Mail Stop 0308
June 28, 2005
Eugene Wielepski
Chief Financial Officer and Vice President-Finance
I.C. Isaacs & Company, Inc.
3840 Bank Street
Baltimore, Maryland 21224-2522
Re: I.C. Isaacs & Company, Inc.
Registration Statement on Form S-2
Filed on June 1, 2005
File No. 333-125396
Annual Report on Form 10-K for the Fiscal Year
Ended
December 31, 2004, as amended
File No. 0-23379
Dear Mr. Wielepski:
We have limited our review to only your financial statements
and related disclosures and do not intend to expand our review to
other portions of your documents. Where indicated, we think you
should revise your document in response to these comments. If you
disagree, we will consider your explanation as to why our comment
is
inapplicable or a revision is unnecessary. Please be as detailed
as
necessary in your explanation. In some of our comments, we may
ask
you to provide us with information so we may better understand
your
disclosure. After reviewing this information, we may raise
additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Form 10-K for Fiscal Year Ended December 31, 2004
Item 7, Management`s Discussion and Analysis of Financial
Condition
and..., page 14
Year Ended December 31, 2004 Compared to Year Ended December 31,
2003, page 15
1. Where you describe two or more business reasons that
contributed
to a material change in a financial statement line item between
periods, please quantify the extent to which each change
contributed
to the overall change in that line item, if practical. For
example,
with respect to the changes in your net sales, please quantify the
extent to which the changes are attributable to price versus
volumetric changes. We believe such additional disclosure is
particularly important because net sales increased as
significantly
as it did in 2004 and because you indicate that you do not expect
the
change attributable to price increases to continue into the
future.
Also, we believe the discussion of the significant changes in your
gross margin would be significantly more meaningful if you
quantified
the individual impacts of the various factors contributing to the
change. See Item 303(A) of Regulation S-K, Financial Reporting
Codification 501.04, and SEC Release No. 33-8350.
Schedule of Contractual Obligations, page 19
2. Please revise your contractual obligations table to include
estimated interest payments on your debt and planned funding of
your
pension plans, if material. Because the table is aimed at
increasing
transparency of cash flow, we believe these payments should be
included in the table. If you choose not to include these
payments,
a footnote to the table should clearly identify the excluded items
and provide any additional information that is material to an
understanding of your cash requirements. See Section IV.A and
footnote 46 to our Management`s Discussion and Analysis Guidance
issued December 19, 2003 available at www.sec.gov.
Item 15, Exhibits, Financial Statement Schedules, page 24
3. It appears that you have omitted a number of exhibits required
by
Item 601 of Regulation S-K, including but not limited to your
Articles of Incorporation, your Bylaws, your code of ethics, the
listing of your subsidiaries, and copies of material contracts,
such
as the Framework Agreement. Please revise to either include all
required exhibits or to incorporate them by reference to
previously
filed documents. Additionally, please amend your Form S-2 filed
June
1, 2005 to include any exhibits required by Item 601 of Regulation
S-
K that have been
omitted from that document. In this regard, it appears that
copies
of material contracts are required but have been omitted.
Consolidated Financial Statements, page F-2
Consolidated Statements of Operations, page F-3
4. Please tell us in detail your basis for classifying losses on
the
sale of property as a non-operating expense. See paragraph 25 of
SFAS 144 and Rule 5-03.9 of Regulation S-X.
Notes to Consolidated Financial Statements, page F-11
General
5. Please disclose the types of expenses that you include in the
cost
of sales line items and the types of expenses that you include
within
operating expenses. In doing so, please disclose specifically
whether you include purchasing and receiving costs, inspection
costs,
warehousing costs, internal transfer costs, and the other costs of
your distribution network in cost of sales. If you currently
exclude
a significant portion of these costs from cost of sales, please
provide cautionary disclosure in your Management`s Discussion and
Analysis section that your gross margins may not be comparable to
others, since some entities include all of the costs related to
their
distribution network in cost of sales and others exclude a portion
of
them from gross margin, including them instead in operating
expense
line items. To the extent the excluded costs are material to your
operating results, please quantify these amounts in your
Management`s
Discussion and Analysis section. If you determine that these
amounts
are immaterial for disclosure, please provide us with your
qualitative and quantitative assessment of materiality for all
periods presented.
6. Based on your Item 1 disclosures, we understand that you sell
several different products. Please provide the revenue
disclosures
by product required by paragraph 37 of SFAS 131. In particular,
it
appears that revenue disclosures for each period presented for the
following products may be applicable:
o Men`s jeanswear;
o Men`s sportswear;
o Women`s jeanswear; and
o Women`s sportswear
If you believe that other product categories are more appropriate,
please advise.
Note 3, Long-Term Debt, page F-11
7. Please disclose the interest rate on your notes payable. See
Rule
5-02.22 of Regulation S-X.
Note 8, Commitments and Contingencies, page F-16
8. Based on your disclosure, it is our understanding that you are
contractually obligated to spend a minimum of $1,090,000 per year
for
advertising and promoting the Girbaud brand, which includes
amounts
you are obligated to pay the licensor for their advertising and
promotion of the Girbaud brand. With a view towards enhancing
disclosure, please tell us how this $1,090,000 minimum amount
reconciles to the schedule of contractual obligations included in
this note and on page 19 in you Management`s Discussion and
Analysis
section. Also, help us understand why the amount of advertising
expense in each period presented, as disclosed on page F-8, is
significantly less than the minimum annual contractual
requirement.
* * * * * *
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested information. Detailed cover
letters greatly facilitate our review. Please understand that we
may
have additional comments after reviewing your amendment and
responses
to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities Act
of
1933 and that they have provided all information investors require
for an informed investment decision. Since the company and its
management are in possession of all facts relating to a company`s
disclosure, they are responsible for the accuracy and adequacy of
the
disclosures they have made.
Notwithstanding our comments, in the event the company
requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledging that:
* should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
* the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy
and
accuracy of the disclosure in the filing; and
* the company may not assert staff comments and the declaration of
effectiveness as a defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the
United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in connection with our review of
your
filing or in response to our comments on your filing.
We will consider a written request for acceleration of the
effective date of the registration statement as confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
You may contact Adam Phippen, Staff Accountant, at (202)
551-
3336, or George Ohsiek, Accounting Branch Chief, at (202) 551-
3843,
if you have questions regarding comments on the financial
statements
and related matters. Please contact John Fieldsend,
Staff Attorney, at (202) 551-3343, David Mittelman, Legal Branch
Chief, at (202) 551-3214, or me at (202) 551-3720 with any other
questions.
Sincerely,
H. Christopher
Owings
Assistant Director
cc: Steven D. Dreyer, Esq.
Arent Fox PLLC
Via Fax: (212) 484-3990
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Eugene Wielepski
I.C. Isaacs & Company, Inc.
June 28, 2005
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