SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
Amendment No. 1
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 4, 2002 Commission File Number 0-15898
CASUAL MALE RETAIL GROUP, INC.
(formerly known as Designs, Inc.)
(Exact name of registrant as specified in its charter)
Delaware 04-2623104
(State or other jurisdiction of (IRS Employer
incorporation of principal executive offices) Identification No.)
555 Turnpike Street, Canton, MA 02021
(Address of principal executive offices) (Zip Code)
(781) 828-9300
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 par value
(Title of each Class)
-----------------
Indicate by "X" whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
The number of shares of common stock outstanding as of June 17, 2002 was
15,994,010.
The registrant hereby amends Part I of its Quarterly Report on Form
10-Q for the period ended May 4, 2002 by replacing it in its entirety as
follows:
DESIGNS, INC.
CONSOLIDATED BALANCE SHEETS
May 4, 2002 and February 2, 2002
(In thousands, except share data)
May 4, February 2,
2002 2002
ASSETS (unaudited)
---------- ----------
Current assets:
Cash and cash equivalents $ -- $ --
Accounts receivable 278 491
Inventories 69,273 57,734
Deferred income taxes 1,082 652
Prepaid expenses 3,012 2,887
--------- ---------
Total current assets 73,645 61,764
Property and equipment, net of accumulated
depreciation and amortization 20,052 20,912
Other assets:
Deferred income taxes 7,326 7,326
Other assets 1,072 899
--------- ---------
Total assets $ 102,095 $ 90,901
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 15,367 $ 7,074
Accrued expenses and other current liabilities 9,769 11,120
Accrued rent 2,651 2,541
Notes payable 33,641 27,752
--------- ---------
Total current liabilities 61,428 48,487
--------- ---------
Stockholders' equity:
Preferred Stock, $0.01 par value, 1,000,000 shares
authorized, none issued -- --
Common Stock, $0.01 par value, 50,000,000 shares
authorized, 17,622,000 and 17,608,000 shares issued
at May 4, 2002 and February 2, 2002, respectively 176 176
Additional paid-in capital 56,237 56,189
Retained earnings (7,099) (5,304)
Treasury stock at cost, 3,040,000 shares at
May 4, 2002 and February 2, 2002, respectively (8,450) (8,450)
Loan to executive (197) (197)
--------- ---------
Total stockholders' equity 40,667 42,414
--------- ---------
Total liabilities and stockholders' equity $ 102,095 $ 90,901
========= =========
The accompanying notes are an integral part of the
consolidated financial statements.
DESIGNS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
---------------------
May 4, May 5,
2002 2001
--------- ---------
Sales $ 36,441 $ 39,395
Cost of goods sold including
occupancy 28,448 29,990
-------- --------
Gross profit 7,993 9,405
Expenses:
Selling, general and administrative 9,077 9,706
Depreciation and amortization 1,411 1,396
-------- --------
Total expenses 10,488 11,102
-------- --------
Operating loss (2,495) (1,697)
-------- --------
Interest expense, net 353 546
-------- --------
Loss before income taxes (2,848) (2,243)
Benefit for income taxes (1,053) ( 875)
-------- --------
Net loss $ (1,795) $ (1,368)
======== ========
Loss per share- Basic and Diluted $ (0.12) $ (0.09)
Weighted average number of common
shares outstanding
- Basic and Diluted 14,576 14,459
The accompanying notes are an integral part of the
consolidated financial statements.
DESIGNS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
-----------------------
May 4, May 5,
2002 2001
--------- ---------
Cash flows from operating activities:
Net loss $ (1,795) $ (1,368)
Adjustments to reconcile net loss to
net cash used for operating activities:
Depreciation and amortization 1,411 1,396
Issuance of common stock and options 33 30
Loss on sale or disposal of fixed assets (26) (8)
Changes in operating assets and liabilities:
Accounts receivable 213 (101)
Inventories (11,539) (10,051)
Prepaid expenses (125) 324
Other assets (202) (31)
Reserve for severance and store closings -- (216)
Income taxes (430) (515)
Accounts payable 8,293 4,706
Accrued expenses and other current liabilities (1,324) 786
Accrued rent 110 113
-------- --------
Net cash used for operating activities (5,381) (4,935)
-------- --------
Cash flows from investing activities:
Additions to property and equipment (523) (1,959)
Proceeds from disposal of property and equipment -- 7
-------- --------
Net cash used for investing activities (523) (1,952)
-------- --------
Cash flows from financing activities:
Net borrowings under credit facility 5,889 6,886
Issuance of common stock under option program 15 1
-------- --------
Net cash provided by financing activities 5,904 6,887
-------- --------
Net change in cash and cash equivalents -- --
Cash and cash equivalents:
Beginning of the year -- --
-------- --------
End of the period $ -- $ --
======== ========
The accompanying notes are an integral part of the
consolidated financial statements.
DESIGNS, INC.
Notes to Consolidated Financial Statements
1. Basis of Presentation
In the opinion of management of the Company, the accompanying unaudited
consolidated financial statements contain all adjustments necessary for a fair
presentation of the interim financial statements. These financial statements do
not include all disclosures associated with annual financial statements and,
accordingly, should be read in conjunction with the notes to the Company's
audited consolidated financial statements for the year ended February 2, 2002
(included in the Company's Annual Report on Form 10-K filed with the Securities
and Exchange Commission). The information set forth in these statements may be
subject to normal year-end adjustments. The information reflects all adjustments
that, in the opinion of management, are necessary to present fairly the
Company's results of operations, financial position and cash flows for the
periods indicated. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. The Company's business historically has been seasonal in
nature and the results of the interim periods presented are not necessarily
indicative of the results to be expected for the full year.
2. Credit Facility
The Company had on December 7, 2000 amended and restated its credit facility
with Fleet Retail Finance Inc. (the "Amended Credit Agreement"). The Amended
Credit Agreement, which was further amended subsequent to the end of the first
quarter of fiscal 2003, as discussed below, principally provided for an
extension of the credit facility to November 30, 2003, reduced the borrowing
costs and tied future interest costs to excess borrowing availability,
eliminated all existing financial performance covenants and adopted a minimum
availability covenant, increased the amount that could potentially be borrowed
by increasing the advance rate formula to 68% from 60% of the Company's eligible
inventory, provided the Company the ability to enter into further stock buyback
programs and reduced the total commitment from $50 million to $45 million. Under
the Amended Credit Agreement, the Company was also able to issue documentary and
standby letters of credit up to $10 million. The Company's obligations under the
Amended Credit Agreement continued to be secured by a lien on all of its assets.
The Company was subject to a prepayment penalty for the first two years of the
extended facility. The Amended Credit Agreement continued to include certain
covenants and events of default customary for credit facilities of this nature,
including change of control provisions and limitations on payment of dividends
by the Company.
At May 4, 2002, the Company had borrowings of approximately $33.6 million
outstanding under this credit facility and had two outstanding standby letters
of credit totaling approximately $2.3 million. Average borrowings outstanding
under this facility during the first three months of fiscal 2003 were
approximately $29.5 million. The Company had average unused excess availability
under this facility of approximately $6.7 million during the first three months
of fiscal 2003, and unused availability of $4.3 million at May 4, 2002. The
Company was in compliance with all debt covenants under the Amended Credit
Agreement at May 4, 2002.
Subsequent to the end of the first quarter on May 14, 2002, the credit facility
was further amended in connection with the financing for the Company's
acquisition of substantially all of the assets of Casual Male Corp. and certain
of its subsidiaries ("Casual Male"). See Note 5 below for further discussion
regarding the acquisition.
3. Earnings Per Share
Statement of Financial Accounting Standards No. 128, "Earnings Per Share,"
requires the computation of basic and diluted earnings per share. Basic earnings
per share is computed by dividing net income (loss) by the weighted average
number of shares of common stock outstanding during the respective period.
Diluted earnings per share is determined by giving effect to the exercise of
stock options using the treasury stock method. The following table provides a
reconciliation of the number of shares outstanding for basic and diluted
earnings per share.
For the three months ended
(In thousands) May 4, 2002 May 5, 2001
- --------------------------------------------------------------------------------
Basic weighted average common
shares outstanding 14,576 14,459
Stock options, excluding the effect of
anti-dilutive options for 764 and 557
shares for the three months ended May 4, 2002
and May 5, 2001, respectively -- --
Diluted weighted average shares -------- -------
outstanding 14,576 14,459
Options to purchase 178,350 shares of the Company's common stock for the three
months ended May 4, 2002 and options to purchase 228,600 shares of the Company's
common stock for the three months ended May 5, 2001, were excluded from the
computations of diluted earnings per share, in each case because the exercise
price of such options was greater than the average market price per share of
Common Stock for the periods reported.
4. Income Taxes
At February 2, 2002, the Company recorded an $8.0 million charge against its
deferred tax asset, related to the potential that certain net operating loss
carryforwards may not be realizable over the next three year period. At the end
of the first quarter of fiscal 2003, the Company re-assessed the realizability
of the Company's remaining deferred tax assets, net of the existing valuation
allowances, and concluded that as of May 4, 2002 no additional reserves were
deemed necessary.
Also, in the first quarter of fiscal 2003, the Company increased its deferred
tax assets as a result of the $1 million income tax benefit recorded against the
operating loss incurred during the period. At May 4, 2002, based principally on
the Company's projections for pre-tax profits for the full fiscal year, the
Company believes that the benefit will be realizable. Furthermore, subsequent to
the end of the first quarter, on May 14, 2002 the Company completed its
acquisition of Casual Male. The Company expects that the
acquisition, which is described more fully in Note 6, will contribute
significantly to the future profitability of the Company.
5. Related Party Transactions
Effective as of April 28, 2002, the Board of Directors approved the extension of
the existing consulting agreement with Jewelcor Management Inc. ("JMI") for an
additional one-year term commencing on April 29, 2002 and ending on April 28,
2003. As payment for services rendered under this agreement, the Company issued
to JMI 60,659 non-forfeitable and fully vested shares of the Company's common
stock. The fair value of those shares on April 29, 2002, the date of issuance,
was $276,000 or $4.55 per share. Seymour Holtzman, Chairman of the Board of
Directors of the Company, is President and Chief Executive Officer of JMI, and
indirectly, with his wife, is the principal beneficial owner of the stock of
JMI.
6. Subsequent Event- Acquisition of Assets
On May 14, 2002, pursuant to an Asset Purchase Agreement entered into as of May
2, 2002, the Company completed the acquisition of Casual Male for a purchase
price of approximately $170 million, plus the assumption of certain operating
liabilities. The Company was selected as the highest and best bidder for the
Casual Male assets at a bankruptcy court ordered auction commencing on May 1,
2002 and concluding on May 2, 2002. The U.S. Bankruptcy Court for the Southern
District of New York subsequently granted its approval of the acquisition of
Casual Male on May 7, 2002.
Casual Male is a leading independent specialty retailer of fashion, casual and
dress apparel for big and tall men, with annual sales that exceed $350 million
Casual Male sells its branded merchandise through various channels of
distribution including full price and outlet retail stores, direct mail and the
internet. Casual Male had been operating under the protection of the U.S.
Bankruptcy Court since May 2001.
Under the terms of the asset purchase agreement, the Company acquired
substantially all of Casual Male's assets including, but not limited to, the
inventory and fixed assets of approximately 475 retail store locations and
various intellectual property. In addition, the Company assumed certain
operating liabilities, including but not limited to, existing retail store lease
arrangements and the existing mortgage for Casual Male's corporate office, which
is located in Canton, Massachusetts.
The Casual Male acquisition, along with the payment of certain related fees and
expenses, was completed with funds provided by: (i) approximately $30.2 million
in additional borrowings from the Company's amended three-year $120.0 million
senior secured credit facility with the Company's bank, Fleet Retail Finance,
Inc. ("FRFI"), (ii) $15.0 million from a three-year term loan with a subsidiary
of FRFI, (iii) proceeds from the private placement of $24.5 million principal
amount of 12% senior subordinated notes due 2007 together with detachable
warrants to acquire 1,715,000 shares of the Company's Common Stock, par value
$.01 per share ("Common Stock"), at an exercise price of $.01 per share, and
additional detachable warrants to acquire 1,176,471 shares of Common Stock at an
exercise price of $8.50 per share, (iv) proceeds from the private placement of
$11.0 million principal amount of 5% senior subordinated notes due 2007, (v)
approximately $82.5 million of proceeds from the private placement of
approximately 1.4 million shares of Common Stock and 180,162 shares of newly
designated Series B Convertible Preferred Stock, par value $0.01 per share
("Series B Preferred Stock") (equivalent to approximately 18.0 million shares of
Common Stock, conditioned upon shareholder approval for conversion), and (vi)
the assumption of a mortgage note in the principal amount of approximately $12.2
million.
This transaction is described more fully in the Company's Current Report on Form
8-K filed on May 23, 2002 and Current Reports on Form 8-K/A filed on May 23,
2002 and June 14, 2002.
Part I. Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
RECENT EVENTS
Acquisition
On May 14, 2002 the Company completed the acquisition of substantially all of
the assets of Casual Male and certain subsidiaries ("Casual Male") for a
purchase price of approximately $170 million, plus the assumption of certain
operating liabilities. The Company was selected as the highest and best bidder
at a bankruptcy court ordered auction commencing on May 1, 2002 and concluding
on May 2, 2002. The U.S. Bankruptcy Court for the Southern District of New York
subsequently granted its approval of the acquisition of Casual Male on May 7,
2002.
Casual Male is a leading independent specialty retailer of fashion, casual and
dress apparel for big and tall men, with annual sales that exceed $350 million.
Casual Male sells its branded merchandise through various channels of
distribution including full price and outlet retail stores, direct mail and the
internet. Casual Male had been operating under the protection of the U.S.
Bankruptcy Court since May 2001.
Under the terms of the asset purchase agreement, the Company acquired
substantially all of Casual Male's assets including, but not limited to, the
inventory and fixed assets of approximately 475 retail store locations and
various intellectual property. In addition, the Company will also assume certain
operating liabilities, including but not limited to, existing retail store lease
arrangements and the existing mortgage for Casual Male's corporate office, which
is located in Canton, Massachusetts.
The Casual Male acquisition, along with the payment of certain related fees and
expenses, was completed with funds provided by: (i) approximately $30.2 million
in additional borrowings from the Company's amended three-year $120.0 million
senior secured credit facility with the Company's bank, Fleet Retail Finance,
Inc. ("FRFI"), (ii) $15.0 million from a three-year term loan with a subsidiary
of FRFI, (iii) proceeds from the private placement of $24.5 million principal
amount of 12% senior subordinated notes due 2007 together with detachable
warrants to acquire 1,715,000 shares of the Company's Common Stock, par value
$.01 per share ("Common Stock"), at an exercise price of $.01 per share, and
additional detachable warrants to acquire 1,176,471 shares of Common Stock at an
exercise price of $8.50 per share, (iv) proceeds from the private placement of
$11.0 million principal amount of 5% senior subordinated notes due 2007, (v)
approximately $82.5 million of proceeds from the private placement of
approximately 1.4 million shares of Common Stock and 180,162 shares of newly
designated Series B Convertible Preferred Stock, par value $0.01 per share
("Series B Preferred Stock") (equivalent to approximately 18.0 million shares of
Common Stock, conditioned upon shareholder approval for conversion), and
(vi) the assumption of a mortgage note in the principal amount of approximately
$12.2 million.
Proposed Corporate Name Change
In view of the significance of the Casual Male acquisition to the growth and
future identity of the Company, the Board of Directors will be recommending to
its stockholders at the Company's Annual Meeting of Stockholders scheduled for
August 8, 2002 that the Company change its name to "Casual Male Retail Group,
Inc." The Company believes that Casual Male will be a significant future
contributor to the Company's overall business and that it will be important to
align the customer and investor identification of the Company with the Casual
Male store concept.
Planned Divestiture
On June 11, 2002, the Company announced that it planned to divest its loss
prevention services subsidiary, LP Innovations ("LPI"), enabling the business to
become an independent company operating under its existing LPI management. LPI,
a subsidiary of Casual Male, was acquired as part of Casual Male acquisition.
LPI, which provides loss prevention services and system solutions primarily to
the retail industry, is expected either to be sold to a company outside of the
retail sector, or to be subject to a distribution of LPI stock pro-rata to the
Company's stockholders, which in either case will result in the LPI business
being held by an independent company. Any public stock received by Designs in
the sale of LPI will be distributed pro rata to the Company's stockholders.
RESULTS OF OPERATIONS
Sales
Sales for the first quarter of fiscal 2003, which ended May 4, 2002, were $36.4
million as compared to sales of $39.4 million in the first quarter of fiscal
2002. Comparable store sales for the first quarter decreased 9%. The first
quarter sales performance primarily reflected the unseasonably cold weather
experienced during the month of April, which resulted in significantly reduced
customer traffic in the outlet malls. The Company believes that its merchandise
inventories are well positioned and at appropriate levels in anticipation of an
increase in customer traffic in the warmer weeks of spring. Comparable stores
are retail locations that have been open at least 13 months. Of the 105 stores
that the Company operated at May 4, 2002, 95 were comparable stores.
Gross Profit Margin
Gross profit margin, inclusive of occupancy costs, was 21.9% for the first
quarter of fiscal 2003 as compared to 23.9% in the first quarter of the prior
year. The majority of the decrease in margin was due to the deleveraging of
occupancy costs to sales of 1.9 percentage points. The Company's initial
merchandise margins continue to be lower than expectations due to a lack of
availability of close-out merchandise, therefore resulting in the Company having
to purchase higher cost merchandise. The Company's markdowns rates on
merchandise were consistent with the prior year.
The Company has made several opportunistic purchases of higher margin fall
merchandise which the Company expects will benefit gross margin in the second
half of fiscal 2003.
Selling, General and Administrative Expenses
Set forth below is certain information concerning the Company's selling, general
and administrative expenses for the three months ended May 4, 2002 and May 5,
2001, respectively.
(In thousands, except May 4, 2002 May 5, 2001
percentage data) $ % of sales $ % of sales
- ----------------------------------------------------------------------------
For the three months ended:
Store payroll $ 4,354 11.9% $ 4,986 12.7%
Other SG&A $ 4,723 13.0% $ 4,720 12.0%
The majority of the decrease in total selling, general and administrative
expense was a result of improvements in store payroll, which decreased 0.8% as a
percentage of sales. The Company continues to focus on its cost reduction
efforts and expects to continue to show favorable decreases over the prior year.
Depreciation and Amortization
Depreciation and amortization expense for the three months ended May 4, 2002
increased slightly by 1.1% from the prior year primarily due to the opening of
new stores and the remodeling of existing stores.
Interest Expense, Net
Net interest expense was $353,000 and $546,000 for the three months ended May 4,
2002 and May 5, 2001, respectively. The decrease was attributable to favorable
interest rates on borrowings under the Company's revolving credit facility as
compared to the prior year.
Income Taxes
At February 2, 2002, the Company recorded an $8.0 million charge against its
deferred tax asset, related to the potential that certain net operating loss
carryforwards may not be realizable over the next three year period. At the end
of the first quarter of fiscal 2003, the Company re-assessed the realizability
of the Company's remaining deferred tax assets, net of the existing valuation
allowances, and concluded that as of May 4, 2002 no additional reserves were
deemed necessary.
Also, in the first quarter of fiscal 2003, the Company increased its deferred
tax assets as a result of the $1 million income tax benefit recorded against the
operating loss incurred during the period. At May 4, 2002, based principally on
the Company's projections for pre-tax profits for the full fiscal year, the
Company believes that the benefit will be realizable. Furthermore, subsequent to
the end of the first quarter, on May 14, 2002 the Company completed its
acquisition of Casual Male. The Company expects that the acquisition, which is
described more fully in Note 6, will contribute significantly to the future
profitability of the Company.
Net Loss
Net loss for the three months ended May 4, 2002 was $1.8 million or $0.12 per
diluted share as compared to a net loss of $1.4 million or $0.09 per diluted
share for the three months ended May 5, 2001. The decrease in earnings in the
first quarter as compared to the prior year was primarily due to the sales
shortfall experienced in April as a result of the unseasonably cold weather and
consequently reduced customer traffic.
SEASONALITY
Historically, the Company has experienced seasonal fluctuations in revenues and
income with increases occurring during the Company's third and fourth quarters
as a result of "Fall" and "Holiday" seasons. Although the Company's business is
principally located in outlet centers, the Company continues to experience a
significant portion of its revenue and income in the second half of the year.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary cash needs are for working capital, essentially inventory
requirements, and capital expenditures. Because the Company's retail stores are
primarily in the outlet channel of distribution, opportunistically acquiring
close-out merchandise is an integral part of the Company's business. In
addition, the Company's capital expenditure program has included projects for
new store openings, remodeling existing stores, and improvements in its systems
infrastructure. For fiscal 2003, the Company expects that much of the Company's
capital requirements will be used for expansion of its Candies(R) and Ecko
Unltd.(R) outlet stores.
As previously discussed, the Company's recent acquisition of Casual Male was
funded through a combination of the issuance of new debt and new equity. The
Company anticipates that cash flow from operations and availability under the
Company's amended $120 million credit facility with FRFI will be sufficient to
meet all debt payments and operating needs of the business.
During the first three months of fiscal 2003, cash used for operations was $5.4
million as compared to cash used for operations of $4.9 million for the first
three months of the prior year. Cash from operations as compared to the prior
year decreased $1.7 million due primarily to timing of merchandise receipt of
inventory and the decrease in earnings during the first quarter as compared to
last year.
At May 4, 2002, total inventory equaled $69.3 million, compared to $57.7 million
at February 2, 2002. This increase in inventory is in part seasonal and reflects
the receipt of merchandise in preparation for the late spring and summer selling
seasons and certain opportunistic purchases of inventory. The Company stocks its
Levi's(R)/Dockers(R) Outlet stores with Levi's(R) and Dockers(R) manufacturing
overruns, merchandise specifically manufactured for The outlet stores and
discontinued lines and irregulars all purchased primarily from Levi Strauss &
Co. By their nature, manufacturing overruns, and discontinued or irregular
merchandise, including the most popular Levi Strauss & Co. styles of
merchandise, and the breadth of the mix of this merchandise, are subject to
limited availability. As previously discussed, the availability of such
close-out merchandise has been limited for the Company's spring and summer
selling seasons and the Company has had to supplement its merchandise offerings
with higher cost merchandise from Levi Strauss & Co. The Company has
acted on several opportunistic purchases which should benefit the fall selling
season. The Company will continue to evaluate additional opportunities to
purchase quantities of Levi's(R), Dockers(R) and Slates(R) brand products.
Total cash outlays for capital expenditures, net of landlord allowances, for The
first three months of fiscal 2003 were $523,000 compared to $3.2 million during
the first three months of fiscal 2002. During the first three months of fiscal
2003, the Company opened four new Candies(r) outlet stores, three of which were
carve-outs from the Company's existing Levi's(R)/Dockers(R) Outlet stores. The
Company's fourth Candies(r) Outlet store to open in the first quarter of fiscal
2003 was in Las Vegas, Nevada and represents the Company's first of several West
Coast locations to be opened in fiscal 2003.
The Company expansion plan for fiscal 2003 includes a total of 15 to 20 new
outlet store openings which will include additional Candies(r) outlet stores as
well as EcKo Unltd.(r) outlet stores.
During the first three months of fiscal 2003, a portion of the Company's cash
needs came from borrowings under its bank credit facility. At May 4, 2002, the
Company had borrowings of approximately $33.6 million outstanding under this
credit facility and had two outstanding standby letters of credit totaling
approximately $2.3 million.
The Company's working capital at May 4, 2002 was approximately $12.2 million,
compared to $13.3 million at February 2, 2002. This decrease in working capital
was primarily attributable to capital expenditures incurred for new and
remodeled stores.
The foregoing discussion of the Company's results of operations, liquidity,
capital resources and capital expenditures includes certain forward-looking
information. Such forward-looking information requires management to make
certain estimates and assumptions regarding the Company's expected strategic
direction and the related effect of such plans on the financial results of the
Company. Accordingly, actual results and the Company's implementation of its
plans and operations may differ materially from forward-looking statements made
by the Company. The Company encourages readers of this information to refer to
Exhibit 99 to the Company's Form 8-K, filed with the Securities and Exchange
Commission on April 28, 2000, which identifies certain risks and uncertainties
that may have an impact on future earnings and the direction of the Company.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
In the normal course of business, the financial position and results of
operations of the Company are routinely subject to a variety of risks, including
market risk associated with interest rate movements on borrowings. The Company
regularly assesses these risks and has established policies and business
practices to seek to protect against the adverse effect of these and other
potential exposures.
The Company utilizes cash from operations and short-term borrowings to
fund its working capital needs. Borrowings under the Company's bank credit
agreement, which expires in November 2003, bear interest at variable rates based
on FleetBoston, N.A.'s prime rate or the London Interbank Offering Rate
("LIBOR"). These interest rates at May 4, 2002 were 4.75% for prime based
borrowings and included various LIBOR contracts with interest rates ranging from
3.870% to 4.374%. Based upon sensitivity analysis as of May 4, 2002, a 10%
increase in interest rates would result in a potential cost to the Company of
approximately $140,000 on an annualized basis. In addition, the Company has
available letters of credit as sources of financing for its working capital
requirements.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CASUAL MALE RETAIL GROUP, INC.
Date: September 11, 2002
By: /s/ Dennis R. Hernreich
--------------------------------
Name: Dennis R. Hernreich
Title: Senior Vice President and
Chief Financial Officer
Casual Male Retail Group, Inc.
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, David A. Levin, certify that:
1. I have reviewed this report on Form 10-Q/A of Casual Male Retail
Group, Inc. (formerly Designs, Inc.);
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this report; and
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this
report.
Date: September 11, 2002
/s/ David A. Levin
----------------------------------
David A. Levin
Chief Executive Officer
(Principal Executive Officer)
I, Dennis R. Hernreich, certify that:
1. I have reviewed this report on Form 10-Q/A of Casual Male Retail
Group, Inc. (formerly Designs, Inc.);
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this report; and
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this
report.
Date: September 11, 2002
/s/ Dennis R. Hernreich
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Dennis R. Hernreich
Chief Financial Officer
(Principal Financial and Accounting
Officer)