benefits expected to
be derived from the restructuring described in certain documents incorporated
by reference into this Prospectus, international expansion and competition.
An investment in the Common Stock offered hereby involves a high
degree of risk. In addition to the other information contained in this
Prospectus, prospective investors should carefully consider the following risk
factors before purchasing the Common Stock offered hereby.
Dependence on Major Customers. The Company's two largest customers,
Kmart Corporation ("K-Mart") and Target, a division of Dayton Hudson
Corporation ("Target"), together accounted for approximately 35% and 37% of
the Company's consolidated net sales during fiscal 1994 and fiscal 1995,
respectively. Each of these customers accounted for more than ten percent of
the Company's consolidated net sales in such periods. The loss of either
K-Mart or Target could have an adverse effect on the results of the Company's
operations. In addition, several of the Company's licensees sell products
bearing the Company's trademarks to the same retailers, including K-Mart. The
Company has no long-term commitments or long-term contracts with any of its
customers.
Recent Apparel Industry Trends. Competition in the apparel industry
has been exacerbated by the recent consolidations and closings of major
stores. Like many of its competitors, the Company sells to certain retailers
who have recently experienced financial difficulties and some of whom are
currently operating under the protection of the federal bankruptcy laws.
Although the Company monitors the financial condition of its customers, the
Company cannot predict what effect, if any, the financial condition of such
customers will have on the Company. The Company believes that developments to
date within these companies have not had a material adverse effect on the
Company's financial position or results of operations. Although the Company
currently does not manufacture in foreign countries for the domestic market,
as new opportunities arise for manufacturing in foreign countries for the
domestic market (either through subcontractors or on a direct basis), such as
opportunities presented by the North American Free Trade Agreement or changes
in international economic conditions, the Company and its competitors may
avail themselves of any advantages of manufacturing in foreign countries,
which may tend to increase competition. In this regard, the Company is
currently seeking to establish manufacturing operations in Mexico.
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Nature of Industry; Dependence on Jeans. The apparel industry is
highly competitive and characterized generally by ease of entry. Many of the
Company's competitors are substantially larger and have greater financial,
marketing and other resources than the Company. The Company's revenues are
derived principally from sales of jeans products. Although the Company's
products for the domestic market have historically been less sensitive to
fashion trends than higher fashion lines, the apparel industry is subject to
rapidly changing consumer preferences, which may have an adverse effect on the
results of the Company's operations if the Company materially misjudges such
preferences.
Dependence on Key Personnel. The Company depends on the services of
certain key personnel, including Mr. Burton M. Rosenberg, the Chairman of the
Board and Chief Executive Officer of the Company. The Company believes that
the loss of the services of any of these key personnel could have an adverse
effect on the results of the Company's operations.
Risks of Doing Business Overseas. The Company's sales and earnings
attributable to its European operations have generally been increasing in
recent years and may in the future constitute a greater proportion of the
Company's sales and earnings. In general, the Company believes that the
demand for jeans in foreign markets is more susceptible to changes in fashion
preferences than in the domestic market. In addition, it is not possible to
predict accurately the effect that the continued elimination of trade barriers
among members of the European Union will have on the Company's operations in
Europe. The Company is also expanding its activities in Eastern Europe, where
economic, political and financial conditions are changing rapidly, and is
currently seeking to establish manufacturing operations in Mexico. In
general, there can be no assurance that the results of the Company's European
operations or any operations in Mexico that the Company may establish will not
be adversely affected by factors such as restrictions on transfer of funds,
political instability, competition, the relative strength of the U.S. dollar,
changes in fashion preferences and general economic conditions.
Absence of Dividends. The Company has not, in recent years, paid
any cash or other dividends on its Common Stock, and there can be no assurance
that the Company will pay cash dividends in the foreseeable future. As a
holding company, the ability of the Company to pay dividends is dependent upon
the receipt of dividends or other payments from its subsidiaries. The
Company's domestic credit agreements (the "Loan Agreements") contain certain
limitations on the Company's ability to pay dividends. In addition, an
agreement between h.i.s. sportswear GmbH, the Company's wholly owned German
subsidiary ("Sportswear"), and one of its lenders would prohibit Sportswear
from paying dividends to the Company under certain circumstances.
Influence on the Company. Kenbarb Corp., a Delaware corporation
("Kenbarb"), holds approximately 3.7% of the outstanding shares of Common
Stock. The stockholders of Kenbarb are all officers of the Company. By
virtue of a voting trust agreement among such stockholders, Mr. Rosenberg
controls Kenbarb and therefore will have the power to vote the outstanding
shares of Common Stock of the Company that are held by Kenbarb. In addition,
by virtue of voting trust agreements with certain stockholders of the Company,
Mr. Rosenberg effectively controls the vote of approximately 6.7% of the
outstanding shares of Common Stock (excluding the shares of Common Stock
offered hereby). See "Selling Stockholder." Mr. Rosenberg is also the voting
trustee under a voting trust agreement with certain officers of the Company
who have received options to purchase shares of Common Stock under the
Company's 1993 Stock Option Plan, as amended. Pursuant to such voting trust
agreement, such officers have agreed to deposit in the voting trust any shares
of Common Stock issued to them upon their exercise of any of their options.
Accordingly, Mr. Rosenberg, together with Mr. Jesse S. Siegel (who is
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a director and owns approximately 8.7% of the outstanding shares of Common
Stock), may have the ability to influence the policies and affairs of the
Company.
Leverage and Financial Covenants. Although the Company's initial
public offering in February 1993 and the other components of its refinancing
plan (the "Refinancing Plan") improved the Company's operating and financial
flexibility, the Company continues to have indebtedness that could adversely
affect its ability to respond to changing business and economic conditions.
At November 4, 1995, the Company had an aggregate of approximately $86.3
mil-lion of indebtedness (including capital leases) outstanding and the
Company's stockholders' equity was approximately $113.4 million. In
addition, the Company's Loan Agreements contain covenants that impose certain
operating and financial restrictions on the Company. Such restrictions
affect, and in many respects limit or prohibit, among other things, the
ability of the Company to incur additional indebtedness, create liens, sell
assets, engage in mergers or acquisitions, make capital expenditures and pay
dividends.
Anti-Takeover Provisions. Certain provisions in the Company's
charter documents, such as the authorization of "blank check" preferred stock,
could have the effect of discouraging certain attempts to acquire the Company
or remove incumbent directors even if some of the Company's stockholders deem
such an attempt to be in the Company's and their best interest. Management
and affiliates of the Company may be deemed to have effective control of the
Company, which may give management and such affiliates the ability to
influence the election of directors and other stockholder actions.
Future Sales of Common Stock. In connection with the Refinancing
Plan, the Company issued to its then lenders and to Mr. Jesse Siegel an
aggregate of 1,913,644 shares of Common Stock, which shares were not
registered in the initial public offering. The Company granted to such
lenders and Mr. Siegel certain registration rights with respect to such
shares. In June 1994, 659,421 of the 1,913,644 shares were sold by three of
the four lenders in a registered secondary public offering. In February 1995,
753,623 of such shares were registered by the Company for sale by the
remaining lender in a public shelf offering. The remaining 500,000 shares,
which are held by Mr. Siegel, are "restricted securities" as that term is
defined in Rule 144 under the Securities Act and may be sold under certain
circumstances without registration pursuant to such rule. The Company also
granted certain registration rights to the representatives of the underwriters
of its initial public offering with respect to 600,000 shares of Common Stock
underlying warrants sold to such representatives at the time of such offering
and to the holders of the 838,545 shares of Common Stock outstanding
(including the shares of Common Stock offered hereby) immediately prior to the
initial public offering. The Company expects that certain of such
stockholders or warrantholders or both may wish to sell shares of Common Stock
in the relatively near future, either through the exercise of their
registration rights or pursuant to Rule 144 or both.
No prediction can be made as to the effect, if any, that future
sales of shares of Common Stock, or the availability of shares of Common Stock
for future sale, will have on the market price of the Common Stock prevailing
from time to time. Sales of substantial amounts of Common Stock in the public
market, or the perception that such sales could occur, could adversely affect
prevailing market prices for the Common Stock. If such sales reduce the
market price of the Common Stock, the Company's ability to raise additional
capital in the equity markets could be adversely affected.
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THE COMPANY
The Company designs, manufactures and markets moderately priced,
basic style, cotton denim jeans, casual pants and shorts for women, girls, men
and boys, which are sold throughout the United States principally through mass
merchandisers. The Company also markets similar apparel in Europe, primarily
in Germany. In the United States, women's and girls' jeans and casual pants
are generally marketed under the Chic<reg-trade-mark> brand name, and
men's and boys' jeans and casual pants are generally marketed under the H.I.S
<reg-trade-mark> brand name, while in Europe all of the Company's apparel
is sold under the H.I.S brand name.
The Company licenses the use of its trademarks, primarily the Chic
brand name, to approximately 30 domestic licensees for a variety of products,
including women's sportswear, fleece activewear, intimate apparel,
accessories, hosiery and athletic and casual footwear. Most of these products
complement apparel products manufactured by the Company.
Unless the context indicates otherwise, the term "Company," as used
in this Prospectus, refers to Chic by H.I.S, Inc., its subsidiaries and its
predecessors. The Company's executive offices are located at 1372 Broadway,
New York, New York 10018, and its telephone number is (212) 302-6400.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of
shares of Common Stock offered hereby, nor will any such proceeds be available
for use by the Company or otherwise for the Company's benefit.
SELLING STOCKHOLDER
The shares of Common Stock offered hereby are being registered
pursuant to the demand of Nancy E. Siegel Jaffee (the "Selling Stockholder")
pursuant to a Registration Rights Agreement, dated as of January 22, 1993,
among the Company, the Selling Stockholder and certain other parties. Prior
to the Offering, as of June 19, 1996, the Selling Stockholder beneficially
owned 203,066 shares of Common Stock, representing approximately 2.1% of the
outstanding Common Stock. Such shares were previously subject to a voting
trust agreement under which Burton M. Rosenberg is the voting trustee. All of
such shares have been released from the voting trust and are being offered
hereby.
PLAN OF DISTRIBUTION
The Selling Stockholder has advised the Company that she may from
time to time offer and sell the shares of Common Stock offered hereby on the
New York Stock Exchange (the "NYSE"), in privately negotiated transactions or
otherwise at prices prevailing in such market or as may be negotiated at the
time of sale. Such shares may also be publicly offered through agents,
underwriters or dealers, in which event the Selling Stockholder may enter into
agreements with respect to such offering. In effecting sales, brokers and
dealers engaged by the Selling Stockholder may arrange for other brokers or
dealers to participate. Brokers or dealers will receive usual and customary
commissions or discounts from the Selling Stockholder in amounts to be
negotiated (and, if any such broker-dealer acts as agent for the
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purchaser of
such shares, from such purchaser). Brokers or dealers may agree with the
Selling Stockholder to sell a specified number of shares at a stipulated price
per share and, to the extent such a broker or dealer is unable to do so acting
as agent for the Selling Stockholder, to purchase as principal any unsold
shares at the price required to fulfill the broker-dealer commitment to the
Selling Stockholder. Brokers or dealers who acquire shares as principal may
thereafter resell such shares from time to time in transactions (which may
involve crosses and block transactions and which may involve sales to and
through other brokers or dealers, including transactions of the nature
described above) on the NYSE, in negotiated transactions or otherwise, at
market prices prevailing at the time of sale or at negotiated prices or
otherwise, and in connection with such resales may pay to or receive from the
purchasers of such shares commissions as described above.
All expenses incurred in connection with the registration of the
shares offered hereby, estimated at $15,854, will be borne by the Company,
except that any brokerage commissions or discounts paid or allowed by the
Selling Stockholder to brokers, agents, underwriters or dealers shall be
payable by the Selling Stockholder. In connection with any sales, the Selling
Stockholder and any brokers participating in such sales may be deemed to be
"Underwriters" within the meaning of the Securities Act, and any commissions
received by them and any profit on the resale of shares sold by them may be
deemed to be underwriting discounts or commissions.
LEGAL MATTERS
The validity of the securities offered hereby has been passed upon
for the Company by Paul, Weiss, Rifkind, Wharton & Garrison, 1285 Avenue of
the Americas, New York, New York 10019-6064.
EXPERTS
The consolidated financial statements and schedules of the Company
incorporated by reference herein and in the Registration Statement have been
audited by BDO Seidman, LLP, independent certified public accountants, to the
extent and for the periods set forth in their reports with respect thereto,
and are incorporated by reference herein and in the Registration Statement in
reliance upon such reports given upon the authority of said firm as experts in
accounting and auditing.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (the "Registration
Statement") (which term encompasses any amendments thereto) under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
shares of Common Stock offered hereby. This Prospectus, which is a part of
the Registration Statement, does not contain all the information set forth in
the Registration Statement and the exhibits thereto.
The Company is subject to the 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. Copies of such reports, proxy statements and other
information, as well as the Registration Statement and the exhibits thereto,
filed by the
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Company with the Commission may be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the regional offices of the Commission
located at 7 World Trade Center, Suite 1300, New York, New York 10048, and at
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of
such material may also be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. In addition, reports and other information concerning the Company can
be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad
Street, New York, New York 10005, on which the Common Stock is listed.
DOCUMENTS INCORPORATED BY REFERENCE
The Company incorporates herein by reference the following documents
filed with the Commission under the Exchange Act: (a) the Company's Annual
Report on Form 10-K for the fiscal year ended November 4, 1995, as amended;
(b) the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended
February 3, 1996, as amended; (c) the Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended May 4, 1996; and (d) the description of the
Common Stock contained in the Company's Registration Statement on Form 8-A
filed on February 12, 1993, as amended.
All documents filed with the Commission by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
of this Prospectus and prior to the termination of the offering registered
hereby shall be deemed to be incorporated by reference into this Prospectus
and to be a part hereof from the date of the filing of such documents. Any
statement contained in a document incorporated or deemed to be incorporated
by reference 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
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any 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 a
copy of this Prospectus is delivered, upon the written or oral request of such
person, a copy of any or all of the documents incorporated by reference
herein (other than exhibits to such documents, unless such exhibits are
specifically incorporated by reference into the documents that this
Prospectus incorporates). Written or telephone requests should be directed to
Chief Financial Officer, Chic by H.I.S, Inc., 1372 Broadway, New York, New
York 10018, telephone (212) 302-6400.
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TABLE OF CONTENTS
Page
Risk Factors 2
The Company 5
Use of Proceeds 5
Selling Stockholder 5
Plan of Distribution 5
Legal Matters 6
Experts 6
Available Information 6
Documents Incorporated by
Reference 7
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED
IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR THE SELLING STOCKHOLDER. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN
THE REGISTERED SECURITIES TO WHICH IT RELATES. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL.
203,066 Shares
CHIC BY H.I.S, INC.
Common Stock
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PROSPECTUS
_____________
July 5, 1996
