PROSPECTUS Registration No. 333-110598
Filed Pursuant to 424(b)(3)
776,400 SHARES
OXFORD INDUSTRIES, INC.
COMMON STOCK
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This prospectus relates to the offering from time to time of up to
776,400 shares of common stock of Oxford Industries, Inc. by certain of our
shareholders. All of these shares are currently held by the selling
shareholders.
We will not receive any of the proceeds from the sale of the shares
being offered. We are registering these shares for resale, but the registration
of such shares does not necessarily mean that any of the shares will be offered
or sold by the selling shareholders.
Sales of the common stock may be effected from time to time in one or
more transactions on the New York Stock Exchange or otherwise at a fixed price
or prices, which may be changed, at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. The selling shareholders from time to time may offer and sell the shares
directly to purchasers or through agents, underwriters or dealers on terms to be
determined at the time of sale. If required, the names of any agents,
underwriters or dealers and any other required information will be set forth in
an accompanying prospectus supplement.
Our common stock is listed on the New York Stock Exchange under the
symbol "OXM." On March 23, 2004, the last reported sale price of our common
stock on the New York Stock Exchange was $44.37 per share. The shares of our
common stock offered pursuant to this prospectus have been listed on the New
York Stock Exchange. Any shares issued to the selling shareholders in the future
will be listed on the New York Stock Exchange at the time of issuance.
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INVESTING IN OUR COMMON STOCK INVOLVES MATERIAL RISKS. SEE "RISK
FACTORS" BEGINNING ON PAGE 4 FOR A DISCUSSION OF THESE RISKS.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this prospectus is March 24, 2004.
TABLE OF CONTENTS
About This Prospectus........................................................ 2
Where You Can Find More Information.......................................... 2
Oxford Industries, Inc....................................................... 3
Risk Factors................................................................. 4
Forward-Looking Statements................................................... 17
Use of Proceeds.............................................................. 18
Selling Shareholders......................................................... 19
Validity of Common Stock..................................................... 22
Experts...................................................................... 22
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with
the SEC using a "shelf" registration process. Under this shelf process, the
selling shareholders may offer and sell up to 776,400 shares of common stock
in one or more transactions. You should read this prospectus and any applicable
prospectus supplement together with the additional information described under
the heading "Where You Can Find More Information."
The registration statement that contains this prospectus contains
additional information about our company and the common stock offered under this
prospectus, including information about the expenses incurred in connection with
this offering, indemnification provided to our directors and officers, exhibits
and certain undertakings we have agreed to. That registration statement can be
read at the SEC web site or at the SEC offices mentioned under the heading
"Where You Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and
other information with the SEC. Our SEC filings are available to the public over
the Internet at the SEC's website at http://www.sec.gov. You may also read and
copy any document we file with the SEC at its public reference facility at 450
Fifth Street, N.W., Washington, D.C. 20459. You can also obtain copies of the
documents at prescribed rates by writing to the Public Reference Section of the
SEC at 450 Fifth Street, N.W., Washington, D.C. 20459. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the public reference
facility. Our SEC filings are also available at the office of the New York Stock
Exchange. For further information on obtaining copies of our public filings from
the New York Stock Exchange, please call (212) 656-5060.
We "incorporate by reference" into this prospectus the information that
we file with the SEC, which means that we are disclosing important information
to you by referring you to those documents. The information incorporated by
reference is an important part of this prospectus, and information that we
subsequently file with the SEC will automatically update and supersede
information in this prospectus and in our other filings with the SEC. We
incorporate by reference the documents listed below, which we have already filed
with the SEC, and any future filings we make with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until the termination
of this offering:
- Our Annual Report on Form 10-K for the year ended May 30, 2003
(File No. 001-04365);
- Our Quarterly Reports on Form 10-Q for the quarters ended
August 30, 2003 and November 28, 2003 (File No. 001-04365);
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- Our Current Reports on Form 8-K filed on June 26, 2003, July
16, 2003, July 17, 2003, October 2, 2003, January 7, 2004 and
January 27, 2004 (File No. 001-04365); and
- The description of our common stock contained in our
Registration Statement on Form 8-A which became effective on
July 23, 1960 (File No. 001-04365).
You may also request a copy of these filings at no cost (other than an exhibit
to a filing unless that exhibit is specifically incorporated by reference into
the filing), by writing or calling us at the following address:
Oxford Industries, Inc.
222 Piedmont Avenue, NE
Atlanta, Georgia 30308
(404) 659-2424
Attention: Vice President, Secretary & General Counsel
You should only rely on the information contained or incorporated by
reference in this prospectus or any applicable prospectus supplement. We have
not authorized anyone else to provide you with different information. You should
not assume that the information contained or incorporated by reference in this
prospectus or any applicable prospectus supplement is accurate as of any date
other than the dates on the front of such documents.
OXFORD INDUSTRIES, INC.
We are a producer and marketer of branded and private label apparel for men,
women and children. We provide retailers and consumers with a wide variety of
apparel products and services to suit their individual needs. Our brands include
Tommy Bahama(R), Indigo Palms(TM), Island Soft(R), Ely and Walker(R) and Oxford
Golf(R). We also hold exclusive licenses to produce and sell certain product
categories under the Tommy Hilfiger(R), Nautica(R), Geoffrey Beene(R),
Slates(R), Dockers(R) and Oscar de la Renta(R) labels. Tommy Hilfiger is
licensed to us for men's and women's golf apparel as well as men's dress shirts.
Nautica, Geoffrey Beene, Slates, Dockers and Oscar de la Renta are all licensed
for men's tailored clothing. Our customers are found in every major channel of
distribution including national chains, specialty catalogs, mass merchants,
department stores, specialty stores and internet retailers. In June 2003, we
acquired Viewpoint International, Inc. and its consolidated subsidiaries, which
we refer to as the "Tommy Bahama Group." Our business is operated through the
following segments: the Menswear Group (which produces branded and private label
dress shirts, sport shirts, dress slacks, casual slacks, suits, sportscoats,
suit separates and walkshorts, as well as branded golf apparel) the Womenswear
Group (which produces private label women's sportswear) and the Tommy Bahama
Group (which produces branded casual and professional attire and operates retail
stores and restaurants).
We effected a two-for-one stock split in the form of a 100% stock
dividend, payable December 1, 2003, to shareholders of record on November 17,
2003. Shareholders received one additional share of our common stock for each
share of common stock held on the record date.
We are a Georgia corporation and our principal executive offices are
located at 222 Piedmont Avenue, NE, Atlanta, Georgia 30308. Our telephone number
is (404) 659-2424. Our website address is www.oxfordinc.com. Information on our
website does not constitute part of this prospectus.
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RISK FACTORS
You should carefully consider the following factors and other
information in this prospectus before deciding to invest in shares of our common
stock.
WE MAY EXPERIENCE VOLATILITY IN OUR STOCK PRICE.
The market price of our common stock has experienced, and may continue
to experience, significant volatility from time to time. For example, in the 52
weeks ended March 23, 2004, our common stock traded between $12.12 per share
and $46.70 per share. Such volatility may be affected by factors such as our
quarterly operating results or changes in the economy, financial markets or
apparel and retail industries. In recent years, the U.S. stock market has
experienced extreme price and volume fluctuations, which have sometimes affected
the market price of the securities issued by a particular company which may be
unrelated to the operational performance of the company. This type of market
effect could impact our common stock price as well. The volatility of our common
stock means that it is more likely that our common stock will have traded down
substantially at such time as you may look to sell your shares of our common
stock.
THE APPAREL INDUSTRY IS HEAVILY INFLUENCED BY GENERAL ECONOMIC CYCLES; DURING AN
ECONOMIC DOWNTURN OR A TIME OF POLITICAL INSTABILITY, CONSUMER SPENDING MAY
DECREASE, CAUSING OUR REVENUES AND RESULTS TO DECLINE.
The apparel industry is cyclical and is dependent upon the overall
level of consumer spending. Purchases of apparel and related goods (in
particular, higher priced goods) tend to be highly correlated with cycles in the
disposable income of consumers. Our customers anticipate and respond to adverse
changes in economic conditions and uncertainty by reducing inventories and
canceling orders. As a result, any deterioration in general economic or
political conditions, or acts of war or terrorism that diminish consumer
spending in the United States could reduce our sales and harm our results of
operations. In particular, the events of September 11, 2001, significantly
contributed to a 16.6% decline in net sales from fiscal 2001 to fiscal 2002.
After September 11, 2001, there was a general decline and fear of a general
decline in the economy that led many of our key customers to reduce their orders
to us as well as a decline in travel, particularly leisure travel, that
suppressed our sales in the golf and resorts markets.
WE OPERATE IN A HIGHLY COMPETITIVE AND FRAGMENTED INDUSTRY; WE MAY NOT BE ABLE
TO COMPETE SUCCESSFULLY OR MAINTAIN OUR PRICE POINTS.
The apparel industry, at wholesale and retail, is highly competitive
and fragmented. Our competitors include numerous apparel designers,
manufacturers, importers, licensors and retailers, some of which have greater
financial and marketing resources than we have. We believe that the principal
competitive factors in the apparel industry are:
- price;
- quality;
- styling;
- marketing;
- customer service; and
- with respect to branded and designer product lines, consumer
recognition and preference.
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The level of competition and the nature of competitors varies by
product segment, with low-margin, mass-market manufacturers being our main
competitors in the less expensive segment of the market, American and foreign
designers and licensors competing with us in the more upscale segment of the
market and high-end specialty retailers, department stores and chain stores
competing with Tommy Bahama. There can be no assurance that we will be able to
maintain and increase our net sales.
In addition, many other companies manufacture products that resemble
and/or compete with Tommy Bahama branded products. They may offer these products
at significantly lower price points in order to directly compete with Tommy
Bahama branded merchandise sold at higher prices. To the extent such competitors
are successful, we may not be able to maintain the premium price points that
Tommy Bahama products have traditionally commanded, which could reduce our
margins.
THE APPAREL INDUSTRY HAS EXPERIENCED PRICE DEFLATION IN RECENT YEARS; THIS PUTS
DOWNWARD PRESSURE ON OUR REVENUES AND MARGINS.
Deflation in the apparel industry is attributable to increased
competition, excess worldwide manufacturing capacity, increased product sourcing
in lower cost countries, growth of the mass merchant channel of distribution and
reduced relative spending on apparel and increased value consciousness on the
part of consumers reflecting, in part, general economic conditions. Average per
unit wholesale and retail selling prices for the mass merchant tier of
distribution are lower than they are in other tiers of distribution. In recent
years, the mass market tier of distribution has gained a progressively larger
percentage of total U.S. apparel sales. This growth in market share, combined
with the lower average per unit wholesale and retail prices, has contributed to
the overall deflation in U.S. apparel prices. In addition, consolidation in the
retail industry has increased our customers' bargaining power, putting downward
pressure on our prices and net sales. Downward pressure on prices has affected
the apparel industry by:
- negatively impacting net sales and gross margins;
- requiring the introduction of lower-priced products;
- requiring the reduction of wholesale prices on existing
products;
- increasing customer demands for allowances, incentives and
other forms of economic support that could adversely affect
our profitability; and
- increasing pressure to further reduce production costs and
operating expenses and to increase unit sales.
All of these impacts may continue in the future. If we are unable to
successfully respond to these developments in our industry, our net sales and
gross margins may continue to be negatively impacted.
THE APPAREL INDUSTRY IS SUBJECT TO RAPIDLY EVOLVING FASHION TRENDS AND WE AND
OTHER PARTICIPANTS IN THE INDUSTRY MUST CONTINUOUSLY OFFER INNOVATIVE AND
UPGRADED PRODUCTS; FAILURE TO DO SO MAY IMPACT OUR NET SALES AND LEAD TO EXCESS
INVENTORY, MARKDOWNS AND/OR DILUTION OF OUR BRANDS.
Although many of our products carry over from season to season, the
apparel industry in general is subject to rapidly changing fashion trends and
shifting consumer demands. Accordingly, success depends on the priority that
target customers place on fashion and ability to anticipate, identify and
capitalize upon emerging as well as proven fashion trends. The failure to
anticipate, identify or react appropriately to changes in styles or trends could
lead to, among other things, excess inventories and higher markdowns, as well as
the decreased appeal of certain of our brands.
The apparel industry is also characterized by constant product
innovation due to changing consumer preferences and by the rapid replication of
new products by competitors. As a result,
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success depends in large part on the ability to continuously develop, market and
deliver innovative products at a pace and intensity competitive with other
brands in our segments. In addition, we must create products that appeal to
multiple consumer segments at a range of price points. Any failure on our part
to develop innovative products and update core products could:
- limit our ability to differentiate, segment and price our
products;
- adversely affect retail and consumer acceptance of our
products;
- limit sales growth; and
- leave us with a substantial amount of unsold inventory, which
we may be forced to sell through markdowns.
The increasing importance of product innovation in apparel requires us
to strengthen our internal research and commercialization capabilities, to rely
more on successful commercial relationships with third parties such as fiber,
fabric and finishing providers and to compete and negotiate effectively for new
technologies and product components. In addition, almost all of our products are
produced outside of the United States. The exposure of our business to changes
in consumer preferences is heightened by this reliance on offshore
manufacturers, as offshore outsourcing may increase lead times between
production decisions and customer delivery. We have reduced our inventory levels
to align them more closely with forecasted demand. To the extent actual demand
exceeds forecasted demand, we may not have an adequate supply of products to
meet demand and may lose sales. Moreover, if we misjudge consumer preferences,
our brand image may be significantly impaired.
INCREASES IN THE PRICES OF RAW MATERIALS OR THEIR REDUCED AVAILABILITY COULD
INCREASE OUR COST OF GOODS SOLD AND DECREASE OUR PROFITABILITY.
The principal fabrics used in our business are cotton, linens, wools,
silk, other natural fibers, synthetics and blends of these materials. The prices
paid for these fabrics depend on the market price for raw materials used to
produce them, primarily cotton and silk. The price and availability of cotton
has in the past fluctuated, and may in the future fluctuate significantly
depending on a variety of factors, including crop yields, weather, supply
conditions, government regulation, economic climate and other unpredictable
factors. Any raw material price increases could increase our cost of goods sold
and decrease profitability. Moreover, due to the particular importance of cotton
and silk as raw materials for our finished products, any decrease in the
availability of cotton or silk could impair our ability to meet production
requirements in a timely manner. We have not historically hedged for these
risks.
WE DEPEND ON A GROUP OF KEY CUSTOMERS FOR A SIGNIFICANT PORTION OF OUR SALES; A
SIGNIFICANT ADVERSE CHANGE IN A CUSTOMER RELATIONSHIP OR IN A CUSTOMER'S
FINANCIAL POSITION COULD MATERIALLY ADVERSELY AFFECT OUR NET SALES.
We derive a significant amount of our respective net sales from a few
major customers. Net sales to our ten largest customers totaled approximately
73%, 72% and 80% of our net sales in fiscal 2001, fiscal 2002 and fiscal 2003,
respectively. Sales to Target, Wal-Mart and Sears accounted for 22%, 15% and
16%, respectively, of our net sales in fiscal 2003. In addition, the net sales
of our individual business segments are concentrated among several large
customers. Consolidation has increased the concentration of our customers.
Consolidation in the retail industry has centralized purchasing decisions and
given customers greater leverage over suppliers, often resulting in lower
prices, and we expect this trend to continue.
We do not have long-term contracts with any of our customers. As a
result, purchases generally occur on an order-by-order basis, and the
relationship, as well as particular orders, can generally be
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terminated by either party at any time. A decision by a major customer, whether
motivated by competitive considerations, quality and style issues, financial
difficulties, economic conditions or otherwise, to decrease its purchases or to
change its manner of doing business with us, could materially adversely affect
our business and financial condition. In addition, during recent years, numerous
retailers, including some of our customers, have experienced significant changes
and difficulties, including consolidation of ownership, restructurings,
bankruptcies and liquidations. As a result of these events, Oxford had total bad
debt write-offs in fiscal 2003, 2002 and 2001 of $480,000, $3,513,000 and
$492,000, respectively. There is excess retail floorspace in the industry, which
could lead to further consolidations, restructurings, bankruptcies and
liquidations. For example, Kmart Corporation, which accounted for 2.2% of our
net sales in fiscal 2002, filed for bankruptcy protection under Chapter 11 of
the U.S. Bankruptcy Code in January 2002 and subsequently announced the closing
of in excess of 28% of its stores. As of the date of Kmart's bankruptcy filing,
we had outstanding $3.5 million of receivables from Kmart. In fiscal 2002,
Oxford's pre-petition Kmart claim was sold for $1.1 million. In addition,
Spiegel, Inc., which owns Eddie Bauer and accounted for 2.6% of our net sales in
fiscal 2003, filed for bankruptcy protection under Chapter 11 of the U.S.
Bankruptcy Code in March 2003. We continue to sell to Eddie Bauer and are
exposed to the associated inventory and credit risks. The future of Eddie Bauer
and Spiegel remains uncertain at this time.
These and other financial problems of some customers, as well as
general weakness in the retail environment, increase the risk of extending
credit to these retailers. A significant adverse change in a customer
relationship or in a customer's financial position could cause us to limit or
discontinue business with that customer, require us to assume more credit risk
relating to that customer's receivables or limit our ability to collect amounts
related to previous purchases by that customer. All of these events could have a
material adverse effect on our business and results of operations. Many
customers (in particular, purchasers of Tommy Bahama) are small upscale
independent specialty stores that may be more susceptible to general economic
conditions. In addition, in order to reduce our future exposure to risks
associated with its bankruptcy, we have decided not to sell products to Kmart in
the near future and may make similar decisions with respect to other customers
in the future. This may reduce our net sales.
OUR THIRD PARTY PRODUCERS AND SOURCING AGENTS MAY BE UNABLE TO MANUFACTURE AND
DELIVER PRODUCTS IN A TIMELY MANNER OR MEET OUR QUALITY STANDARDS; THIS MAY
IMPACT OUR ABILITY TO DELIVER QUALITY PRODUCTS TO OUR CUSTOMERS ON A TIMELY
BASIS.
In fiscal 2003, we purchased 85% of our products from third party
producers located in foreign countries. The Tommy Bahama Group's purchases from
third party producers are particularly concentrated. The Tommy Bahama Group's
largest third party producer accounted for approximately 26% of its purchases
for fiscal 2003. The Tommy Bahama Group's two largest suppliers accounted for
44% of the Tommy Bahama Group's purchases in fiscal 2003. We depend upon the
ability of third party producers to secure a sufficient supply of raw materials,
adequately finance the production of goods ordered and maintain sufficient
manufacturing and shipping capacity. The use of third party producers and the
resulting lack of direct control could subject us to difficulty in obtaining
timely delivery of products of acceptable quality. In addition, a third party
producer's failure to ship products to us in a timely manner or to meet the
required quality standards could cause us to miss the delivery date requirements
of our customers. The failure to make timely deliveries may cause customers to
cancel orders, refuse to accept deliveries, impose non-compliance charges
through invoice deductions or other charge-backs, demand reduced prices or
reduce future orders any of which could harm our sales, reputation and overall
profitability. In addition, as more participants in the apparel industry move
towards sourcing from third parties, the competition for quality contractors has
intensified. Some of these contractors have long-standing relationships with our
competitors. To the extent we are not able to secure or maintain relationships
with third party producers that are able to fulfill our requirements, our
business would be harmed.
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OUR DISTRIBUTION OPERATIONS ARE CONCENTRATED, MAKING US MORE SUSCEPTIBLE TO
DISRUPTION.
We operate warehousing and distribution facilities in Georgia,
Tennessee, South Carolina and Washington. Finished garments from our
manufacturing facilities and from our contractors are inspected and stored for
distribution at these distribution facilities. We do not have other distribution
facilities to support our distribution needs. As a result, if any of these
distribution facilities were to shut down or otherwise become inoperable or
inaccessible for any reason, we could incur significantly higher costs and
longer lead times associated with the distribution of our products during the
time it takes to reopen or replace the facility. This could negatively affect
our results of operations and reputation. In light of our strategic emphasis on
rapid replenishment as a key competitive advantage, a distribution disruption
might have a disproportionately adverse effect on our operations and
profitability relative to our competitors.
OUR MANUFACTURING AND SOURCING OPERATIONS IN FOREIGN COUNTRIES ARE SUBJECT TO
DISRUPTION.
Because approximately 98% of our products are manufactured abroad, we
must begin production of our products further in advance than would be the case
if the products were manufactured domestically. In limited circumstances, we
begin production in one of our owned manufacturing facilities or place an order
with an independent manufacturer before receiving an order from a customer. If
we overestimate retailers' demand, we may be required to hold goods in inventory
which we may be unable to sell at historical margins. If we underestimate
retailers' demand, we may not be able to fill reorders on a timely basis.
However, foreign manufacturing is subject to a number of other risks, including:
- transportation delays and interruptions (including strikes and
work stoppages at port facilities);
- political instability;
- economic disruptions;
- foreign currency;
- the imposition of new or adversely adjusted tariffs, duties,
quotas, import and export controls, and other regulations;
- changes in governmental policies and other events; and
- intellectual property infringement, including knock-offs and
counterfeiting, which is more prevalent outside of the United
States.
If any of these events occur, contract manufacturers' ability to
produce and ship products during a given retailing season will be impaired,
which could result in loss of revenues, customer orders and customer goodwill.
We require third party producers to meet our standards in terms of
working conditions, environmental protection and other matters before placing
business with them. As a result of higher costs relating to compliance with
these standards, we may pay higher prices than some of our competitors for
products. In addition, the labor and business practices of independent apparel
manufacturers have received increased attention from the media, non-governmental
organizations, consumers and governmental agencies in recent years. Any failure
by our independent manufacturers to adhere to labor or other laws or appropriate
labor or business practices, and the potential litigation, negative publicity
and political pressure relating to any of these events, could harm our
reputation and impact our net sales.
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We are also exposed to foreign currency risk as a result of our foreign
manufacturing and sourcing operations. Most of our contracts to have goods
assembled or produced in foreign countries are negotiated in U.S. dollars. If
the value of the U.S. dollar decreases relative to certain foreign currencies in
the future, then the prices that we negotiate for products could increase, and
it is possible that we would not be able to pass this increase on to customers,
which would negatively impact our margins. If the value of the U.S. dollar
increases between the time a price is set and payment for a product, the price
we pay may be higher than that paid for comparable goods by any competitors that
pay for goods in local currencies, and they may be able to sell their products
at more competitive prices. We do not engage in hedging activities with respect
to foreign currency risk.
OUR BUSINESS IS SUBJECT TO REGULATORY RISKS ASSOCIATED WITH IMPORTING PRODUCTS;
OUR PRODUCTS MAY BECOME LESS COMPETITIVE AS A RESULT OF CHANGES IN THE
REGULATORY ENVIRONMENT.
We import approximately 98% of our products from owned foreign
manufacturing facilities or foreign third party producers. In 2003, we did
business in the following countries: Bangladesh, Cambodia, Canada, Colombia,
Dominican Republic, Egypt, Guatemala, Honduras, Hong Kong, India, Indonesia,
Jordan, Lithuania, Macau, Malaysia, Mauritius, Mexico, Mongolia, Nepal,
Pakistan, the People's Republic of China, Peru, the Philippines, Romania,
Russia, Saipan, Singapore, South Korea, Sri Lanka, Taiwan, Thailand, Turkey and
the United Arab Emirates. Substantially all of our import operations are subject
to tariffs imposed on imported products and quotas imposed by trade agreements.
In addition, the countries into which our products are manufactured or imported
may from time to time impose additional new quotas, duties, tariffs or other
restrictions on imports or adversely modify existing restrictions. Adverse
changes in these import costs and restrictions could increase our costs and
decrease the competitiveness of our products. Our or any supplier's failure to
comply with customs or similar laws, could restrict our ability to import
product or lead to fines or other penalties. We cannot assure you that future
trade agreements will not provide our competitors with a material advantage over
us or materially increase our costs.
Our operations are also subject to international trade agreements and
regulations such as the North American Free Trade Agreement and the Caribbean
Basin Initiative, and the activities and regulations of the World Trade
Organization. Trade agreements can impose requirements that adversely affect our
business, such as limiting the countries from which we can purchase raw
materials and setting quotas on products that may be imported into the United
States from a particular country. In addition, the World Trade Organization may
commence a new round of trade negotiations that liberalize textile trade by
further eliminating quotas or reducing tariffs. The elimination of quotas on
World Trade Organization member countries by 2005 and other effects of these
trade agreements could result in materially increased competition from
developing countries which historically have lower labor costs, including China
and Taiwan, both of which recently became members of the World Trade
Organization. We also believe that the elimination of quotas in 2005 will
significantly change the competitiveness of many countries as locations for
apparel manufacturing and sourcing.
EVENTS SUCH AS WAR, ACTS OF TERRORISM AND LABOR DISPUTES MAY MAKE IT MORE
DIFFICULT FOR US TO IMPORT PRODUCTS.
As a result of our reliance on offshore manufacturing of our products,
if goods become difficult or impossible to import into the United States due to
actual or threatened war or acts of terrorism, our net sales and net margins may
be materially adversely affected. In the event that commercial transportation is
curtailed or substantially delayed, our business may be materially adversely
impacted, as we may have difficulty shipping merchandise from foreign
facilities, which provide approximately 98% of our manufacturing requirements.
In addition, any of these events may adversely affect general economic
conditions in the United States. Further deterioration in prevailing economic
conditions in the United States could reduce demand for our products.
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Our ability to import products in a timely and cost-effective manner
may be affected by problems at ports or issues that otherwise affect
transportation and warehousing providers, such as labor disputes. These problems
could require us to locate alternative ports or warehousing providers to avoid
disruption to our customers. These alternatives may not be available on short
notice or could result in higher transit costs. As an example, in September
2002, the Pacific Maritime Association, which represents terminal operators and
ocean ship companies, locked out the union workers at a number of ports on the
western coast of the United States. Although a federal court ordered the ports
reopened and the parties ultimately entered into a new union agreement, the lock
out caused a significant disruption in the shipment of goods, including our
products, into the United States. Additionally, the 2002 Pacific Maritime
Association lock out required us to re-route to the East coast of the United
States shipments that were originally routed to the West coast. Rerouting
shipments from the West coast to the East coast resulted in longer transit times
for many of these shipments. A small number of shipments originally scheduled to
ship by ocean had to be shipped by air instead which resulted in higher freight
costs.
WE MAY LOSE BUSINESS FROM SOME OF OUR CUSTOMERS AS THEY SOURCE PRODUCT DIRECTLY.
We sell most of our products on a delivered, duty paid basis, meaning
that we are responsible for clearing the goods through U.S. Customs and paying
all customs duties and international freight charges. However, some of our
customers, by working directly with manufacturers, purchase goods on a direct
basis, in which the customer takes ownership of the product in the country of
production. As a result of this direct sourcing, customers can reduce their cost
of goods by handling the logistics of importation of goods themselves. All of
our major customers engage in some amount of direct sourcing. We are not able to
quantify the impact that direct sourcing has had on our net sales or margins,
but as many of our major customers purchase an increasing percentage of their
apparel on a direct basis, our opportunities to sell on a delivered, duty paid
basis are reduced.
WE HOLD IMPORTANT LICENSES; OUR NET SALES COULD BE NEGATIVELY IMPACTED BY A LOSS
OF ANY OF THESE LICENSES OR THE REDUCTION IN VALUE OF ANY OF THESE LICENSES.
We have entered into license and design agreements to use well-known
trademarks and trade names to market our products. Fiscal 2003 net sales under
license and design agreements were $140.9 million or approximately 18% of total
net sales. Sales under the largest single license were 3.7% of total fiscal
2003 net sales. Combined sales under four separate license agreements with a
single licensor were 7.2% of total fiscal 2003 net sales. These license and
design agreements will expire at various dates through fiscal 2007. We cannot
assure you that we will be able to renew these licenses on acceptable terms
upon their expiration or that we will be able to acquire new licenses to use
other popular trademarks. If any one or more of these licenses expires or is
terminated, we will lose the sales and profits generated pursuant to such
license. The loss of such sales on profits would depress our overall sales and
profits.
In addition, all of our significant licenses provide minimum
thresholds for sales, royalty payments and advertising expenditures for each
license year and if these thresholds are not met due to a general economic
downturn or otherwise, our licensors may be permitted contractually to
terminate these agreements or seek payment of minimum royalties even if the
minimum sales are not achieved. In addition, our licensors license trademarks
we use to other third parties and we are unable to control the quality or
fashion sense of goods that such third parties produce. If our third party
licensees do not maintain the quality of these trademarks or tradenames, our
net sales and reputation could materially suffer.
WE MAY BE UNABLE TO PROTECT OUR TRADEMARKS AND OTHER INTELLECTUAL PROPERTY AND
MAY OTHERWISE HAVE OUR BRAND NAMES AND GOODWILL HARMED BY COMPETITORS' PRODUCTS
OR THE QUALITY OF OUR LICENSEES' PRODUCTS.
We currently rely on a combination of trademark, copyright and patent
rights, as well as other contractual arrangements, including licenses, to
establish and protect our intellectual property and brand names. We believe that
our trademarks and other proprietary intellectual property rights are important
to our continued success and our competitive position due to their recognition
by our customers. For
10
example, the value of the Tommy Bahama brand and other related brands is
critical to our success and our ability to maintain certain price points.
There can be no assurance that the actions that we have taken to
establish and protect our trademarks and other intellectual property will be
adequate to prevent the creation of knock-offs, imitations or infringement of
our marks, products, services or trademarks by third parties. For example, from
time to time, we discover products in the marketplace that are reproductions of
Tommy Bahama products or that otherwise infringe upon our trademark and
copyright rights. If we are unsuccessful in challenging or decide not to
challenge a particular third party's products on the basis of trademark
infringement or otherwise or are unaware of any such infringement, continued
sales of such product by that or any other third party could materially
adversely impact the Tommy Bahama brand or other brands and negatively impact
our net sales. In addition, if any third party imitates Tommy Bahama products in
a manner that projects a lesser quality or carries a negative connotation, this
could have a material adverse effect on Tommy Bahama's goodwill in the
marketplace, whether or not it violates our intellectual property rights.
A portion of our business uses endorsements of amateur and professional
athletes and coaches to promote some of our product lines. Unfavorable news
reports about an endorser could create unfavorable publicity for us and could
result in harm to the goodwill associated with some of our trademarks.
In the future, we may have to rely on litigation and other legal action
to enforce our intellectual property rights or contractual rights. If litigation
that we initiate is unsuccessful, we may not be able to protect the value of
some of our intellectual property. In addition, we may face claims of
infringement by third parties that could interfere with our ability to sell some
of our products. In the event a claim of infringement against us is successful,
we may be required to pay royalties or license fees to continue to use
intellectual property rights that we had been using or we may be unable to
obtain necessary licenses from third parties at a reasonable cost or within a
reasonable time. Any litigation and other legal action of this type, whether
successful or unsuccessful, could result in substantial costs to us and
diversion of our resources. In addition, the laws of certain foreign countries
do not protect our trademarks and proprietary rights to the same extent as do
the laws of the United States.
WE RELY ON KEY MANAGEMENT; OUR REMAINING MANAGEMENT MAY BE DISTRACTED FOLLOWING
ANY DEPARTURE OF A KEY MEMBER OF MANAGEMENT, AND THE PORTION OF OUR BUSINESS FOR
WHICH THAT INDIVIDUAL WAS RESPONSIBLE MAY EXPERIENCE OPERATIONAL DIFFICULTIES.
Our success depends upon the talents and efforts of a small number of
key management personnel. J. Hicks Lanier, our chairman of the board and chief
executive officer and Ben B. Blount, Jr., our executive vice president of
finance, planning and administration and chief financial officer, have been with
our company and active in our industry for many years; the loss of either of
these individuals could impact our strategic direction, operations or customer
relationships. In addition, since, prior to our acquisition of the Tommy Bahama
Group, we did not have any prior experience operating retail stores and
restaurants, or designing the Tommy Bahama line of clothes, the loss of either
of the principal managers of the Tommy Bahama Group, S. Anthony Margolis and
Lucio Dalla Gasperina, who have been with the Tommy Bahama Group and/or
Viewpoint for a long time, could severely impact our Tommy Bahama Group
operations.
OUR RETAIL STORES MAY EXPERIENCE FLUCTUATIONS IN COMPARABLE STORE SALES, WHICH
COULD IMPACT THE PRICE OF OUR COMMON STOCK.
Our comparable store sales are affected by a variety of factors which
may cause our results to differ materially from prior periods. These factors
include:
- general economic conditions;
11
- fashion trends;
- changes in its merchandise assortment;
- our success in executing our business strategy;
- competition;
- retail prices;
- the timing of release of new merchandise; and
- weather conditions.
Fluctuations in our comparable store sales could have a material
adverse effect on the market price of our common stock. Any failure to meet the
expectations of investors, security analysts or credit rating agencies in one or
more future periods could reduce the market price of our common stock and cause
our credit ratings to decline.
OUR RETAIL STORES' OPERATIONS MAY BE NEGATIVELY IMPACTED IF THEY ARE LOCATED IN
POOR LOCATIONS.
Many of our Tommy Bahama retail stores are located in indoor and
outdoor shopping malls and plazas, and sales are derived, in part, from the
volume of traffic in such shopping areas. An important part of our business is
finding and keeping profitable store locations within successful shopping areas
in order to generate consumer traffic. Tommy Bahama's stores face competition
from other nearby retailers, and a store's sales can be affected not only by its
location in relation to its competitors but also by its proximity to other
points of attraction, the location of a store within the mall and the amount of
advertising and promotional dollars spent on attracting consumers to the malls.
Fuel shortages and high fuel prices may also deter shoppers, as they may curtail
their driving and other travel. Hence, our business may suffer based on declines
in the desirability of the shopping environment in a particular mall, shopping
center or plaza, which could result from factors outside of our control. The
failure to locate new stores in advantageous locations or failure to obtain
renewal of our current attractive locations may have a material adverse effect
on our retail business.
REDUCED TRAVEL TO RESORT LOCATIONS MAY NEGATIVELY IMPACT SALES OF OUR TOMMY
BAHAMA PRODUCTS.
We have retail stores under the Tommy Bahama name located in resort
areas and sell apparel that is often worn in resort locations. In recent years,
resort travel has been depressed as a result of geopolitical and economic
conditions. Particularly in fiscal 2002, we experienced a material reduction in
net sales or margins as the result of reduced resort travel. We believe that a
reduction in resort travel similar to that experienced following the terrorist
strikes on September 11, 2001 would adversely affect net sales.
OUR RESTAURANT OPERATIONS MAY BE NEGATIVELY IMPACTED BY HEALTH, SAFETY, LABOR
AND OTHER OPERATIONAL ISSUES, OR BY PUBLICITY SURROUNDING ANY OF THESE ISSUES.
We own and operate seven compound locations under the Tommy Bahama name
that contain a full-service, white linen Tommy Bahama Tropical Cafe, in addition
to a standard Tommy Bahama retail store selling Tommy Bahama products. As a
participant in the restaurant industry, we face risks relating to food quality,
food-borne illness, injury, restaurant facilities, health inspection scores and
employee relationships at one or more of our restaurants. Regardless of whether
allegations related to these matters are valid or whether we become liable, we
may be materially and adversely affected by negative publicity related thereto.
The negative impact of adverse publicity relating to one restaurant may extend
far
12
beyond the restaurant involved to affect some or all of the other restaurants,
as well the Tommy Bahama brand name and image as a whole, including our retail
and wholesale businesses.
The profitability and continued success of our restaurant operations
depend on, among other things, the following additional factors:
- the ability to compete in the highly competitive restaurant
business;
- the ability to maintain the necessary federal, state and local
governmental licenses, permits and approvals, including those
relating to the preparation and sale of food and alcoholic
beverages, building and zoning requirements, and
employer-employee relationships, such as minimum wage
requirements, overtime, working and safety requirements, and
citizenship requirements;
- the availability and timely delivery of high quality, fresh
ingredients, including fresh produce, dairy products and meat;
- the availability of qualified, high energy restaurant
personnel; and
- factors affecting discretionary consumer spending, including
national, regional and local economic conditions, disposable
consumer income, inflation and consumer confidence.
Adverse changes in any of these factors could reduce guest traffic,
adversely impacting the profitability of our restaurant operations.
INTEGRATING THE TOMMY BAHAMA GROUP INTO OUR COMPANY STRUCTURE MAY DISTRACT OUR
MANAGEMENT AND STRAIN OUR RESOURCES, WHICH MAY HURT OUR NET SALES OR CAUSE
OPERATIONAL DIFFICULTIES.
The acquisition of the Tommy Bahama Group in June 2003 was
significantly larger than any of our previous acquisitions. The significant
expansion of our business and operations resulting from the acquisition of the
Tommy Bahama Group may strain our administrative, operational and financial
resources. The integration of the Tommy Bahama Group into our company will
require substantial time, effort, attention and dedication of management
resources and may distract our management in unpredictable ways from our
existing business. The integration process could create a number of potential
challenges and adverse consequences for us, including the possible unexpected
loss of key employees, customers or suppliers, a possible loss of sales or an
increase in operating or other costs. We may not be able to manage the combined
operations and assets effectively or realize all or any of the anticipated
benefits of the acquisition of the Tommy Bahama Group.
As part of our business strategy, we intend to pursue other strategic
acquisitions of brands and related businesses and we may face similar challenges
regarding such acquisitions.
OPERATING OUR NEWLY ACQUIRED RETAIL STORES AND RESTAURANTS MAY DISTRACT OUR
MANAGEMENT; WE MAY ALSO BE UNSUCCESSFUL AT OPERATING THESE STORES AND
RESTAURANTS.
Prior to the acquisition of the Tommy Bahama Group in June 2003, we did
not operate any retail stores or restaurants. We may not be successful in
managing retail and/or restaurant operations and these operations may divert our
management's attention away from our existing business. This could impair our
integration of the Tommy Bahama Group and/or harm our net sales and results of
operations.
13
WE MAY NOT BE ABLE TO IMPLEMENT SUCCESSFULLY OUR PLANS TO EXPAND OUR TOMMY
BAHAMA BUSINESS; IF THAT OCCURS, OUR FINANCIAL RESULTS WILL SUFFER.
We plan to expand our Tommy Bahama business, including our Tommy Bahama
retail stores and restaurants. Our ability to open and operate new retail stores
and restaurants depends on many factors, including, among others, our ability
to:
- identify and obtain suitable retail and restaurant locations,
the availability of which is outside of our control;
- negotiate favorable lease terms;
- successfully address competition, merchandising and
distribution challenges;
- and hire, train and retain a sufficient number of qualified
personnel.
We must balance our expansion goals with our desire to foster an
element of scarcity at the consumer level when selling Tommy Bahama products in
a given geographical market. We believe that the careful and deliberate
selection of our retail stores within particular geographical areas has been a
key element of our successful retail business. Therefore, we may not achieve our
retail and restaurant expansion goals for Tommy Bahama. Even if we succeed in
expanding the number of Tommy Bahama retail stores and restaurants, we cannot
assure you that the newly opened stores and restaurants will achieve sales or
profitability levels comparable to those of our existing Tommy Bahama stores and
restaurants in the time periods estimated by us, or at all. If retail stores and
restaurants fail to achieve or are unable to sustain acceptable sales and
profitability levels, we may incur significant costs associated with operating
or closing those stores and restaurants.
OUR SUCCESS WILL DEPEND ON THE VALUE OF THE TOMMY BAHAMA BRAND, AND IF THE VALUE
OF THE TOMMY BAHAMA BRAND WERE TO DIMINISH, OUR NET SALES AND RESULTS OF
OPERATIONS WOULD BE ADVERSELY AFFECTED.
Maintaining and developing the Tommy Bahama brand will be critical to
our success because of the prominence of the Tommy Bahama brand and because of
the historical growth of Tommy Bahama sales. If for any reason Tommy Bahama's
image or reputation were to be tarnished, or if consumers no longer perceived
Tommy Bahama products to be of high quality and value, worthy of a premium price
as compared to the competition, our net sales and margins would materially
suffer.
In addition, we license our Tommy Bahama brand and other related brands
to a number of strategic partners to produce a variety of other products,
including certain types of shoes, neckwear, handbags, furniture and women's
swimwear. While we require that these licensees maintain the quality of the
Tommy Bahama brand through specific contractual provisions, we cannot be certain
that such licensees, or their manufacturers and distributors, will honor their
contractual obligations or that they will not take other actions that will
significantly diminish the value of the Tommy Bahama brand name.
WE MAY NOT HAVE UNCOVERED ALL RISKS ASSOCIATED WITH THE TOMMY BAHAMA GROUP
ACQUISITION OR ANY FUTURE ACQUISITIONS; THIS MAY SUBJECT US TO MATERIAL
LIABILITIES.
We may become responsible for unexpected liabilities that we failed to
discover in the course of performing due diligence in connection with the Tommy
Bahama Group acquisition and any future acquisitions. We cannot assure you that
any indemnification from the selling shareholders to which we may be entitled
will be enforceable, collectible or sufficient in amount, scope or duration to
fully offset the possible liabilities associated with the business or property
acquired. Any of these liabilities, individually or in the aggregate, could have
a material adverse effect on our financial condition and results of operations.
14
WE MAY OWE CONTINGENT PAYMENTS TO THE SELLING SHAREHOLDERS; THESE PAYMENTS,
WHICH MAY BE PAID IN CASH, ARE CONTINGENT ON EARNINGS OF THE TOMMY BAHAMA GROUP
THAT MAY BE NON-CASH; WE MAY HAVE DIFFICULTY MAKING THE PAYMENTS IF OUR OTHER
OPERATIONS SUFFER; AND YOU MAY EXPERIENCE DILUTION IF WE ISSUE COMMON STOCK IN
THE FUTURE FOR A PORTION OF THE CONTINGENT PAYMENTS.
Under the terms of our acquisition of the Tommy Bahama Group, we will
be required to make up to $75 million in performance-based contingent payments
to the selling shareholders of the Tommy Bahama Group over the four years
following the Tommy Bahama Group acquisition. The contingent payments will be
comprised of an annual basic contingent payment and a cumulative additional
contingent payment. The earnings upon which these payments are contingent may
not be cash-based; we may therefore have difficulty in making cash payments. In
addition, if the acquired Tommy Bahama Group business is successful but the rest
of our business is not successful, we may have difficulty making the contingent
payments or, if we do make the contingent payments, we could have insufficient
cash for our business objectives. Also, if we issue common stock for a portion
of the contingent payments, particularly in the first two years when the selling
shareholders are entitled to 50% of any contingent payment in shares of common
stock valued at $12.88 per share, you may experience substantial dilution.
Certain of the selling shareholders (Messrs. Margolis and Dalla
Gasperina) are key members of management of the Tommy Bahama Group business. It
is possible that their interests with respect to the contingent payments will
differ from the interests of Oxford. For example, they may have incentives to
maximize the profitability of the Tommy Bahama Group during the four year term
of the earnout agreement to the detriment of the longer term prospects for the
business.
WE HAVE SUBSTANTIAL INDEBTEDNESS; THIS INDEBTEDNESS LIMITS OUR FLEXIBILITY AND
COULD AFFECT OUR FINANCIAL HEALTH AND THE VALUE OF OUR COMMON STOCK.
We have a significant amount of indebtedness. As of November 28, 2003,
we had $199 million of indebtedness outstanding and stockholders' equity of $216
million. The instruments relating to that indebtedness contain a number of
covenants requiring us to meet certain financial tests. In addition, those
instruments contain other covenants which limit our ability to, among other
things, incur additional indebtedness, make certain payments (including
dividends on our common stock), make investments, issue or sell preferred stock
of our subsidiaries, create liens, sell assets, engage in transactions with
affiliates or consolidate, merge or sell all or substantially all of our assets.
Those restrictions may have important consequences for us. For example,
they may:
- limit our ability to borrow additional funds, or to sell
assets to raise funds, if needed, for working capital, capital
expenditures, acquisitions or other purposes;
- increase our vulnerability to adverse economic and industry
conditions;
- require us to dedicate a substantial portion of our cash flow
from operations to payments on our debt, thereby reducing
funds available for operations, future business opportunities
or other purposes, such as funding our working capital and
capital expenditures;
- limit our flexibility in planning for, or reacting to, changes
in the business and industry in which we operate; or
- place us at a competitive disadvantage compared to our
competitors that have less indebtedness.
The existence of this significant indebtedness may lower the value of
our common stock, depending on our ability, or perceived ability, to service
that indebtedness. In addition, a breach of any
15
of the covenants in the instruments relating to that indebtedness could result
in an event of default under those instruments, allowing the holders of that
indebtedness to declare all outstanding indebtedness immediately due and
payable. In addition, upon a change of control, as defined in those instruments,
the holders of much of our indebtedness would have the right to require us to
purchase their indebtedness. If we are unable to do so, that would constitute an
event of default under the instruments relating to that indebtedness. We would
most likely be unable to pay all of our outstanding indebtedness. We would,
therefore be required to seek alternative sources of funding or face bankruptcy.
In bankruptcy, the value of our common stock would almost certainly be
materially adversely impacted, as our liquidation value is likely to be less
than our going concern value. In addition, all of our creditors would have
priority with respect to our assets.
OUR ANTI-TAKEOVER PROVISIONS MAY DEPRESS THE PRICE OF OUR COMMON STOCK.
Certain provisions of our articles of incorporation and bylaws and
Georgia law may delay, defer or prevent a takeover attempt that a shareholder
might consider in its best interest. A shareholder may not receive as much in
exchange for his or her shares as they could without these provisions. The
following is a description of the provisions that may reduce the market prices
for our share of common stock.
Our articles of incorporation and bylaws separate our board of
directors into three classes of directors, with each class as nearly equal in
number as the total number of directors permits. Each class serves for
three-year terms, and each class' term expires in different successive years. In
addition, our articles of incorporation authorize the board of directors to
issue preferred stock in one or more classes or series and to determine the
price, rights, preferences, privileges and restrictions, including voting
rights, of those shares without any action on the part of the shareholders. The
rights of the holders of our common stock will be subject to, and may be
adversely affected by, the rights of the holders of any preferred stock that may
be issued in the future. The issuance of preferred stock could have the effect
of making it more difficult for a third party to acquire a majority of our
outstanding voting stock.
16
FORWARD-LOOKING STATEMENTS
This prospectus, including the documents incorporated by reference
herein, contains forward-looking statements within the meaning of the federal
securities laws. Statements that are not historical facts, including statements
about our beliefs and expectations, are forward-looking statements.
Forward-looking statements include statements preceded by, followed by or that
include the words "may," "could," "would," "should," "believe," "expect,"
"anticipate," "plan," "estimate," "target," "project," "intend" or similar
expressions. These statements include, among others, statements regarding our
expected business outlook, anticipated financial and operating results, our
business strategy and means to implement the strategy, our objectives, the
amount and timing of future capital expenditures, the likelihood of our success
in developing and introducing new products and expanding our business, the
timing of the introduction of new and modified products or services, financing
plans, working capital needs and sources of liquidity.
Forward-looking statements reflect our current expectations and are not
guarantees of performance. These statements are based on our management's
beliefs and assumptions, which in turn are based on currently available
information. Important assumptions relating to these forward looking statements
include, among others, assumptions regarding demand for our products, expected
pricing levels, raw material costs, the timing and cost of planned capital
expenditures, expected outcomes of pending litigation, competitive conditions,
general economic conditions and expected synergies in connection with
acquisitions and joint ventures, including the acquisition of the Tommy Bahama
Group. These assumptions could prove inaccurate. Forward-looking statements also
involve risks and uncertainties, which could cause actual results to differ
materially from those contained in any forward-looking statement. Many of these
risks are beyond our ability to control or predict. Such risks include, but are
not limited to, all of the risks discussed under "Risk Factors" and the
following:
- general economic cycles;
- competitive conditions in our industry;
- price deflation in the worldwide apparel industry;
- our ability to identify and respond to rapidly changing
fashion trends and to offer innovative and upgraded products;
- the price and availability of raw materials;
- our dependence on and relationships with key customers;
- the ability of our third party producers to deliver quality
products in a timely manner;
- potential disruptions in the operation of our distribution
facilities;
- economic and political conditions in the foreign countries in
which we operate or source our products;
- regulatory risks associated with importing products;
- the impact of labor disputes and wars or acts of terrorism on
our business;
- increased competition from direct sourcing;
- our ability to maintain our licenses;
17
- our ability to protect our intellectual property and prevent
our trademarks and service marks and goodwill from being
harmed by competitors' products;
- our reliance on key management;
- inability to retain premium pricing on Tommy Bahama products
due to competitive or other factors;
- fluctuations in the Tommy Bahama Group's comparable store
sales;
- the impact of reduced travel to resort locations on the Tommy
Bahama Group's sales;
- risks related to the Tommy Bahama Group's operation of
restaurants under the Tommy Bahama name;
- the integration of the Tommy Bahama Group into our company;
- the expansion of our business through the Tommy Bahama Group
acquisition into new businesses;
- our ability to successfully implement our growth plans for the
Tommy Bahama Group;
- our ability to open new Tommy Bahama stores following the
acquisition of the Tommy Bahama Group; and
- unforeseen liabilities associated with the acquisition of the
Tommy Bahama Group and other businesses.
We believe these forward-looking statements are reasonable; however,
you should not place undue reliance on any forward-looking statements, which are
based on current expectations. Furthermore, forward-looking statements speak
only as of the date they are made, and we undertake no obligation to update
publicly any of them in light of new information or future events.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares of
common stock offered by the selling shareholders under this prospectus, but we
have agreed to bear all expenses (other than direct expenses incurred by the
selling shareholders, such as selling commissions, brokerage fees and expenses
and transfer taxes) associated with registering such shares under federal and
state securities laws. We are registering the shares for sale to provide the
selling shareholders with freely tradeable securities, but the registration of
such shares does not necessarily mean that any of the shares will be offered or
sold by the selling shareholders.
18
SELLING SHAREHOLDERS
Pursuant to a registration rights agreement dated as of June 13, 2003
among the selling shareholders and us, we agreed to register with the SEC
resales of the 776,400 shares of our common stock received by the selling
shareholders in connection with our acquisition of Viewpoint International, Inc.
(now the Tommy Bahama Group) from the selling stockholders of ViewPoint
International, Inc. This registration statement relates to resales of those
shares.
In addition, pursuant to an earnout agreement dated as of June 13, 2003
among the selling stockholders of Viewpoint International, Inc. and us, upon
achievement of certain milestones by our Tommy Bahama Group, the selling
shareholders may receive up to $12.5 million from us in each of the next four
years. They can opt to receive up to half of their annual earnout payment in
shares of common stock (valued at $12.88 per share) in each of the first two
years. We have the right to pay up to half of the annual earnout payment in
shares of common stock (valued at the then current market price of the common
stock) in each of the four years (in the first two years, only to the extent
that the selling shareholders have not opted to receive shares of common stock).
We have agreed to register resales of any shares issued pursuant to the earnout
agreement. At current stock prices and given our current expectations regarding
performance of the Tommy Bahama Group, we expect the selling shareholders to
earn their full $12.5 million earnout in each of years one and two, and to opt
to receive half of each such earnout in shares of our common stock valued at
$12.88 per share (for a total of 970,497 shares). This registration statement
does not relate to resales of shares that the selling shareholders may receive
pursuant to the earnout agreement. If we issue shares pursuant to the earnout
agreement, we will be required, pursuant to the registration rights agreement,
to file one or more separate registration statements to cover resales of those
shares.
Under the registration rights agreement, prior to selling any shares
covered by the registration rights agreement, a selling shareholder must offer
us the right to purchase those shares at a price per share equal to the average
of the high and low per share sales prices of a share of common stock on the
trading day immediately preceding the date that the selling shareholder offers
us the shares. If we decline to purchase any of the shares so offered, the
selling shareholder may sell those shares at any time within 90 days of the
offer to us. At the expiration of the 90-day period, the selling shareholder
must again offer the shares to us prior to selling them.
The following table sets forth as of January 28, 2004:
- the name of each selling shareholder;
- the nature of any position, office or other material
relationship each selling shareholder has had within the past
three years with us or any of our predecessors or affiliates;
- the number of shares of common stock beneficially owned by
each selling shareholder;
- the maximum number of shares of common stock that may be
offered or sold by each selling shareholder under this
prospectus; and
- the amount of common stock to be owned by each selling
shareholder upon the completion of the offering if all shares
covered by this registration statement are sold.
SHARES BENEFICIALLY
OWNED PRIOR TO SHARES BENEFICIALLY
OFFERING(1) OWNED AFTER OFFERING(1)
-------------------- MAXIMUM NUMBER -----------------------
PERCENTAGE OF SHARES BEING PERCENTAGE
NAMES OF SELLING SHAREHOLDERS(2) NUMBER OF CLASS OFFERED NUMBER OF CLASS
-------------------------------- -------- ---------- ---------------- ------ ------------
SKM-TB, LLC(3) ........................ 274,758 1.7% 274,758 - 0%
Whole Duty Investment Ltd.(4) ......... 261,726 1.6% 261,726 - 0%
S. Anthony Margolis(5) ................ 108,592 * 108,592 - 0%
Margolis Family Stock Trust for
the benefit of Jodi Kooperman(6) ...... 2,658 * 2,658 - 0%
Margolis Family Stock Trust for
the benefit of David Margolis(6) ...... 2,658 * 2,658 - 0%
Margolis Family Stock Trust for
the benefit of Lucas Margolis(6) ...... 2,660 * 2,660 - 0%
Margolis Family Stock Trust for
the benefit of Katelyn Margolis(6) .... 2,658 * 2,658 - 0%
Margolis Family Stock Trust for
the benefit of Brandon Margolis(6) .... 2,658 * 2,658 - 0%
William S. Sterns, III(6) ............. 13,292 * 13,292 - 0%
Bonita Beach Blues Inc.(7) ............ 35,924 * 35,924 - 0%
Lucio Dalla Gasperina(8) .............. 82,108 * 82,108 - 0%
------- --- ------- ---- ----
Total(9) .............................. 776,400 4.8% 776,400 - 0%
---------------------------------
* Indicates less than 1%.
(1) Each beneficial owner listed in the table has both voting and
investment power over the applicable shares unless otherwise
indicated. The amounts and percentages of common stock
beneficially owned prior to this offering have been calculated
in accordance with applicable SEC regulations. These
regulations require shares underlying stock options or
warrants to be considered outstanding (solely for purposes of
calculating the relevant holder's percentage) if they are
issuable within 60 days of January 28, 2004. The percentages
of beneficial ownership are based on an aggregate of
16,170,814 shares of common stock outstanding as of November
28, 2003.
(2) Each of the selling shareholders listed in the table was a
stockholder of Viewpoint/the Tommy Bahama Group prior to its
acquisition by us.
(3) SKM Equity Fund III, L.P. is the managing member of SKM-TB,
LLC. SKM Partners, LLC is the general partner of SKM Equity
Fund III, L.P. Two partners of SKM Partners, LLC, John F.
Megrue, Jr. and David J. Oddi (each of whom disclaims control
of SKM Partners, LLC and SKM-TB, LLC), were directors of
Viewpoint/the Tommy Bahama Group prior to its acquisition by
us. SKM Partners, LLC, is controlled by a management committee
consisting of Thomas A. Saunders III, Allan W. Karp and John
F. Megrue, Jr. The management committee acts by majority vote.
Saunders Karp & Megrue, L.P., an affiliate of SKM Equity Fund
III, L.P., provided Viewpoint/the Tommy Bahama Group with
financial advisory services pursuant to an advisory agreement
which was terminated upon our acquisition of Viewpoint/the
Tommy Bahama Group.
(4) Whole Duty Investment Ltd. Is controlled by Yeung Yuk Wai.
(5) Mr. Margolis is currently Group Vice President of our company
and is President and Chief Executive Officer of the Tommy
Bahama Group. Prior to our acquisition of Viewpoint/the Tommy
Bahama Group, Mr. Margolis served as its President and Chief
Executive Officer.
(6) William S. Sterns, III, is the sole trustee of each of the
indicated trusts and may be deemed to be the beneficial owner
of the shares held by each such trust. Mr. Sterns is not
selling any shares in this offering. All shares indicated as
being sold by Mr. Sterns are shares attributed to him, but
being sold by the trusts.
(7) Bonita Beach Blues Inc. is controlled by Robert Emfield.
(8) Mr. Dalla Gasperina is currently Executive Vice President of
the Tommy Bahama Group. Prior to our acquisition of
Viewpoint/the Tommy Bahama Group, Mr. Dalla Gasperina served
as its Executive Vice President.
(9) All totals do not reflect amounts listed next to Mr. Sterns,
as such shares are duplicative of those held by the indicated
trusts. See note (6).
PLAN OF DISTRIBUTION
The sale of common stock by the selling shareholders and any of their
pledgees, assignees and successors-in-interest pursuant to this prospectus may
be effected from time to time in one or more transactions on the New York Stock
Exchange or otherwise at a fixed price or prices, which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
The selling shareholders from time to time may offer and sell the
shares directly to purchasers or through agents, underwriters or dealers. Such
sales may be in the form of:
- ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
- block trades in which the broker-dealer will attempt to sell
the shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
- purchases by a broker-dealer as principal and resale by the
broker-dealer for its own account;
- exchange distributions in accordance with the rules of the New
York Stock Exchange or any other applicable exchange;
- privately negotiated transactions;
- short sales;
- agreements between broker-dealers and the selling shareholders
to sell a specified number of shares at a stipulated price per
share;
- a combination of any such methods of sale; and
- any other method permitted pursuant to applicable law.
Agents or underwriters acting on behalf of the selling shareholders may
receive compensation from the selling shareholders or from purchasers of the
common stock for whom they act as agent in the form of discounts, concessions or
commissions. Underwriters may sell the common stock to or through dealers, and
such dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agents. Agents, underwriters and dealers that participate
in the distribution of common stock may be deemed to be underwriters for
purposes of the Securities Act of 1933, as amended, which we refer to as the
Securities Act, and any discounts, concessions or commissions received by them
from the selling shareholders and any profit on the resale of common stock by
them may be deemed to be underwriting discounts and commissions under the
Securities Act. To our knowledge, the selling shareholders have not entered into
any agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of the shares, nor is there any underwriter or
coordinating broker acting in connection with the proposed sale of shares by the
selling shareholders.
The selling shareholders may enter into hedging transactions with
broker-dealers in connection with distributions of the shares or otherwise. In
such transactions, broker-dealers or other financial institutions may engage in
short sales of the shares in the course of hedging the positions they assume
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with selling shareholders. The selling shareholders may also sell shares short
and deliver the shares to close out such short positions. The selling
shareholders may also enter into option or other transactions with
broker-dealers, which require the delivery to the broker-dealer of the shares.
The broker-dealer may then resell or otherwise transfer such shares pursuant to
this prospectus. The selling shareholders may also pledge or loan the shares to
a broker-dealer. The broker-dealer may sell the shares so loaned, or upon a
default, the broker-dealer may sell the pledged shares pursuant to this
prospectus. Any of these transactions, if undertaken, may have the effect of
lowering the trading price of the common stock.
The selling shareholders may from time to time pledge or grant a
security interest in some or all of the shares of our common stock owned by them
and, if they default in the performance of their secured obligations, the
pledges or secured parties may offer and sell the shares of common stock from
time to time under this prospectus, or under an amendment to this prospectus
under Rule 424(b)(3) or other applicable provision on the Securities Act
amending the list of selling shareholders to include the pledgee, transferee or
other successors-in-interest as selling shareholders under this prospectus.
At the time a particular offer of shares is made, a prospectus
supplement, if required, will be distributed that will set forth the names of
any agents, underwriters or dealers and any compensation from the selling
shareholders and any other required information.
If sold through third parties, in most states, the shares must be sold
through registered or licensed brokers or dealers We have advised the selling
shareholders that the anti-manipulation rules of Regulation M under the Exchange
Act may apply to sales of shares in the market and to the activities of the
selling shareholders and their affiliates. In addition, we will make copies of
this prospectus available to the selling shareholders and we have informed them
of the need for delivery of copies of this prospectus to purchasers at or prior
to the time of any sale of the shares offered hereby. The selling shareholders
may indemnify any broker-dealer that participates in transactions involving the
sale of the shares against certain liabilities, including liabilities arising
under the Securities Act.
We will pay all expenses incident to the offering and sale of the
shares to the public other than any commissions and discounts of underwriters,
dealers or agents and any transfer taxes. We estimate that we will spend
approximately $125,000 for expenses in connection with the offering of shares by
the selling shareholders.
Agents, underwriters or dealers may engage in transactions with or
perform services for us in the ordinary course of business.
VALIDITY OF COMMON STOCK
The validity of the common stock offered hereby will be passed upon for
us by Thomas C. Chubb III, our Vice President, Secretary & General Counsel. As
of January 28, 2004, Mr. Chubb beneficially owned 2,000 shares of our common
stock and had options to purchase 33,470 shares.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements as of May 30, 2003 and May 31, 2002, and for the years then
ended, included in our Annual Report on Form 10-K for the year ended May 30,
2003, as set forth in their report, which is incorporated by reference in this
prospectus and elsewhere in the registration statement. Our financial statements
are
22
incorporated by reference in reliance on Ernst & Young LLP's report, given on
their authority as experts in accounting and auditing.
The consolidated financial statements of Oxford Industries, Inc. and
Subsidiaries for the year ended June 1, 2001, incorporated by reference in this
registration statement, were audited by Arthur Andersen LLP, independent public
accountants, as stated in their reports. On May 22, 2002, we engaged Ernst &
Young LLP to replace Arthur Andersen LLP as our independent auditors. Relief in
connection with claims which may be available to you against auditing firms may
not be available as a practical matter against Arthur Andersen LLP. In reliance
on the temporary relief provided by the SEC under Rule 437a of the Securities
Act, we are filing this registration statement without the written consent of
Arthur Andersen LLP as required by Section Seven of the Securities Act.
Accordingly, you will not be able to sue Arthur Andersen LLP pursuant to Section
11(a)(4) of the Securities Act and therefore your right of recovery under that
section may be limited as a result of the lack of consent.
The consolidated financial statements of Viewpoint International, Inc.
as of March 31, 2003 and 2002 and for each of the three fiscal years ended
March 31, 2003, incorporated by reference in this registration statement, have
been audited by Mahoney Cohen & Company, CPA, P.C. independent accountants, as
stated in their report. Viewpoint's financial statements are incorporated by
reference in reliance on Mahoney Cohen & Company, CPA, P.C.'s report, given on
their authority as experts in accounting and auditing.
23
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776,400 Shares
OXFORD INDUSTRIES, INC.
Common Stock
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PROSPECTUS
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March 24, 2004
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