As filed with the Securities and Exchange Commission on May 7, 2001
Registration Statement No. 333-58236
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Amendment No. 1 to
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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JONES APPAREL GROUP, INC.
(Exact name of Registrant as specified in its charter)
JONES APPAREL GROUP HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)
JONES APPAREL GROUP USA, INC.
(Exact name of Registrant as specified in its charter)
NINE WEST GROUP INC.
(Exact name of Registrant as specified in its charter)
--------------------------
Pennsylvania 06-0935166
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Delaware 51-0390339
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Pennsylvania 23-2978516
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Delaware 13-4060243
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
--------------------------
250 Rittenhouse Circle
Bristol, Pennsylvania 19007
(215) 785-4000
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
--------------------------
Ira M. Dansky, Esq.
Jones Apparel Group, Inc.
1411 Broadway
New York, New York 10018
(212) 536-9526
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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With a copy to:
William V. Fogg, Esq.
Cravath, Swaine & Moore
825 Eighth Avenue
New York, New York 10019
(212) 474-1000
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Approximate date of commencement of proposed sale to public: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box: [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933 (the "Securities Act"), other than securities offered only in
connection with dividend or interest reinvestment plans, please check the
following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act, please check the following box. [ ]
--------------------------
CALCULATION OF REGISTRATION FEE
Proposed Maximum
Title of Each Class of Securities to Amount to be Proposed Maximum Aggregate Aggregate Offering Price Amount of
be Registered Registered Price Per Unit (1) (1) Registration Fee*
- ------------------------------------- ------------------- -------------------------- ------------------------- -----------------
Zero Coupon Convertible Senior
Notes due 2021 ...................... $805,645,000 50.26% $404,917,920.00 $101,229.48
Common Stock, par value
$.01 per share, of Jones Apparel
Group, Inc........................... (2) (3) (3) (3)
- ------------------------------------- ------------------- -------------------------- -------------------------- ----------------
* Previously paid on April 3, 2001.
(1) Estimated solely for the purpose of calculating the registration fee.
This fee is calculated on the basis of the offering price of the notes
alone. The notes were originally issued at a substantial discount from
their principal amount at maturity. The registration fee with respect to
the notes was calculated based on the approximate accreted value thereof
as of April 2, 2001 determined pursuant to the provisions of the
indenture governing such notes.
(2) Includes 7,903,781 shares of common stock issuable upon conversion of the
notes. Each note is convertible into 9.8105 shares of common stock per
$1,000 principal amount at maturity of notes, subject to adjustment under
certain circumstances. Pursuant to Rule 416 under the Securities Act,
such number of shares of common stock registered hereby shall include an
indeterminate number of shares of common stock that may be issued in
connection with a stock split, stock dividend, capitalization or similar
event.
(3) The shares of common stock issuable upon conversion of the notes will be
issued for no additional consideration, and therefore no registration fee
is required pursuant to Rule 457(i).
--------------------------
The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment that specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any jurisdiction where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED MAY 7, 2001
PRELIMINARY PROSPECTUS
$805,645,000
Jones Apparel Group, Inc.
Jones Apparel Group Holdings, Inc.
Jones Apparel Group USA, Inc.
Nine West Group Inc.
Zero Coupon Convertible Senior Notes due 2021
and Shares of Common Stock of Jones Apparel Group, Inc.
Issuable Upon Conversion of the Notes
--------------------------
Jones Apparel Group, Inc. and its subsidiaries Jones Apparel Group
Holdings, Inc., Jones Apparel Group USA, Inc. and Nine West Group Inc. are
jointly and severally liable for the obligations under the notes. In this
prospectus, the terms "we," "us," and "our" refer collectively to all four
co-obligors in respect of the notes.
We issued the notes in a private placement in February 2001 at an issue
price of $499.60 per $1,000 principal amount at maturity. This prospectus will
be used by selling securityholders to resell their notes and the Jones Apparel
Group common stock issuable upon conversion of their notes, and we will not
receive any proceeds from sales that the selling securityholders make.
We will not pay cash interest on the notes prior to maturity. Instead, on
February 1, 2021, the maturity date of the notes, noteholders will receive
$1,000 per note. The original issue price per note represented a yield to
maturity of 3.50% per year calculated from February 1, 2001. If a Tax Event
occurs and we so elect, cash interest, instead of future original issue
discount, shall accrue and be payable semi-annually on each note at 3.50% per
year. See "Description of the Notes--Optional Conversion to Semi-annual Cash
Pay Note Upon Tax Event" for the definition of the term "Tax Event."
Noteholders may convert their notes at any time on or before the maturity
date, unless the notes have been redeemed or purchased previously, into 9.8105
shares of Jones Apparel Group common stock per note. The conversion rate will
not be adjusted for accrued original issue discount, but will be subject to
adjustment in certain events described under "Description of the
Notes--Conversion Rights."
We may redeem the notes at any time on or after February 1, 2004 at the
indicative redemption prices listed on page 16. Holders may require us to
repurchase the notes on February 1, 2004, February 1, 2009 and February 1,
2014 at a price per note of $554.41, $659.44 and $784.36, respectively. We may
choose to pay the purchase price in cash, in shares of Jones Apparel Group
common stock valued at 95% of their Market Price or any combination thereof.
In addition, if we experience specific kinds of fundamental changes prior to
February 1, 2004, holders may require us to repurchase the notes. In the case
of a repurchase upon such a fundamental change, the repurchase price will be
equal to the issue price of the notes plus accrued original issue discount,
and we may choose to pay the repurchase price in cash, in shares of Jones
Apparel Group common stock valued at 95% of their Market Price or any
combination thereof. See "Description of the Notes--Purchase of Notes at the
Option of the Holder" for the definition of the term "Market Price."
The notes are our senior obligations and rank equally with all our other
senior unsecured debt.
Jones Apparel Group common stock is listed on the New York Stock Exchange
under the Symbol "JNY." On April 30, 2001, the closing price of Jones
Apparel Group common stock was $39.740 per share.
This investment involves risks. See "Risk Factors" beginning on page 8.
The notes and the shares of Jones Apparel Group common stock may be
offered by the selling securityholders in negotiated transactions or otherwise
at market prices prevailing at the time of sale or at negotiated prices. The
selling securityholders may be deemed to be "underwriters" as defined in the
Securities Act of 1933, as amended (the "Securities Act"). If any
broker-dealers are used by the selling securityholders, any commissions paid
to broker-dealers and, if broker-dealers purchase any notes or shares as
principals, any profits received by such broker-dealers on the resale of the
notes or shares of Jones Apparel Group common stock may be deemed to be
underwriting discounts or commissions under the Securities Act. In addition,
any profits realized by the selling securityholders may be deemed to be
underwriting commissions.
This prospectus does not constitute an offer to sell, or a solicitation
of an offer to buy, any of the securities offered hereby by any person in any
jurisdiction in which it is unlawful for such person to make such an offering
or solicitation.
--------------------------
Neither the Securities and Exchange Commission (the "SEC") 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.
The date of this prospectus is o, 2001.
TABLE OF CONTENTS
Page
Where You Can Find More Information................................... 3
Special Note Regarding Forward-Looking Statements..................... 4
The Company........................................................... 5
Summary of the Offering............................................... 5
Risk Factors.......................................................... 8
Price Range of Common Stock and Dividend Policy....................... 11
Use of Proceeds....................................................... 11
Ratio of Earnings to Fixed Charges.................................... 11
Description of Other Debt............................................. 12
Description of the Notes.............................................. 14
Registration Rights................................................... 29
Description of Capital Stock.......................................... 30
Certain United States Federal Income Tax Considerations............... 31
Selling Securityholders............................................... 38
Plan of Distribution.................................................. 43
Legal Matters......................................................... 45
Experts............................................................... 45
You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized anyone to provide you
with different information. You should not assume that the information
contained in this prospectus is accurate as of any date other than the date on
the front of this prospectus.
As used in this prospectus, unless the context requires otherwise:
o "We," "us" and "our" refer collectively to all four co-obligors in
respect of the notes;
o "Jones" or the "Company" means Jones Apparel Group, Inc. and/or its
predecessors and consolidated subsidiaries, including the other
issuers, as the context may require;
o "Jones Apparel Group" means Jones Apparel Group, Inc.;
o "Jones Holdings" means Jones Apparel Group Holdings, Inc.;
o "Jones USA" means Jones Apparel Group USA, Inc.; and
o "Nine West" means Nine West Group Inc.
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WHERE YOU CAN FIND MORE INFORMATION
Jones files annual, quarterly and special reports, proxy statements and
other information with the SEC. Jones' SEC filings are available to the public
over the Internet at the SEC's web site at http://www.sec.gov. You may also
read and copy any document Jones files at the SEC's public reference
facilities in Washington, D.C., New York, New York and Chicago, Illinois at
the following addresses:
o 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549;
o Seven World Trade Center, Suite 1300, New York, New York 10048; and
o Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661.
Please call the SEC at 1-800-SEC-0330 for further information on the
public reference facilities.
Reports, proxy statements and other information concerning us can also be
inspected and copied at the offices of the New York Stock Exchange at 20 Broad
Street, New York, New York 10005.
We have elected to incorporate by reference into this prospectus the
following document (including the documents incorporated by reference therein)
filed by Jones with the SEC:
o Annual Report on Form 10-K for the fiscal year ended December 31,
2000, filed with the SEC on March 26, 2001;
o Current Report on Form 8-K, filed with the SEC on April 16, 2001;
and
o Proxy Statement, filed with the SEC on April 26, 2001.
Any statement made in a document incorporated by reference or deemed
incorporated herein by reference is deemed to be modified or superseded for
purposes of this prospectus if a statement contained in this prospectus or in
any other subsequently filed document which also is incorporated or deemed
incorporated by reference herein modifies or supersedes that statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this prospectus. We also
incorporate by reference all documents filed pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act")
after the date of this prospectus and prior to the termination of this
offering.
You may request a copy of these filings, in most cases without exhibits,
as well as the indenture referred to herein at no cost by writing or
telephoning us at the following address:
Chief Financial Officer
Jones Apparel Group, Inc.
250 Rittenhouse Circle
Bristol, Pennsylvania 19007
(215) 785-4000
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SPECIAL NOTE REGARDING
FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference contain
certain "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 with respect to financial condition,
results of operations, business strategies, operating efficiencies or
synergies, competitive position, growth opportunities for existing products,
plans and objectives of management, markets for our common stock and other
matters. Statements in this prospectus, including those incorporated by
reference, that are not historical facts are "forward-looking statements" for
the purpose of the safe harbor provided by Section 21E of the Exchange Act and
Section 27A of the Securities Act. Forward-looking statements, including,
without limitation, those relating to our future business prospects, revenues
and income, wherever they occur in this prospectus, are necessarily estimates
reflecting the best judgment of our senior management and involve a number of
risks and uncertainties that could cause actual results to differ materially
from those suggested by forward-looking statements. You should consider
forward-looking statements, therefore, in light of various important factors,
including those set forth in this prospectus. Important factors that could
cause actual results to differ materially from estimates or projections
contained in the forward-looking statements include, without limitation:
o the effect of national and regional economic conditions;
o lowered levels of consumer spending resulting from a general
economic downturn;
o the performance of our products within the prevailing retail
environment;
o customer acceptance of both new designs and newly-introduced product
lines;
o financial difficulties encountered by customers;
o the effects of vigorous competition in the markets in which we
operate;
o our ability to integrate the organizations and operations of any
acquired business into our existing organization and operations;
o the termination or non-renewal of the licenses with Polo Ralph
Lauren Corporation;
o risks relating to our extensive foreign operations and
manufacturing;
o changes in the costs of raw materials, labor and advertising; and
o our ability to secure and protect trademarks and other intellectual
property rights.
Words such as "estimate," "project," "plan," "intend," "expect,"
"believe" and similar expressions are intended to identify forward-looking
statements. You will find these forward-looking statements at various places
throughout this prospectus and the documents incorporated by reference,
including any amendments. You are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date they were
made. We do not undertake any obligation to publicly update or release any
revisions to these forward-looking statements to reflect events or
circumstances after the date of this prospectus or to reflect the occurrence
of unanticipated events.
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THE COMPANY
Jones is a leading designer and marketer of a broad range of women's
collection sportswear, suits and dresses, casual sportswear and jeanswear for
men, women and children, women's shoes and accessories, and costume jewelry.
Jones has pursued a multi-brand strategy by marketing its products under
several nationally known brands, including Jones New York, Evan-Picone, Rena
Rowan, Nine West, Easy Spirit, Enzo Angiolini, Bandolino and Todd Oldham and
the licensed brands Lauren by Ralph Lauren, Ralph by Ralph Lauren and Polo
Jeans Company. Each brand is differentiated by its own distinctive styling and
pricing strategy, and together they target a wide range of consumers. Jones
primarily contracts for the manufacture of its products through a worldwide
network of quality manufacturers. Jones has capitalized on its nationally known
brand names by entering into various licenses for the Jones New York,
Evan-Picone and Nine West brand names with select manufacturers of women's and
men's products which Jones does not manufacture.
On July 31, 2000, Jones acquired 100% of the capital stock of Victoria +
Co Ltd. Victoria is a leading designer and marketer of branded and private
label costume jewelry sold to better department and specialty stores. Victoria
markets its products under the national brand names Napier, Richelieu and
Judith Jack and under several licensed brands, including Tommy Hilfiger and
Givenchy, as well as private labels. In addition, Victoria markets jewelry
under Jones' Nine West label.
On April 13, 2001, Jones entered into a definitive merger agreement (the
"Merger Agreement") with McNaughton Apparel Group Inc., a Delaware corporation
("McNaughton"), pursuant to which McNaughton will be merged with and into a
direct wholly owned subsidiary of Jones (the "Merger"). McNaughton designs,
contracts for the manufacture of and markets a broad line of brand name,
moderately-priced women's and juniors' career and casual clothing. In
connection with the Merger, stockholders of McNaughton will receive $10.50 in
cash and approximately $10.50 in Jones Apparel Group common stock for each
share of McNaughton common stock, subject to adjustment in accordance with the
Merger Agreement. The Merger is subject to customary closing conditions,
including approval by McNaughton's shareholders and clearance under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
Our principal executive offices are located at 250 Rittenhouse Circle,
Bristol, Pennsylvania 19007. Our telephone number is (215) 785-4000.
SUMMARY OF THE OFFERING
The following summary of the offering should be read together with the
information contained in other parts of this prospectus and the documents we
incorporate by reference. You should carefully read this prospectus and the
documents we incorporate by reference, which contain important information
regarding the terms of the notes as well as tax and other considerations that
are important in making a decision about whether to invest in the notes, and
you should pay special attention to the "Risk Factors" section beginning on
page 8.
Notes Offered................. $805,645,000 aggregate principal amount at
maturity of Zero Coupon Convertible Senior
Notes Due 2021. We will not pay cash interest
on the notes prior to maturity, other than as
described below under "--Optional Conversion to
Semi-annual Cash Pay Note Upon Tax Event." The
notes were originally sold by Salomon Smith
Barney Inc. and Bear, Stearns & Co. Inc. to
qualified institutional buyers (as defined in
Rule 144A under the Securities Act) at an issue
price of $499.60 per note and a principal
amount at maturity of $1,000 per note. This
prospectus also relates to the offering of
shares of Jones Apparel Group common stock
which are issuable upon conversion or
repurchase of the notes.
Maturity...................... February 1, 2021.
Yield to Maturity of Notes.... 3.50% per year (computed on a semi-annual bond
equivalent basis) calculated from February 1,
2001.
Conversion Rights............. Holders may convert their notes at any time
prior to the close of business on February 1,
2021, unless the notes have been redeemed or
purchased by us previously. For each note of
$1,000 principal amount at maturity converted,
we will deliver 9.8105 shares of Jones Apparel
Group common stock. The conversion rate may be
adjusted for certain reasons but will not be
adjusted for accrued original issue discount.
Upon conversion, the holder will not receive
any cash payment representing accrued original
issue discount; accrued original issue discount
will be deemed paid by shares of the common
stock received by the holder of notes on
conversion.
Ranking....................... The notes are our unsecured senior obligations
and rank equally with all of our other
unsecured senior indebtedness.
Original Issue Discount....... The notes were offered with original issue
discount for U.S. federal income tax
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purposes equal to the principal amount at
maturity of each note less the issue price to
investors. You should be aware that, although
we will not pay cash interest on the notes,
U.S. investors must include accrued original
issue discount in their gross income for U.S.
federal income tax purposes prior to the
conversion, redemption, purchase or maturity of
the notes (even if such notes are ultimately
not converted, redeemed, purchased or paid at
maturity).
Sinking Fund.................. None.
Optional Redemption........... We may redeem all or a portion of the notes for
cash at any time on or after February 1, 2004.
Indicative redemption prices are set forth in
this prospectus on page 16.
Purchase of the Notes by Us at
the Option of the Holder..... Holders may require us to purchase their notes
on any one of the following dates at the
following prices:
o on February 1, 2004 at a price of $554.41
per note;
o on February 1, 2009 at a price of $659.44
per note; and
o on February 1, 2014 at a price of $784.36
per note.
We may choose to pay the purchase price in cash
or Jones Apparel Group common stock, valued at
95% of the Market Price, or a combination of
cash and Jones Apparel Group common stock.
Optional Conversion to
Semi-annual Cash Pay Note
Upon Tax Event.............. From and after the occurrence of a Tax Event,
at our option, cash interest in lieu of future
original issue discount shall accrue on each
note from the date on which we exercise such
option at the rate of 3.50% per year on the
restated principal amount (i.e., the issue
price of the note plus any original issue
discount accrued to the later of the date of
the Tax Event and the date we exercise such
option) and shall be payable semi-annually on
each interest payment date to holders of record
at the close of business on each regular record
date immediately preceding such interest
payment date. Interest will be computed upon a
360-day year comprised of twelve 30-day months
and will initially accrue from the Option
Exercise Date and thereafter from the most
recent date to which interest has been paid. In
such an event, the redemption prices, purchase
prices, and Fundamental Change repurchase
prices shall be adjusted as described herein.
However, there will be no changes in a holder's
conversion rights. See "Description of the
Notes--Optional Conversion to Semi-annual Cash
Pay Note Upon Tax Event" for the definition of
the term "Option Exercise Date."
Fundamental Change............ Upon a Fundamental Change involving us
occurring prior to February 1, 2004, each
holder may require us to repurchase all or a
portion of such holder's notes. This repurchase
price will be equal to the issue price of the
notes plus accrued original issue discount to
the date of repurchase. We may choose to pay
the repurchase price in cash or in Jones
Apparel Group common stock valued at 95% of the
Market Price or a combination of cash and
common stock. See "Description of the
Notes--Fundamental Change Permits Holder to
Require Us to Repurchase Notes" for the
definition of the term "Fundamental Change."
Covenants..................... The notes were issued under an indenture that
limits our ability and the ability of our
subsidiaries to create or permit to exist liens
and to engage in sale and leaseback
transactions.
Use of Proceeds............... We will not receive any proceeds from any sale
of the securities contemplated by this
prospectus.
Trading....................... The notes and shares of common stock issuable
upon the conversion of the notes have been
designated for trading in the PORTAL Market.
However, any notes or
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shares of common stock issuable upon conversion
sold under this prospectus will no longer trade
in the PORTAL Market. Jones Apparel Group
common stock is listed on the New York Stock
Exchange under the symbol "JNY."
-7-
RISK FACTORS
You should consider carefully all the information included or
incorporated by reference in this prospectus and, in particular, should
evaluate the following risks before deciding to invest in the notes.
The Apparel, Footwear and Accessories Industries are Highly Competitive
Apparel, footwear and accessories companies face competition on many
fronts, including the following:
o establishing and maintaining favorable brand recognition;
o developing products that appeal to consumers;
o pricing products appropriately;
o providing strong marketing support; and
o obtaining access to retail outlets and sufficient floor space.
There is intense competition in the sectors of the apparel, footwear and
accessories industries in which we participate. We compete with many other
manufacturers and retailers, some of which are larger and have greater
resources than we do. Any increased competition could result in reduced sales
or prices, or both, which could have a material adverse effect on us.
Fashion Trends are Constantly Changing
Customer tastes and fashion trends can change rapidly. We may not be able
to anticipate, gauge or respond to such changes in a timely manner. If we
misjudge the market for our products or product groups, we may be faced with a
significant amount of unsold finished goods inventory, which would have a
material adverse effect on us.
The Apparel, Footwear and Accessories Industries are Highly Cyclical
Negative economic trends over which we have no control that depress the
level of consumer spending could have a material adverse effect on us.
Purchases of apparel, footwear and related goods often decline during
recessionary periods when disposable income is low. In such an environment, we
may increase the number of promotional sales, which would further adversely
affect our profitability.
The Concentration of Our Customers Could Adversely Affect Our Business
Our ten largest customers, principally department stores, accounted for
approximately 56% of sales in 2000. While no single customer accounted for
more than 10% of our net sales, certain of our customers are under common
ownership. Department stores owned by the following entities accounted for the
following percentages of our 2000 sales:
Federated Department Stores, Inc................................ 14%
May Department Stores Company................................... 14%
Remainder of ten largest customers.............................. 28%
We believe that purchasing decisions are generally made independently by
individual department stores within a commonly controlled group. There has
been a trend, however, toward more centralized purchasing decisions. As such
decisions become more centralized, the risk to us of such concentration
increases. The loss of any of our largest customers, or the bankruptcy or
material financial difficulty of any customer or any of the companies listed
above, could have a material adverse effect on us. We do not have long-term
contracts with any of our customers, and sales to customers generally occur on
an order-by-order basis. As a result, customers can terminate their
relationships with us at any time or under certain circumstances cancel or
delay orders.
-8-
Significant Portions of Our Sales and Profits Depend on Certain of Our License
Agreements with Polo Ralph Lauren Corporation
The termination or non-renewal of our exclusive licenses to manufacture
and market clothing under the Lauren by Ralph Lauren and Polo Jeans Company
trademarks in the United States and elsewhere would have a material adverse
effect on us. Our Lauren by Ralph Lauren and Polo Jeans Company businesses
represent significant portions of our sales and profits. We sell products
bearing those trademarks, as well as the Ralph by Ralph Lauren trademark,
under exclusive licenses from affiliates of Polo Ralph Lauren Corporation.
The Lauren by Ralph Lauren license expires on December 31, 2001. We have
exercised our right to renew that license through December 31, 2006. There is
no presently existing right or obligation to renew the Lauren by Ralph Lauren
license after December 31, 2006.
The Polo Jeans Company license expires on December 31, 2005 and may be
renewed by us in five-year increments for up to 25 additional years, if
certain minimum sales levels in certain years are met. Polo Jeans Company
sales are made season-to-season, with customers having no obligation to buy
products beyond what they have already ordered for a particular season. In
addition, renewal of the Polo Jeans Company license after 2010 requires a
one-time payment by us of $25 million or, at our option, a transfer of a 20%
interest in our Polo Jeans Company business to Polo Ralph Lauren (with no fees
required for subsequent renewals). Polo Ralph Lauren also has an option,
exercisable on or before June 1, 2010, to purchase our Polo Jeans Company
business at the end of 2010 for a purchase price, payable in cash, equal to
80% of the then fair value of the business as a going concern, assuming the
continuation of the Polo Jeans Company license through December 31, 2030.
In addition to the provisions described above, the licenses contain
provisions common to trademark licenses which could result in termination of a
license, such as failure to meet payment or advertising obligations.
The Extent of Our Foreign Operations and Manufacturing May Adversely Affect
Our Domestic Business
In 2000, approximately 73% of our apparel products were manufactured
outside North America, primarily in Asia, while the remainder were
manufactured in the United States and Mexico. Nearly all of Nine West's
products were manufactured outside of North America in 2000 as well. The
following may adversely affect foreign operations:
o political instability in countries where contractors and suppliers
are located;
o imposition of regulations and quotas relating to imports;
o imposition of duties, taxes and other charges on imports;
o significant fluctuation of the value of the dollar against foreign
currencies; and
o restrictions on the transfer of funds to or from foreign countries.
As a result of our substantial foreign operations, Jones' domestic
business is subject to the following risks:
o quotas imposed by bilateral textile agreements between the United
States and certain foreign countries;
o reduced manufacturing flexibility because of geographic distance
between us and our foreign manufacturers, increasing the risk that
we may have to mark down unsold inventory as a result of misjudging
the market for a foreign-made product; and
o violations by foreign contractors of labor and wage standards and
resulting adverse publicity.
Fluctuations in the Price, Availability and Quality of Raw Materials Could
Cause Delay and Increase Costs
Fluctuations in the price, availability and quality of the fabrics or
other raw materials used by us in our manufactured apparel and in the price of
leather used to manufacture our footwear and accessories could have a material
adverse effect on our cost of sales or our ability to meet our customers'
demands. We mainly use cotton twill, wool, denim, and synthetic and blended
fabrics. The prices for such fabrics depend largely on the market prices for
the raw materials
-9-
used to produce them, particularly cotton. The price and availability of such
raw materials and, in turn, the fabrics used in our apparel may fluctuate
significantly, depending on many factors, including crop yields and weather
patterns. We generally enter into denim purchase order contracts at specified
prices for three to six months at a time. Higher cotton prices would directly
affect our costs and could affect our earnings. During the past few years,
there have been increases in the price of leather, which generally were
reflected in the selling price of our footwear and accessories products. In
the future, we may not be able to pass all or a portion of such higher raw
materials prices on to our customers.
Our Reliance on Independent Manufacturers Could Cause Delay and Damage
Customer Relationships
We rely upon independent third parties for the manufacture of most of our
products. A manufacturer'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 for those items. The failure to make timely
deliveries may drive customers to cancel orders, refuse to accept deliveries
or demand reduced prices, any of which could have a material adverse effect on
our business. We do not have long-term written agreements with any of our
third party manufacturers. As a result, any of these manufacturers may
unilaterally terminate their relationships with us at any time.
The Successful Integration of Jones and McNaughton Following the Merger Will
Present Significant Challenges
Jones and McNaughton believe that the Merger presents opportunities to
achieve cost savings, including those in connection with distribution,
sourcing, marketing and overhead reductions. The failure to integrate
McNaughton and Jones successfully, and to manage the challenges presented by
the integration process successfully, may prevent Jones from achieving these
anticipated cost savings.
We Depend on Key Personnel to Manage Our Business
Jones' success depends upon the personal efforts and abilities of its
senior executive officers, including Sidney Kimmel, its Chairman, Jackwyn
Nemerov, its President, and Irwin Samelman, its Executive Vice President,
Marketing, as well as the senior executive officers of our operating
subsidiaries, including, after the Merger, Peter Boneparth. If any of these
individuals become unable or unwilling to continue in their present
positions, our business and financial results could be materially adversely
affected.
Our Stock Price Has Been Volatile and We Expect That It Will Continue to be
Volatile
Our stock price has historically been volatile, and we expect that it
will continue to be volatile. Our financial results are difficult to predict
and could fluctuate significantly.
There Has Been No Trading Market for the Notes
The notes are eligible for trading on the PORTAL Market; however, any
notes sold under this prospectus will no longer trade in the PORTAL Market. We
cannot assure you that any market for the notes will develop or, if one does
develop, that it will be maintained. If an active market for the notes fails
to develop or be sustained, the trading price of the notes could be materially
adversely affected.
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PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
Jones Apparel Group common stock is listed on the New York Stock Exchange
and is traded under the symbol "JNY." The following table shows the high and
low per share sale prices of Jones Apparel Group common stock, as reported by
the New York Stock Exchange for the periods indicated.
High Low
1999 $32.500 $21.500
First Quarter 35.875 27.500
Second Quarter 34.875 24.750
Third Quarter 33.000 24.813
Fourth Quarter
2000 $31.875 $20.125
First Quarter 32.563 21.250
Second Quarter 29.188 22.063
Third Quarter 35.000 23.313
Fourth Quarter
2001
First Quarter $41.090 $31.125
Second Quarter (through April 30, 2001) 40.000 34.050
On April 30, 2001, the closing price of Jones Apparel Group common
stock on the New York Stock Exchange was $39.740 per share.
Jones Apparel Group has never declared or paid any cash dividends on its
common stock and does not anticipate paying any cash dividends on its common
stock in the foreseeable future.
USE OF PROCEEDS
The selling securityholders will receive all of the proceeds from the
sale of the notes under this prospectus and the Jones Apparel Group common
stock issuable upon conversion of the notes. We will not receive any proceeds
from these sales.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratios of earnings to fixed charges
for the years and periods indicated:
Year Ended December 31,
--------------------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
Ratio of Earnings to Fixed Charges..... 4.3 4.1 12.6 18.2 14.4
We computed these ratios by dividing fixed charges into the sum of
earnings (after certain adjustments) and fixed charges. Earnings used in
computing the ratio of earnings to fixed charges consist of income before
income taxes and fixed charges excluding capitalized interest. Fixed charges
consist of interest expensed and capitalized, amortization of debt expense and
that portion of rental expense representative of interest.
Because we do not have any preferred stock outstanding, the ratio of
earnings to fixed charges and preferred stock dividends, and the deficiency of
earnings to cover fixed charges and preferred stock dividends were the same as
the ratio of earnings to fixed charges and the deficiency of earnings to cover
fixed charges.
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DESCRIPTION OF OTHER DEBT
Senior Credit Facilities
Jones USA, as borrower, and Jones Apparel Group, Jones Holdings, and Nine
West, as co-obligors, are parties to two credit agreements with First Union
National Bank, as administrative agent (the "Administrative Agent"), and other
lending institutions (collectively, the "Banks") to borrow an aggregate
principal amount of up to $1.45 billion, consisting of (i) a $750.0 million
364-Day Revolving Credit Facility and (ii) a $700.0 million Five-Year
Revolving Credit Facility, the entire amount of each of which is available for
letters of credit and cash borrowings. The 364-Day and Five-Year Revolving
Credit Facilities are referred to collectively in this prospectus as the
"Senior Credit Facilities."
Debt under the Senior Credit Facilities bears interest at a floating rate
based, at Jones USA's option, upon (i) the reserve adjusted London Interbank
Offered Rate ("Adjusted LIBOR"), as determined by the Administrative Agent for
one, two, three or six months plus a margin ranging between 0.35% and 1.125%,
in the case of the 364-Day Revolving Credit Facility, and 0.325% and 1.075%,
in the case of the Five-Year Revolving Credit Facility, depending on Jones'
credit rating or (ii) the Administrative Agent's Base Rate.
Loans made under the Senior Credit Facilities may be borrowed, repaid and
reborrowed from time to time until (in the case of the Five-Year Facility)
June 15, 2004 and (in the case of the 364-Day Facility) June 12, 2001, subject
to satisfaction of certain conditions on the date of any such borrowing. The
364-Day Revolving Credit Facility is subject to customary extension provisions
for a limited number of additional 364-day terms.
Jones USA is required to pay to the Banks an annual facility fee in an
amount ranging from 0.10% to 0.25% per annum, in the case of the 364-Day
Revolving Credit Facility, and 0.125% to 0.30% per annum, in the case of the
Five- Year Revolving Credit Facility, depending on Jones' credit rating, on
the entire amount of the Senior Credit Facilities, regardless of usage.
Additionally, Jones USA is required to pay a letter of credit fee in an amount
ranging from 0.15% to 0.35% per annum, in the case of the 364-Day Facility,
and 0.125% to 0.30% per annum in the case of the Five-Year Facility, depending
on Jones' credit rating, on the amount of outstanding trade letters of credit.
Jones USA is also required to pay a utilization fee of 0.125% per annum in the
case of each facility to the extent that the average utilization of such
facility during any quarter exceeds 50% of the original commitments under such
facility (exclusive of any issued and outstanding letters of credit under such
facility). Jones USA is also required to pay an issuance fee of 0.125% per
annum on all outstanding standby letters of credit.
The Senior Credit Facilities require Jones to satisfy an EBITDA plus
rents to cash interest expense plus rents coverage ratio and a net worth
maintenance covenant. The Senior Credit Facilities also contain covenants
which, among other things, will limit, subject to various exceptions, Jones'
ability to incur additional indebtedness, incur liens and encumbrances, make
guarantees, loans, acquisitions and investments, engage in asset sales,
mergers and consolidations, change its business, engage in transactions with
affiliates, prepay subordinated indebtedness, make material amendments to debt
instruments, pay dividends or other distributions to shareholders and redeem
or repurchase capital stock. The Senior Credit Facilities also contain
customary affirmative covenants. The covenants may be modified or waived with
the consent of a majority of the Banks.
Defaults under the Senior Credit Facilities include failure to pay any
interest, principal or fees when due under the Senior Credit Facilities,
failure to perform any covenant or agreement contained in the documents
relating to the Senior Credit Facilities, the making by Jones of inaccurate or
false representations or warranties, the default by Jones in respect of
certain other indebtedness, the occurrence of certain events of bankruptcy,
the entering of certain judgments against Jones, and a change in control of
Jones.
6.25% Senior Notes Due 2001
The 6.25% Senior Notes Due 2001 (the "6 1/4% Notes") are unsecured
senior obligations of Jones Apparel Group, Jones Holdings, Jones USA and
Nine West, each as a co-obligor. The 6 1/4% Notes were originally issued in
an aggregate principal amount of $265.0 million, of which $242.9 million is
currently outstanding. The 6 1/4% Notes bear interest at a rate of 6 1/4%,
payable semi-annually on April 1 and October 1 of each year, and will
mature on October 1, 2001. The 6 1/4% Notes are redeemable at any time or
from time to time at a redemption price equal to the greater of (1) 100% of
their principal amount or (2) the sum of the present values of the
remaining scheduled payments of principal and interest discounted to the
date of redemption on a semi-annual basis at the treasury rate specified in
the indenture relating to the 6 1/4% Notes plus 15 basis points, plus in
the case of
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each of clauses (1) and (2) accrued and unpaid interest to the date of
redemption. The 6 1/4% Notes contain certain covenants including
restrictions on liens and restrictions on sale and leaseback transactions.
8 3/8% Series B Senior Notes Due 2005
The 8 3/8% Series B Senior Notes Due 2005 (the "8 3/8% Notes") are
unsecured senior obligations of Jones Apparel Group, Jones Holdings, Jones USA
and Nine West, each as a co-obligor. The 8 3/8% Notes were originally issued
in an aggregate principal amount of $200.0 million, of which $129.6 million
remains outstanding. The 8 3/8% Notes bear interest at a rate of 8 3/8%,
payable on February 15 and August 15 of each year, and will mature on August
15, 2005. The 8 3/8% Notes are not redeemable prior to maturity. The 8 3/8%
Notes contain certain covenants including limitation on liens and purchase of
Notes upon a change of control.
9% Series B Senior Subordinated Notes Due 2007
The 9% Series B Senior Subordinated Notes Due 2007 (the "9% Notes") are
unsecured senior subordinated obligations of Nine West. The 9% Notes were
originally issued in an aggregate principal amount of $125.0 million, of which
$82,000 is currently outstanding. The 9% Notes bear interest at a rate of 9%,
payable on February 15 and August 15 of each year, and will mature on August
15, 2007. The 9% Notes are redeemable at any time and from time to time on or
after August 15, 2002 at the redemption prices specified in the 9% Notes. The
9% Notes contain certain covenants including limitation on sale of assets and
purchase of Notes upon a change of control.
5 1/2% Convertible Subordinated Notes Due 2003
The 5 1/2% Convertible Subordinated Notes due 2003 (the "5 1/2% Notes")
are unsecured subordinated obligations of Jones Holdings and Nine West, each
as a co-obligor. The 5 1/2% Notes were originally issued in an aggregate
principal amount of $185.7 million, of which $459,000 remains outstanding. The
5 1/2% Notes bear interest at a rate of 5 1/2%, payable on January 15 and July
15 each year, and will mature on July 15, 2003. The 5 1/2% Notes are
redeemable at any time and from time to time at a redemption price equal to
the greater of (a) 100% of their principal amount or (b) the sum of the
present values of the remaining scheduled payments of principal and interest
discounted, on a semi-annual basis, at a rate equal to the sum of the treasury
rate specified in the indenture relating to the 5 1/2% Notes plus 25 basis
points, plus in the case of clauses (a) and (b) accrued and unpaid interest to
the date of redemption.
7.50% Senior Notes Due 2004
7.875% Senior Notes Due 2006
The 7.50% Senior Notes Due 2004 (the "7 1/2% Notes") and the 7.875%
Senior Notes Due 2006 (the "7 7/8% Notes") are unsecured senior obligations of
Jones Apparel Group, Jones Holdings, Jones USA and Nine West, each as a
co-obligor. The 7 1/2% Notes and the 7 7/8% Notes were originally issued in
respective aggregate principal amounts of $175 million and $225 million, and
the full principal amount of each remains outstanding. The 7 1/2% Notes bear
interest at a rate of 7 1/2%, payable semi-annually on June 15 and December 15
of each year, and will mature on June 15, 2004. The 7 7/8% Notes bear interest
at a rate of 7 7/8%, payable semi-annually on June 15 and December 15 of each
year, and will mature on June 15, 2006. The 7 1/2% Notes and the 7 7/8% Notes
are redeemable at any time and from time to time at a redemption price equal
to the greater of (1) 100% of their principal amount or (2) the sum of the
present values of the remaining scheduled payments of principal and interest
discounted, on a semi-annual basis at a rate equal to the sum of the treasury
rate specified in the indentures relating to the 7 1/2% Notes and the 7 7/8%
Notes plus 25 basis points, plus in the case of clauses (1) and (2) accrued
and unpaid interest to the date of redemption. The 7 1/2% Notes and the 7 7/8%
Notes contain certain covenants, including restrictions on liens and
restrictions on sale and leaseback transactions.
-13-
DESCRIPTION OF THE NOTES
We issued the notes under an indenture (the "indenture") dated as of
February 1, 2001 among us and The Bank of New York, as trustee (the
"trustee"). A copy of the indenture and the form of the notes are filed as
exhibits to Jones Apparel Group's Annual Report on Form 10-K for the fiscal
year ended December 31, 2000 which is incorporated by reference to the
registration statement of which this prospectus is a part and are also
available upon request as set forth under "Where You Can Find More
Information." The following summary of certain provisions of the indenture and
the notes does not purport to be complete and is subject to, and qualified in
its entirety by reference to, all the provisions of the indenture, including
the definitions therein of certain terms. Because the following is only a
summary, it does not contain all information that you may find useful. For
further information you should read the notes and the indenture.
General
The notes:
o are our unsecured obligations and rank equally with all of our other
unsecured senior indebtedness;
o are limited to $805,645,000 aggregate principal amount at maturity;
o will mature on February 1, 2021; and
o do not pay interest annually, but will pay a principal amount of
$1,000 per note upon maturity, representing a yield to maturity of
3.50%.
The notes are redeemable prior to maturity only on or after February 1,
2004, as described below under "--Optional Redemption," and do not have the
benefit of a sinking fund. Principal of the notes is payable, and the transfer
of notes is registrable, at the office of the trustee.
The notes were offered at a substantial discount from their principal
amount at maturity. See "Certain United States Federal Income Tax
Considerations--U.S. Holders--Original Issue Discount." Except as described
below, we will not make periodic cash payments of interest on the notes. Each
note of $1,000 principal amount was issued at an issue price of $499.60 per
note. However, the notes will accrue original issue discount while they remain
outstanding. Original issue discount is the difference between the issue price
and the principal amount at maturity of a note. The calculation of the accrual
of original issue discount is on a semi-annual bond equivalent basis using a
360-day year composed of twelve 30-day months. The issue date for the notes
and the commencement date for the accrual of original issue discount was
February 1, 2001.
The notes were issued only in registered form without coupons in
denominations of $1,000 and any integral multiple of $1,000 above that amount.
No service charge will be made for any registration of transfer or exchange of
notes, but we may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith. The notes are
represented by three global securities registered in the name of a nominee of
DTC, New York, New York.
Conversion Rights
A holder may convert notes, in multiples of $1,000 principal amount at
maturity, into Jones Apparel Group common stock at any time before the close
of business on February 1, 2021. However, a holder may convert a note only
until the close of business on the last business day prior to the redemption
date if we call a note for redemption, unless we default on payment of the
redemption price. A note for which a holder has delivered a purchase notice or
a Fundamental Change (as defined below under "--Fundamental Change Permits
Holder to Require Us to Repurchase Notes") repurchase notice requiring us to
purchase or repurchase the note may be converted only if such notice is
withdrawn in accordance with the indenture.
The initial conversion rate is 9.8105 shares of common stock per note
with a principal amount at maturity of $1,000, subject to adjustment upon the
occurrence of certain events described below. The conversion rate will not be
adjusted for accrued original issue discount.
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In lieu of issuing fractional shares, we will pay an amount of cash based
on the Sale Price (as defined below under "--Purchase of Notes at the Option
of the Holder") of the common stock on the trading day immediately preceding
the conversion date. On conversion of a note, a holder will not receive any
cash payment representing accrued original issue discount and the conversion
rate will not be adjusted to reflect any such accrual. Our delivery to the
holder of the fixed number of shares of common stock into which the note is
convertible, together with any cash payment for fractional shares, will be
deemed:
o to satisfy our obligation to pay the principal amount at maturity of
the note; and
o to satisfy our obligation to pay original issue discount that
accrued from the issue date through the conversion date.
As a result, accrued original issue discount is deemed to be paid in full
rather than canceled, extinguished or forfeited.
A certificate for the number of full shares of common stock into which
any note is converted, together with any cash payment for fractional shares,
will be delivered through the conversion agent as soon as practicable
following the conversion date. For a discussion of the tax treatment of a
holder receiving common stock upon conversion, see "Certain United States
Federal Income Tax Considerations--U.S. Holders--Conversion of Notes."
The conversion rate will be adjusted for:
o dividends or distributions on Jones Apparel Group common stock
payable in Jones Apparel Group common stock or other Jones Apparel
Group capital stock;
o subdivisions, combinations or certain reclassifications of Jones
Apparel Group common stock;
o distributions to all holders of Jones Apparel Group common stock of
certain rights to purchase Jones Apparel Group common stock for a
period expiring within 60 days at less than the Sale Price at the
time; and
o certain distributions to such holders of our assets or debt
securities or certain rights to purchase our securities (excluding
cash dividends or other cash distributions from current or retained
earnings unless the annualized amount thereof per share exceeds 10%
of the Sale Price on the day preceding the date of declaration of
such dividend or other distribution and excluding distributions in
connection with a transaction described in the third succeeding
paragraph).
However, no adjustment need be made if noteholders may participate in the
transaction or in certain other cases. In cases where the fair market value of
assets, debt securities or certain rights, warrants or options to purchase our
securities distributed to shareholders (a) equals or exceeds the average
quoted price of the common stock, or (b) such average quoted price exceeds the
fair market value of such assets, debt securities or rights, warrants or
options so distributed by less than $1.00, rather than being entitled to an
adjustment in the conversion rate, the holder of a note will be entitled to
receive upon conversion, in addition to the shares of Jones Apparel Group
common stock, the kind and amount of assets, debt securities or rights,
warrants or options comprising the distribution that such holder would have
received if such holder had converted such note immediately prior to the
record date for determining the shareholders entitled to receive the
distribution.
The indenture permits us to increase the conversion rate from time to
time.
If we are party to a consolidation, merger or binding share exchange or a
transfer of all or substantially all of our assets, the right to convert a
note into common stock may be changed into a right to convert it into the kind
and amount of securities, cash or other assets of Jones or another person
which the holder would have received if the holder had converted the holder's
notes immediately prior to the transaction.
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Holders of the notes may, in certain circumstances, be deemed to have
received a distribution subject to federal income tax as a dividend as the
result of:
o a taxable distribution to holders of common stock which results in
an adjustment of the conversion rate; or
o an increase in conversion rate at our discretion.
See "Certain United States Federal Income Tax Considerations--U.S.
Holders--Adjustment of Conversion Rate."
If we exercise our option to have cash interest, instead of original
issue discount, accrue on a note following a Tax Event (as defined below under
"--Optional Conversion to Semi-annual Cash Pay Note Upon Tax Event"), the
holder will be entitled on conversion to receive the same number of shares of
Jones Apparel Group common stock the holder would have received if we had not
exercised this option.
If we exercise this option, notes surrendered for conversion by a holder
during the period from the close of business on any regular record date to the
opening of business of the next interest payment date, except for notes to be
redeemed on a date within this period or on the next interest payment date,
must be accompanied by payment of an amount equal to the interest that the
registered holder is to receive on the note.
Except where notes surrendered for conversion must be accompanied by
payment as described above, we will not pay interest on converted notes on any
interest payment date subsequent to the date of conversion. See "--Optional
Conversion to Semi-annual Cash Pay Note Upon Tax Event."
Optional Redemption
No sinking fund is provided for the notes. Prior to February 1, 2004, the
notes will not be redeemable. Beginning on February 1, 2004, at our option we
may redeem the notes for cash at any time as a whole, or from time to time in
part. We will give not less than 30 days nor more than 60 days notice of
redemption to noteholders by mail.
The table below shows what redemption prices of a note would be on
February 1, 2004, at each February 1 thereafter prior to maturity and at
maturity on February 1, 2021. These prices equal the issue price plus the
accrued original issue discount calculated to each such date. The redemption
price of a note redeemed between such dates would include an additional amount
reflecting the additional original issue discount accrued since the next
preceding date in the table.
Accrued
Original Issue Redemption
Issue Discount At Price
Redemption Date Price (1) 3.50%(2) (1) + (2)
- --------------- --------- -------- ---------
February 1, 2004.................... $499.60 $54.81 $554.41
February 1, 2005.................... 499.60 74.38 573.98
February 1, 2006.................... 499.60 94.65 594.25
February 1, 2007.................... 499.60 115.63 615.23
February 1, 2008.................... 499.60 137.35 636.95
February 1, 2009.................... 499.60 159.84 659.44
February 1, 2010.................... 499.60 183.12 682.72
February 1, 2011.................... 499.60 207.22 706.82
February 1, 2012.................... 499.60 232.18 731.78
February 1, 2013.................... 499.60 258.02 757.62
February 1, 2014.................... 499.60 284.76 784.36
February 1, 2015.................... 499.60 312.46 812.06
February 1, 2016.................... 499.60 341.13 840.73
February 1, 2017.................... 499.60 370.81 870.41
February 1, 2018.................... 499.60 401.54 901.14
February 1, 2019.................... 499.60 433.36 932.96
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February 1, 2020.................... 499.60 466.30 965.90
At stated maturity.................. 499.60 500.40 1,000.00
If converted to semi-annual cash pay notes following the occurrence of a
Tax Event, the notes will be redeemable at the restated principal amount plus
accrued and unpaid interest from the date of such conversion through the
redemption date. However, in no event may the notes be redeemed prior to
February 1, 2004. See "--Optional Conversion to Semi-annual Cash Pay Note Upon
Tax Event."
If less than all of the outstanding notes are to be redeemed, the trustee
shall select the notes to be redeemed in principal amounts at maturity of
$1,000 or integral multiples of $1,000. In this case the trustee may select
the notes by lot, pro rata or by any other method the trustee considers fair
and appropriate. If a portion of a holder's notes is selected for partial
redemption and the holder converts a portion of the notes, the converted
portion shall be deemed to be the portion selected for redemption.
Purchase of Notes at the Option of the Holder
On the purchase dates of February 1, 2004, February 1, 2009 and February
1, 2014, we will, at the option of the holder, be required to purchase any
outstanding note for which a written purchase notice has been properly
delivered by the holder to the trustee and not withdrawn, subject to certain
additional conditions. Holders may submit their notes for purchase to the
paying agent at any time from the opening of business on the date that is 30
business days prior to such purchase date until the close of business on such
purchase date.
The purchase price of a note will be:
o $554.41 per note on February 1, 2004;
o $659.44 per note on February 1, 2009; and
o $784.36 per note on February 1, 2014.
These purchase prices equal the issue price plus accrued original issue
discount to the purchase dates.
We may, at our option, elect to pay the purchase price in cash or in
shares of common stock valued at 95% of the Market Price (as defined below) or
any combination thereof. See "Certain United States Federal Income Tax
Considerations--U.S. Holders--Exercise of Holder's Put Option."
If prior to a purchase date the notes have been converted to semi-annual
cash pay notes following the occurrence of a Tax Event, the purchase price
will be equal to the restated principal amount plus accrued and unpaid
interest from the date of such conversion to the purchase date. See
"--Optional Conversion to Semi-annual Cash Pay Note Upon Tax Event."
We will be required to give notice on a date not less than 30 business
days prior to each purchase date to all holders at their addresses shown in
the register of the registrar, and to beneficial owners as required by
applicable law, stating among other things:
o whether we will pay the purchase price of notes in cash or common
stock or any combination thereof, specifying the percentages of
each;
o if we elect to pay in common stock, the method of calculating the
Market Price of the common stock; and
o the procedures that holders must follow to require us to purchase
their notes.
The purchase notice given by each holder electing to require us to
purchase notes shall state:
o the certificate numbers of the holder's notes to be delivered for
purchase;
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o the portion of the principal amount at maturity of notes to be
purchased, which must be $1,000 or an integral multiple of $1,000;
o that the notes are to be purchased by us pursuant to the applicable
provisions of the notes and the indenture; and
o in the event we elect, pursuant to the notice that we are required
to give, to pay the purchase price in common stock, in whole or in
part, but the purchase price is ultimately to be paid to the holder
entirely in cash because any condition to payment of the purchase
price or portion of the purchase price in common stock is not
satisfied prior to the close of business on the purchase date, as
described below, whether the holder elects: (1) to withdraw the
purchase notice as to some or all of the notes to which it relates,
or (2) to receive cash in respect of the entire purchase price for
all notes or portions of notes subject to such purchase notice.
If the holder fails to indicate the holder's choice with respect to the
election described in the final bullet point above, the holder shall be deemed
to have elected to receive cash in respect of the entire purchase price for
all notes subject to the purchase notice in these circumstances. For a
discussion of the tax treatment of a holder receiving cash instead of common
stock, see "Certain United States Federal Income Tax Considerations--U.S.
Holders--Exercise of Holder's Put Option."
Any purchase notice may be withdrawn by the holder by a written notice of
withdrawal delivered to the paying agent prior to the close of business on the
purchase date.
The notice of withdrawal shall state:
o the principal amount at maturity being withdrawn;
o the certificate numbers of the notes being withdrawn; and
o the principal amount at maturity of the notes that remain subject to
the purchase notice, if any.
If we elect to pay the purchase price, in whole or in part, in shares of
Jones Apparel Group common stock, the number of shares of Jones Apparel Group
common stock to be delivered by us shall be equal to the portion of the
purchase price to be paid in Jones Apparel Group common stock divided by 95%
of the Market Price of a share of Jones Apparel Group common stock.
We will pay cash based on the Market Price for all fractional shares of
common stock in the event we elect to deliver common stock in payment, in
whole or in part, of the purchase price. See "Certain United States Federal
Income Tax Considerations--U.S. Holders--Exercise of Holder's Put Option."
The "Market Price" means the average of the Sale Prices of Jones Apparel
Group common stock for the 20 trading day period ending on the third business
day (if the third business day prior to the applicable purchase date is a
trading day or, if not, then on the last trading day prior thereto) prior to
the applicable purchase date, appropriately adjusted to take into account the
occurrence, during the period commencing on the first of such trading days
during such 20 trading day period and ending on such purchase date, of certain
events with respect to the common stock that would result in an adjustment of
the conversion rate.
The "Sale Price" of the Jones Apparel Group common stock on any date
means the closing sale price per share (or if no closing sale price is
reported, the average of the bid and ask prices or, if more than one in either
case, the average of the average bid and the average ask prices) on such date
as reported in composite transactions for the principal United States
securities exchange on which the common stock is traded or, if the common
stock is not listed on a United States national or regional securities
exchange, as reported by the Nasdaq System.
Because the Market Price of the common stock is determined prior to the
applicable purchase date, holders of notes bear the market risk with respect
to the value of the common stock to be received from the date such Market
Price is determined to such purchase date. We may pay the purchase price or
any portion of the purchase price in common stock only if the information
necessary to calculate the Market Price is published in a daily newspaper of
national circulation.
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Our right to purchase notes, in whole or in part, with common stock is
subject to our satisfying various conditions, including:
o the registration of the common stock under the Securities Act and
the Exchange Act, if required; and
o any necessary qualification or registration under applicable state
securities law or the availability of an exemption from such
qualification and registration.
If such conditions are not satisfied with respect to a holder prior to
the close of business on the purchase date, we will pay the purchase price of
the notes of such holder entirely in cash. See "Certain United States Federal
Income Tax Considerations--U.S. Holders--Exercise of Holder's Put Option." We
may not change the form or components or percentages of components of
consideration to be paid for the notes once we have given the notice that we
are required to give to holders of notes, except as described in the first
sentence of this paragraph.
In connection with any purchase offer, we will:
o comply with the provisions of Rule 13e-4, Rule 14e-1 and any other
tender offer rules under the Exchange Act which may then be
applicable; and
o file Schedule TO or any other required schedule under the Exchange
Act.
Payment of the purchase price for a note for which a purchase notice has
been delivered and not validly withdrawn is conditioned upon delivery of the
note, together with necessary endorsements, to the paying agent at any time
after delivery of the purchase notice. Payment of the purchase price for the
note will be made promptly following the later of the purchase date or the
time of delivery of the note.
If the paying agent holds money or securities sufficient to pay the
purchase price of the note on the business day following the purchase date in
accordance with the terms of the indenture, then, immediately after the
purchase date, the note will cease to be outstanding and original issue
discount on such note will cease to accrue, whether or not the note is
delivered to the paying agent. Thereafter, all other rights of the holder
shall terminate, other than the right to receive the purchase price upon
delivery of the note.
Our ability to purchase notes with cash may be limited by the terms of
our then existing indebtedness or financing agreements.
No notes may be purchased for cash at the option of holders if there has
occurred and is continuing an event of default with respect to the notes,
other than a default in the payment of the purchase price with respect to such
notes.
Fundamental Change Permits Holder to Require Us to Repurchase Notes
If a Fundamental Change occurs at any time prior to February 1, 2004,
each holder will have the right, at the holder's option, to require us to
repurchase any or all of the holder's notes. The notes may be repurchased in
multiples of $1,000 principal amount at maturity. We will repurchase the notes
at a price equal to the issue price plus accrued original issue discount to
the repurchase date. If, prior to the repurchase date, we elect to convert the
notes to semi-annual cash pay notes following a Tax Event, the repurchase
price will be equal to the restated principal amount plus accrued and unpaid
interest to the repurchase date. See "--Optional Conversion to Semi-annual
Cash Pay Note Upon Tax Event."
We may, at our option, instead of paying the Fundamental Change
repurchase price in cash, pay all or a portion of the Fundamental Change
repurchase price in Jones Apparel Group common stock, as long as Jones Apparel
Group common stock is then listed on a national securities exchange or traded
on the Nasdaq National Market. If we elect to pay all or a portion of the
Fundamental Change repurchase price in shares of Jones Apparel Group common
stock, then the number of shares of Jones Apparel Group common stock to be
delivered by us shall be equal to the portion of the Fundamental Change
repurchase price to be paid in Jones Apparel Group common stock divided by 95%
of the Market Price of a share of Jones Apparel Group common stock.
On or before the 30th day after the occurrence of a Fundamental Change,
we will mail to all holders of record of the notes a notice of the occurrence
of the Fundamental Change and of the resulting repurchase right. We will also
deliver to the trustee a copy of the notice. To exercise the repurchase right,
holders of notes must deliver, on or before the 60th
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day after the date of our notice of a Fundamental Change, the notes to be
repurchased, duly endorsed for transfer, together with the form entitled
"Option to Elect Repurchase Upon a Fundamental Change" on the reverse side of
the note duly completed, to the paying agent.
A Fundamental Change occurs if:
o Jones Apparel Group consolidates or merges with or into another
person (other than a subsidiary);
o Jones Apparel Group sells, conveys, transfers or leases its
properties and assets substantially as an entirety to any person
(other than a subsidiary);
o any person (other than a subsidiary) consolidates with or merges
with or into Jones Apparel Group;
o Jones Apparel Group outstanding common stock is reclassified into,
exchanged for or converted into the right to receive any other
property or security provided that none of these circumstances will
be a Fundamental Change if at least 50% of the aggregate fair market
value (as determined by our board of directors) of such property and
securities, other than cash payments for fractional shares, consists
of shares of voting common stock of the surviving person that are,
or upon issuance will be, traded on a United States national
securities exchange or approved for trading on an established
automated over-the-counter trading market in the United States; or
o any person, including its affiliates and associates (an "Acquiring
Person"), files a Schedule 13D or Schedule TO (or any successor
schedule, form or report under the Exchange Act) disclosing that
such person has become the beneficial owner of 50% or more of the
total voting power in the aggregate of all classes of our common
stock then outstanding normally entitled to vote in elections of
directors other than through a merger or binding share exchange in
which all or substantially all (as determined by our board of
directors) of the consideration (except for cash payments for
fractional shares) received by the holders (other than the Acquiring
Person) of Jones Apparel Group common stock consists of shares of
voting common stock of the surviving person that are, or that upon
issuance will be, traded on a United States national securities
exchange or approved for trading on an established automated
over-the-counter trading market in the United States.
We will comply with the provisions of Rule 13e-4 and any other tender
offer rules under the Exchange Act which may then be applicable in connection
with the repurchase of the notes in the event of a Fundamental Change.
The repurchase rights of the holders of notes could discourage a
potential acquirer of Jones. The Fundamental Change repurchase feature,
however, is not the result of management's knowledge of any specific effort to
obtain control of Jones by any means or part of a plan by management to adopt
a series of anti-takeover provisions.
The term Fundamental Change is limited to specified transactions and may
not include other events that might adversely affect our financial condition.
In addition, the requirement that we offer to repurchase the notes upon a
Fundamental Change may not protect noteholders in the event of a highly
leveraged transaction, reorganization, merger or similar transaction involving
us.
No notes may be repurchased at the option of holders upon a Fundamental
Change if there has occurred and is continuing an event of default described
under "--Events of Default" below. However, notes may be repurchased if the
event of default is in the payment of the Fundamental Change repurchase price
with respect to the notes.
Optional Conversion to Semi-annual Cash Pay Note Upon Tax Event
From and after the date of the occurrence of a Tax Event, we will have
the option to elect to have interest in lieu of future original issue discount
accrue at the rate of 3.50% per year on a principal amount per note (the
"Restated Principal Amount") equal to the issue price plus original issue
discount accrued to the date of the Tax Event or the date on which we exercise
the option described herein, whichever is later (the "Option Exercise Date").
Such interest will accrue from the Option Exercise Date and will be
payable in cash semi-annually on the interest payment dates of February 1 and
August 1 of each year to holders of record at the close of business on January
16 or July 16 immediately preceding the interest payment date. Interest will
be computed on the basis of a 360-day year
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comprised of twelve 30-day months. Interest will initially accrue from the
Option Exercise Date and thereafter from the last date to which interest has
been paid.
A "Tax Event" means that we shall have received an opinion from
independent tax counsel experienced in such matters to the effect that, on or
after the date of this prospectus, as a result of:
(1) any amendment to, or change (including any announced prospective
change) in the laws, rules or regulations thereunder of the United States
or any political subdivision or taxing authority thereof or therein, or
(2) any amendment to, or change in, an interpretation or application
of such laws, rules or regulations by any legislative body, court,
governmental agency or regulatory authority,
in each case which amendment or change is enacted, promulgated, issued or
announced or which interpretation is issued or announced or which action is
taken, on or after the date of this prospectus, there is more than an
insubstantial risk that original issue discount payable on the notes either:
o would not be deductible on a current accrual basis, or
o would not be deductible under any other method,
in either case in whole or in part, by us (by reason of deferral,
disallowance, or otherwise) for United States federal income tax purposes.
The Clinton Administration had proposed to change the tax law to defer
the deduction of original issue discount on convertible debt instruments until
the issuer pays the original issue discount. Congress has not enacted these
proposed changes in the law. If a similar proposal were ever enacted and made
applicable to the notes in a manner that would limit our ability to either:
o deduct the interest, including original issue discount, payable on
the notes on a current accrual basis, or
o deduct the interest, including original issue discount, payable on
the notes under any other method for United States federal income
tax purposes,
such enactment would result in a Tax Event and the terms of the notes would be
subject to modification at our option as described above.
The modification of the terms of the notes by us upon a Tax Event, as
described above, may alter the timing of income recognition by holders of the
notes with respect to the semi-annual payments of interest due on the notes
after the Option Exercise Date.
Certain Covenants
The indenture contains covenants including, among others, the following:
Restrictions on Liens. Except as provided below under "--Exempted Debt," we
will not, and will not permit any "significant subsidiary" (as such term is
defined in Regulation S-X promulgated by the SEC) to, create or suffer to
exist any mortgage, lien, pledge, charge, security interest or encumbrance (a
"lien" or "liens") to secure any of our or a significant subsidiary's
indebtedness on any property the net book value of which exceeds 1% of our
consolidated net tangible assets (the "Principal Properties"), unless all of
the notes outstanding at the time of such lien are secured by the same lien,
equally and ratably with any and all other indebtedness secured by such lien.
The restrictions in the preceding sentence do not apply to:
o liens on property of a person existing at the time of its merger or
consolidation with or into any of us or our significant subsidiaries
or at the time of sale, lease or other disposition of its properties
to any of us or our significant subsidiaries;
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o liens on property of a person existing at the time it becomes a
significant subsidiary or existing on property prior to our or a
significant subsidiary's acquisition of the property;
o liens securing indebtedness (A) between a significant subsidiary and
any of us, or (B) between significant subsidiaries or (C) between
us;
o liens on any property created, assumed or otherwise brought into
existence in contemplation of the sale or other disposition of the
underlying property, so long as (A) the relevant person disposes of
such property within 180 days after the creation of those liens and
(B) any indebtedness secured by those liens is without recourse to
any of us or any significant subsidiary;
o liens in favor of the United States of America or any of its states,
or any of their departments, agencies or instrumentalities or
political subdivisions, or in favor of any country, or any of its
political subdivisions, to secure partial, progress, advance or
other payments, or performance of any other similar obligations,
including, without limitation, liens to secure pollution control
bonds or industrial revenue or other similar types of bonds;
o liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary
course of business which secure obligations not more than 60 days
past due or are being contested in good faith and by appropriate
proceedings;
o liens incurred in the ordinary course of business to secure
performance of obligations with respect to statutory or regulatory
requirements, performance or return-of-money bonds, surety bonds or
other obligations of a like nature, in each case which are not
incurred in connection with the borrowing of money, the obtaining of
advances or credit or the payment of the deferred purchase price of
property and which do not in the aggregate impair in any material
respect the use of property in the operation of our business taken
as a whole;
o liens incurred to secure appeal bonds and judgment and attachment
liens, in each case in connection with litigation or legal
proceedings which are being contested in good faith by appropriate
proceedings so long as reserves have been established to the extent
required by generally accepted accounting principles as in effect at
such time;
o pledges or deposits under workmen's compensation laws, unemployment
insurance laws or similar legislation, or good faith deposits in
connection with bids, tenders, contracts (other than for the payment
of indebtedness) or leases to which any of us or any significant
subsidiary is a party, or deposits to secure public or statutory
obligations of any of us or of any significant subsidiary or
deposits for the payment of rent, in each case incurred in the
ordinary course of business;
o utility easements, building restrictions and such other encumbrances
or charges against real property as are of a nature generally
existing with respect to properties of a similar character;
o liens granted to any bank or other institution on the payments to be
made to such institution by any of us or any subsidiary pursuant to
any interest rate swap or similar agreement or foreign currency
hedge, exchange or similar agreement designed to provide protection
against fluctuations in interest rates and currency exchange rates,
respectively, provided that such agreements are entered into in, or
are incidental to, the ordinary course of business;
o liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of set off or similar
rights and remedies, in each case as to any deposit account or any
other fund maintained with a creditor depository institution,
provided that (1) the deposit account is not a dedicated cash
collateral account and is not subject to restrictions against access
by the applicable co- obligor or a significant subsidiary in excess
of those set forth by regulations promulgated by the Federal Reserve
Board, and (2) the deposit account is not intended by the applicable
co-obligor or a significant subsidiary to provide collateral to the
depository institution;
o liens arising from the Uniform Commercial Code financing statements
regarding leases;
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o the giving, simultaneously with or within 180 days after the latest
of the date of the indenture, or the acquisition, construction,
improvement, development or expansion of such property, of a
purchase money lien on property acquired, constructed, improved,
developed or expanded after the date of the indenture, or the
acquisition, construction, improvement, development or expansion
after the date of the indenture, of property subject to any lien
which is limited to such property;
o the giving of a lien on real property which is the sole security for
indebtedness incurred within two years after the latest of the date
of the indenture, or the acquisition, construction, improvement,
development or expansion of the property, so long as the holder of
such indebtedness is entitled to enforce its payment only by
resorting to such security;
o liens arising by the terms of letters of credit entered into in the
ordinary course of business to secure reimbursement obligations
thereunder;
o liens existing on the date of the indenture;
o liens for taxes, assessments and other governmental charges or
levies not yet due or as to which the period of grace, if any, has
not expired or which are being contested in good faith and by
appropriate proceedings if adequate reserves are maintained to the
extent required by generally accepted accounting principles as in
effect at such time; and
o extension, renewal, replacement or refunding of any lien existing on
the date of the indenture or referred to in certain of the bullet
points above, so long as the principal amount of indebtedness so
secured and not otherwise authorized by the relevant bullet points
shall not exceed the principal amount of indebtedness, plus any
premium or fee payable in connection with any such extension,
renewal, replacement or refunding, so secured at the time of such
extension, renewal, replacement or refunding.
Restrictions on Sale and Leaseback Transactions. Except as provided below
under "--Exempted Debt," we will not, and will not permit any significant
subsidiary to, enter into any arrangement with any person providing for the
leasing from that person of any Principal Property previously or
contemporaneously sold or transferred to it by any of us or our significant
subsidiaries with the intention of taking back a lease of such Principal
Property (a "sale and leaseback transaction"), unless our board of directors
determines that the net proceeds of the sale or transfer are to be at least
equal to the fair market value of the relevant Principal Property or asset at
the time of the sale and transfer and either one of the following occurs:
o within 180 days after it has been received, an amount equal to the
net proceeds of such sale or transfer is applied to the retirement
or prepayment of our or a significant subsidiary's indebtedness that
is senior to or equal in right of payment with the notes or to the
purchase, construction or development of property or assets to be
used in the ordinary course of business, or
o the lessee would, on the effective date of the relevant sale or
transfer, be entitled, pursuant to the indenture, to issue, assume
or guarantee indebtedness secured by a lien upon the relevant
Principal Property at least equal in amount to the then present
value (discounted at the actual rate of interest of the sale and
leaseback transaction) of its obligation for the net rental payments
in respect of such sale and leaseback transaction without equally
and ratably securing the notes.
The restrictions in the preceding paragraph will not apply to any sale and
leaseback transaction:
o between (A) any of us and a significant subsidiary or (B) between
significant subsidiaries or (C) between us, so long as the lessor is
one of us or a wholly owned significant subsidiary;
o which has a lease of less than three years in length;
o entered into within 180 days after the later of the purchase,
construction or development of the relevant Principal Property or
asset or the commencement of operation of the relevant Principal
Property; or
o involving Jones' distribution warehouse at South Hill, Virginia.
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Exempted Debt. Notwithstanding the restrictions in the indenture on (1) liens
and (2) sale and leaseback transactions, any of us or any significant
subsidiary may, in addition to amounts permitted under those restrictions,
create indebtedness secured by liens, or enter into sale and leaseback
transactions, so long as, at the time of those transactions and after giving
effect to them, the aggregate outstanding amount of all such indebtedness
secured by liens plus the then present value (discounted at the actual rate of
interest of the sale and leaseback transaction) of the obligations for the net
rental payments resulting from the sale and leaseback transactions does not
exceed 20% of our and our subsidiaries' consolidated stockholders' equity.
Corporate Existence. Unless our board of directors determines that it is no
longer desirable in the conduct of our business and the business of our
significant subsidiaries considered as a whole, each of us will do or cause to
be done all things necessary to preserve and keep in full force and effect our
corporate existence, material rights (charter and statutory) and material
franchises.
No Special Protection in the Event of a Highly Leveraged Transaction. The
terms of the notes will not afford the holders special protection in the event
of a highly leveraged transaction.
Events of Default
Each of the following constitutes an event of default under the
indenture:
o default in payment of the principal amount at maturity (or if the
notes have been converted to semi- annual cash pay notes following a
Tax Event, the Restated Principal Amount), redemption price,
purchase price or Fundamental Change repurchase price with respect
to any note when such amount becomes due and payable;
o if the notes have been converted to semi-annual cash pay notes
following a Tax Event, the failure to pay interest within 30 days of
the due date;
o our failure to pay liquidated damages within 30 days of the due
date;
o our failure to comply with the obligations described under
"--Mergers and Sales of Assets" below;
o our failure to comply with any of our obligations under the
covenants described under "--Certain Covenants" above upon receipt
by us of notice of such default by the trustee or by holders of not
less than 25% in aggregate principal amount at maturity of the notes
then outstanding and our failure to cure (or obtain a waiver of)
such default within 30 days after receipt by us of such notice;
o our failure to comply with any of our other agreements in the notes
or the indenture upon receipt by us of notice of such default by the
trustee or by holders of not less than 25% in aggregate principal
amount at maturity of the notes then outstanding and our failure to
cure (or obtain a waiver of) such default within 60 days after
receipt by us of such notice;
o a default under any indebtedness (other than the notes) by any of us
or by any significant subsidiary as a result of which an amount in
excess of $25.0 million becomes due and payable prior to the date on
which it would otherwise have become due and payable upon receipt by
us of notice of the default by the trustee or by holders of not less
than 25% in aggregate principal amount at maturity of the notes then
outstanding, without such indebtedness having been discharged or
such acceleration having been rescinded or annulled within 30 days
after such notice;
o any judgment or decree for the payment of money in excess of $25.0
million against any of us or any significant subsidiary if (A) an
enforcement proceeding thereon is commenced by any creditor or (B)
it is not discharged, waived or stayed and remains outstanding for a
period of 60 days;
o the co-obligation of any of us shall cease to be in full force and
effect (except as contemplated by the terms thereof); and
o certain events of bankruptcy, insolvency or reorganization affecting
us.
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If any event of default (other than an event of default relating to
certain events of bankruptcy, insolvency or reorganization) occurs and is
continuing, either the trustee or the holders of not less than 25% in
aggregate principal amount at maturity of the notes then outstanding by
written notice to us (and to the trustee if such notice is given by the
holders) may declare the issue price of the notes plus the original issue
discount on the notes accrued through the date of such declaration to be
immediately due and payable. In the case of certain events of bankruptcy,
insolvency or reorganization, the issue price of the notes plus the original
issue discount accrued thereon through the occurrence of such event shall
automatically become and be immediately due and payable without any
declaration or other act on the part of the trustee or any holders.
Subject to the provisions of the indenture relating to the duties of the
trustee in case an event of default shall occur and be continuing, the trustee
is under no obligation to exercise any of its rights or powers under the
indenture at the request or direction of any of the holders, unless such
holders have offered to the trustee indemnity or security satisfactory to it
against any loss, liability or expense. Subject to such provisions for the
indemnification of the trustee, the holders of at least a majority in
aggregate principal amount at maturity of the outstanding notes have the right
to direct the time, method and place of conducting any proceeding for any
remedy available to the trustee or exercising any trust or power conferred on
the trustee with respect to the notes. The trustee, however, may refuse to
follow any direction that conflicts with law or the indenture or that the
trustee determines is unduly prejudicial to the rights of any other holder or
that would involve the trustee in personal liability. Prior to taking any
action under the indenture, the trustee is entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses
caused by taking or not taking such action.
No holder of a note has any right to institute any proceeding with
respect to the indenture, or for the appointment of a receiver or a trustee,
or for any other remedy thereunder, unless:
o such holder has previously given to the trustee written notice of a
continuing event of default with respect to the notes;
o the holders of at least 25% in aggregate principal amount at
maturity of the outstanding notes have made written request, and
such holder or holders have offered reasonable security or indemnity
against any loss, liability or expense, to the trustee to institute
such proceeding as trustee; and
o the trustee has failed to institute such proceeding, and has not
received from the holders of a majority in aggregate principal
amount at maturity of the outstanding notes a direction inconsistent
with such request, within 60 days after such notice, request and
offer.
However, such limitations do not apply to a suit instituted by a holder of a
note for the enforcement of payment of the principal amount at maturity, the
restated principal amount, redemption price, purchase price or Fundamental
Change repurchase price or interest on such note on or after the applicable
due date specified in such note.
The indenture provides that if a default with respect to notes occurs and
is continuing and is known to the trustee, the trustee must mail to each
noteholder notice of the default within 90 days after it occurs. Except in the
case of a default in the principal amount at maturity (or if the notes have
been converted to semi-annual cash pay notes following a Tax Event, the
Restated Principal Amount), redemption price, purchase price or Fundamental
Change repurchase price with respect to any note when such amount becomes due
and payable, the trustee may withhold notice if and so long as a committee of
its trust officers in good faith determines that withholding notice is in the
interests of the noteholders.
The indenture requires Jones to furnish to the trustee, within 120 days
after the end of each fiscal year, a statement by certain of its officers as
to whether or not we, to their knowledge, are in default in the performance or
observance of any of the terms, provisions and conditions of the indenture
and, if so, specifying all such known defaults.
Modification and Waiver
Modifications and amendments of the indenture may be made by us and the
trustee with the consent of the holders of at least a majority in aggregate
principal amount at maturity of the outstanding notes affected by such
modification or amendment.
No such modification or amendment may, without the consent of the holder
of each outstanding note affected thereby,
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o make any change to the percentage of principal amount at maturity of
notes the holders of which must consent to an amendment;
o reduce the principal amount at maturity, restated principal amount
or issue price, or extend the stated maturity, of any note;
o reduce the redemption price, purchase price or Fundamental Change
repurchase price of any note;
o make any change that adversely affects the right to convert any
note;
o except as otherwise provided herein and in the indenture, alter the
manner or rate of accrual of original issue discount or interest on
any note, reduce the rate of interest upon the occurrence of a Tax
Event, or extend the time for payment of original issue discount or
interest, if any, on any note;
o make any note payable in money or securities other than that stated
in the note;
o make any change that adversely affects such holder's right to
require us to purchase a note; or
o impair the right to institute suit for the enforcement of any
payment with respect to, or conversion of, the notes.
Without the consent of any holder, we and the trustee may amend the
indenture to cure any ambiguity, omission, defect or inconsistency, to provide
for the assumption by a successor corporation of our obligations under the
indenture as permitted thereunder, or to make any other change that does not
adversely affect the rights of any holder.
The holders of at least a majority in principal amount at maturity of the
outstanding notes may waive compliance by us with certain restrictive
provisions of the indenture. The holders of at least a majority in principal
amount at maturity of the outstanding notes may waive any past default under
the indenture, except a default in the payment of principal or interest and
certain covenants and provisions of the indenture which cannot be amended
without the consent of the holder of each outstanding note.
Mergers and Sales of Assets
The indenture provides that none of the issuers may consolidate with or
merge into any other person or convey, transfer or lease all or substantially
all of its properties and assets to another person, unless among other items:
(i) the resulting, surviving or transferee person (if other than the relevant
issuer) is organized and existing under the laws of the United States, any
state thereof or the District of Columbia and such person expressly assumes,
by supplemental indenture, all obligations of the relevant issuer under the
notes and the indenture; (ii) the relevant issuer or such successor person
shall not immediately thereafter be in default under the indenture; (iii) the
relevant issuer shall have provided the trustee with an opinion of counsel and
officer's certificate confirming compliance with the indenture and (iv) the
notes shall be secured ratably by any liens to which a Principal Property of
the relevant issuer becomes subject as a result of the transaction that would
otherwise not be permitted by the indenture. Upon the assumption of the
obligations of the relevant issuer by such a person in such circumstances,
subject to certain exceptions, the relevant issuer shall be discharged from
all obligations under the notes and the indenture (except in the case of a
lease). Although such transactions are permitted under the indenture, certain
of the foregoing transactions could constitute a Fundamental Change permitting
each holder to require us to purchase the notes of such holder as described
above.
Discharge of the Indenture
We may satisfy and discharge our obligations under the indenture by
delivering to the trustee for cancelation all outstanding notes or by
depositing with the trustee, the paying agent or the conversion agent, if
applicable, after the notes have become due and payable, whether at stated
maturity, or any redemption date, or any purchase date, or a Fundamental
Change repurchase date, or upon conversion or otherwise, cash or shares of
Jones Apparel Group common stock (as applicable under the terms of the
indenture) sufficient to pay all of the outstanding notes and paying all other
sums payable under the indenture by us.
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Limitation of Claims in Bankruptcy
If a bankruptcy proceeding is commenced in respect of us, the claim of
the holder of a note is, under Title 11 of the United States Code, limited to
the issue price of the note plus that portion of the original issue discount
that has accrued from the date of issue to the commencement of the proceeding.
Regarding the Trustee
The indenture provides that, except during the continuance of an event of
default, the trustee will perform only such duties as are specifically set
forth in the indenture. During the existence of an event of default, the
trustee will exercise such rights and powers vested in it under the indenture
and use the same degree of care and skill in its exercise as a prudent person
would exercise under the circumstances in the conduct of such person's own
affairs.
The indenture and provisions of the Trust Indenture Act that are
incorporated by reference therein contain limitations on the rights of the
trustee, should it become one of our creditors, to obtain payment of claims in
certain cases or to realize on certain property received by it in respect of
any such claim as security or otherwise. The trustee is permitted to engage in
other transactions with us or any of our affiliates; provided, however, that
if it acquires any conflicting interest (as defined in the indenture or in the
Trust Indenture Act), it must eliminate such conflict or resign.
The trustee under the indenture has additional financial arrangements
with us, including as trustee under Nine West's Supplemental Executive
Retirement Plan, as trustee for the Nine West Pension Plan, as a lender under
the Senior Credit Facilities, as trustee for our 7 1/2% Notes, 7 7/8% Notes, 8
3/8% Notes and 9% Notes and as transfer agent and registrar for Jones Apparel
Group common stock.
Book-Entry; Delivery and Form; Global Note
Notes sold by the selling securityholders pursuant to the registration
statement of which this prospectus forms a part will be represented by one or
more permanent global notes in definitive, fully-registered form without
interest coupons. The global notes will be deposited with the trustee as
custodian for DTC and registered in the name of a nominee of DTC in New York,
New York for the accounts of participants in DTC.
Investors may hold their interests in the global note directly through
DTC if they are DTC participants, or indirectly through organizations that are
DTC participants.
Investors who purchase notes in offshore transactions may hold their
interests in the global note directly through Euroclear Bank S.A./N.V., as
operator of the Euroclear System ("Euroclear") and Clearstream Banking,
societe anonyme ("Clearstream"), if they are participants in such systems, or
indirectly through organizations that are participants in such systems.
Euroclear and Clearstream will hold interests in the global note on behalf of
their participants through their respective depositaries, which in turn will
hold such interests in the global note in the depositaries' names on the books
of DTC.
DTC has advised us as follows: DTC is a limited purpose trust company
organized under the laws of the State of New York Uniform Commercial Code, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC was created to hold securities of institutions
that have accounts with DTC ("participants") and to facilitate the clearance
and settlement of securities transactions among its participants in such
securities through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of securities
certificates. DTC's participants include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations.
Access to DTC's book-entry system is also available to others such as banks,
brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, whether directly or indirectly.
Ownership of beneficial interests in the global note will be limited to
participants or persons that may hold interests through participants.
Ownership of beneficial interests in the global note will be shown on, and the
transfer of those ownership interests will be effected only through, records
maintained by DTC (with respect to participants' interests) and such
participants (with respect to the owners of beneficial interests in the global
note other than participants). Beneficial interests in the global note will be
exchangeable for definitive notes only in accordance with the terms of the
indenture.
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So long as DTC or its nominee is the registered holder and owner of the
global note, DTC or such nominee, as the case may be, will be considered the
sole legal owner of the notes represented by the global note for all purposes
under the indenture and the notes. Except as set forth below, owners of
beneficial interests in the global note will not be entitled to receive
definitive notes and will not be considered to be the owners or holders of any
notes under the global note. We understand that under existing industry
practice, in the event an owner of a beneficial interest in the global note
desires to take any actions that DTC, as the holder of the global note, is
entitled to take, DTC would authorize the participants to take such action,
and that participants would authorize beneficial owners owning through such
participants to take such action or would otherwise act upon the instructions
of beneficial owners owning through them. No beneficial owner of an interest
in the global note will be able to transfer the interest except in accordance
with DTC's applicable procedures, in addition to those provided for under the
indenture and, if applicable, those of Euroclear and Clearstream.
Payments of the principal of, premium, if any, and liquidated damages, if
any, on, the notes represented by the global note registered in the name of
and held by DTC or its nominee will be made to DTC or its nominee, as the case
may be, as the registered owner and holder of the global note.
DTC or its nominee, upon receipt of any payment of principal in respect
of the global note, will credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the
principal amount of the global note as shown on the records of DTC or its
nominee. We also expect that payments by participants to owners of beneficial
interests in the global note held through such participants will be governed
by standing instructions and customary practices as is now the case with
securities held for accounts of customers registered in the names of nominees
for such customers. Such payments, however, will be the responsibility of such
participants and indirect participants, and neither we, the trustee nor any
paying agent will have any responsibility or liability for any aspect of the
records relating to, or payments made on account of, beneficial ownership
interests in the global note or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests or for any other
aspect of the relationship between DTC and its participants or the
relationship between such participants and the owners of beneficial interests
in the global note.
Unless and until it is exchanged in whole or in part for definitive notes
in definitive form, the global note may not be transferred except as a whole
by DTC to a nominee of DTC or by a nominee of DTC to DTC or another nominee of
DTC. Transfers between participants in DTC will be effected in the ordinary
way in accordance with DTC rules and will be settled in same-day funds.
Transfers between participants in Euroclear and Clearstream will be
effected in the ordinary way in accordance with their respective rules and
operating procedures. If a holder requires physical delivery of a definitive
note for any reason, including to sell notes to persons in jurisdictions that
require such delivery of such notes or to pledge such notes, such holder must
transfer its interest in the global note in accordance with the normal
procedures of DTC and the procedures set forth in the indenture.
Cross-market transfers between DTC, on the one hand, and directly or
indirectly through Euroclear or Clearstream participants, on the other, will
be effected in DTC in accordance with DTC rules on behalf of Euroclear or
Clearstream, as the case may be, by its respective depositary; however, such
cross-market transactions will require delivery of instructions to Euroclear
or Clearstream, as the case may be, by the counterparty in such system in
accordance with its rules and procedures and within its established deadlines
(Brussels time). Euroclear or Clearstream, as the case may be, will, if the
transaction meets its settlement requirements, deliver instructions to its
respective depositary to take action to effect final settlement on its behalf
by delivering or receiving interests in the global note in DTC, and making or
receiving payment in accordance with normal procedures for same-day funds
settlement applicable to DTC. Euroclear participants and Clearstream
participants may not deliver instructions directly to the depositaries for
Euroclear or Clearstream.
Because of time zone differences, the securities account of a Euroclear
or Clearstream participant purchasing an interest in the global note from a
DTC participant will be credited during the securities settlement processing
day (which must be a business day for Euroclear or Clearstream, as the case
may be) immediately following the DTC settlement date, and such credit of any
interests in the global note settled during such processing day will be
reported to the relevant Euroclear or Clearstream participant on such day.
Cash received in Euroclear or Clearstream as a result of sales of interests in
the global note by or through a Euroclear or Clearstream participant to a DTC
participant will be received with value on the DTC settlement date, but will
be available in the relevant Euroclear or Clearstream cash account only as of
the business day following settlement in DTC.
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We expect that DTC will take any action permitted to be taken by a holder
of notes only at the direction of one or more participants to whose account
the DTC interests in the global note is credited and only in respect of such
portion of the aggregate principal amount of the notes as to which such
participant or participants has or have given such direction. However, if
there is an Event of Default under the notes, DTC will exchange the global
note for definitive notes, which it will distribute to its participants.
Although we expect that DTC, Euroclear and Clearstream will agree to the
foregoing procedures in order to facilitate transfers of interests in the
global note among participants of DTC, Euroclear, and Clearstream, DTC,
Euroclear and Clearstream are under no obligation to perform or continue to
perform such procedures, and such procedures may be discontinued at any time.
Neither we nor the trustee will have any responsibility for the performance by
DTC, Euroclear or Clearstream or their participants or indirect participants
of their respective obligations under the rules and procedures governing their
operations.
If DTC is at any time unwilling to continue as a depositary for the
global note and a successor depositary is not appointed by us within 90 days,
we will issue definitive notes in exchange for the global note.
We may decide to discontinue use of the system of book-entry transfers
through DTC (or a successor securities depositary). In that event,
certificates representing the notes will be printed and delivered.
The information in this section concerning DTC, Clearstream Banking,
Euroclear and DTC's book-entry system has been obtained from sources that we
believe to be reliable, but we do not take responsibility for the accuracy
thereof.
REGISTRATION RIGHTS
Pursuant to the registration rights agreement we entered into with the
initial purchasers of the notes, we have filed a shelf registration statement,
of which this prospectus is a part, covering resales of the notes and the
Jones Apparel Group common stock issuable upon the conversion thereof pursuant
to Rule 415 under the Securities Act.
Subject to certain rights to suspend use of the shelf registration
statement, we will use reasonable efforts to cause the shelf registration
statement to be declared effective by July 31, 2001 and to keep the shelf
registration statement effective until the earliest of (1) the time when the
notes or Jones Apparel Group common stock issuable upon conversion thereof
covered by the shelf registration statement can be sold pursuant to Rule 144
under the Securities Act or any successor rule or regulation thereto, (2)
February 1, 2003, the second anniversary of the original date of issuance of
the notes, (3) the date on which all notes registered under the shelf
registration statement are disposed of in accordance therewith and (4) the
date upon which the notes are no longer outstanding.
The following requirements and restrictions will generally apply to a
holder selling such securities pursuant to the shelf registration statement:
o such holder will be required to be named as selling securityholder
in the related prospectus;
o such holder will be required to deliver a prospectus to purchasers;
o such holder will be subject to certain of the civil liability
provisions under the Securities Act in connection with such sales;
and
o such holder will be bound by the provisions of the registration
rights agreements which are applicable to such holder (including
certain indemnification obligations).
We have agreed to pay predetermined liquidated damages ("liquidated
damages") to holders of the notes and holders of Jones Apparel Group common
stock issued upon conversion of the notes if the shelf registration statement
is not timely made effective as described above or if the prospectus is
unavailable for periods in excess of those described below. Such liquidated
damages shall accrue until such failure to become or remain effective or such
unavailability is cured:
o in respect of any note, at a rate per year equal to 0.25% for the
first 90 days after the occurrence of such event and 0.5% thereafter
of the applicable principal amount (as defined below) thereof, and
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o in respect of any shares of Jones Apparel Group common stock into
which the notes have been converted at a rate per year equal to
0.25% for the first 90 days after the occurrence of such event and
0.5% thereafter of the then applicable conversion price (as defined
below).
The term "applicable principal amount" means, as of any date of
determination, with respect to each $1,000 principal amount at maturity of the
notes, the sum of the issue price of such notes plus accrued original issue
discount with respect to such notes through such date of determination or,
following the conversion of the notes to interest-bearing securities after a
Tax Event, the Restated Principal Amount. The term "applicable conversion
price" means, as of any date of determination, the applicable principal amount
per $1,000 principal amount at maturity of notes as of such date of
determination divided by the conversion rate in effect as of such date of
determination or, if no notes are then outstanding, the conversion rate that
would be in effect were the notes then outstanding.
Such liquidated damages will accrue from and including the date on which
any such registration default occurs to but excluding the date on which all
registration defaults have been cured. We will have no other liabilities for
monetary damages with respect to our registration obligations, except that if
we breach, fail to comply with or violate certain provisions of the
registration rights agreement, the holders of the notes will be entitled to
equitable relief, including injunction and specific performance.
We are permitted to suspend the effectiveness of the shelf registration
statement or the use of the prospectus that is part of the shelf registration
statement during specified periods (not to exceed 45 days in any three month
period or 90 days in any 12 month period) in specified circumstances,
including circumstances relating to pending corporate developments.
The summary above of certain provisions of the registration rights
agreement is subject to, and is qualified in its entirety by reference to, all
the provisions of the registration rights agreement, a copy of which is filed
as an exhibit to Jones Apparel Group's Annual Report on Form 10-K for the
fiscal year ended December 31, 2000 which is incorporated by reference to the
registration statement of which this prospectus is a part and is also
available upon request as described under "Where You Can Find More
Information."
DESCRIPTION OF CAPITAL STOCK
Jones Apparel Group's authorized capital stock consists of (1)
200,000,000 shares of common stock, $.01 par value per share, and (2)
1,000,000 shares of preferred stock, $.01 par value per share. On May 1,
2001, Jones Apparel Group had 120,029,305 shares of common stock issued and
outstanding and no shares of preferred stock outstanding. Jones Apparel Group
common stock is listed on the New York Stock Exchange under the trading symbol
"JNY."
Each share of Jones Apparel Group common stock is entitled to one vote on
all matters submitted to a vote of shareholders. Jones shareholders are
entitled to receive dividends when and as declared by the Jones board of
directors out of legally available funds. Dividends may be paid on the Jones
Apparel Group common stock only if all dividends on any outstanding preferred
stock of Jones shareholders have been paid or reserved. To date, Jones has not
paid any cash dividends on shares of its common stock and does not anticipate
paying any cash dividends in the foreseeable future.
The issued and outstanding shares of Jones Apparel Group common stock are
fully paid and nonassessable. Jones shareholders have no preemptive or
conversion rights and are not subject to further calls or assessments by
Jones. In the event of the voluntary or involuntary dissolution, liquidation
or winding up of Jones, Jones shareholders are entitled to receive, pro rata,
after satisfaction in full of the prior rights of creditors and holders of
preferred stock, if any, all of Jones' remaining assets available for
distribution.
The Jones board of directors is authorized to provide for the issuance
from time to time of Jones preferred stock in series and, as to each series,
to fix the designation, the dividend rate, whether dividends are cumulative,
the preferences which dividends will have with respect to any other class or
series of capital stock, the voting rights, the voluntary and involuntary
liquidation prices, the conversion or exchange privileges, the redemption
prices and the other terms of redemption, and the terms of any purchase or
sinking funds applicable to the series. Cumulative dividends, dividend
preferences and conversion, exchange and redemption provisions, to the extent
that some or all of these features may be present when shares of Jones
preferred stock are issued, could have an adverse effect on the availability
of earnings for distribution to the holders of Jones Apparel Group common
stock or for other corporate purposes.
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The transfer agent and registrar for Jones Apparel Group common stock is
The Bank of New York.
CERTAIN UNITED STATES FEDERAL INCOME
TAX CONSIDERATIONS
General
This section summarizes the material U.S. tax consequences to holders of
notes and the shares of common stock into which the notes may be converted. It
represents the views of our tax counsel, Cravath, Swaine & Moore. However, the
discussion is limited in the following ways:
o The discussion only covers you if you hold your notes and the shares
of common stock received upon conversion as a capital asset (that
is, for investment purposes), and if you do not have a special tax
status.
o The discussion does not cover tax consequences that depend upon your
particular tax situation in addition to your ownership of notes or
shares. We suggest that you consult your tax advisor about the
consequences of holding notes or shares in your particular
situation.
o The discussion is based on current law. Changes in the law may
change the tax treatment of the notes or the shares.
o The discussion does not cover state, local or foreign law.
o We have not requested a ruling from the IRS on the tax consequences
of owning the notes or the shares. As a result, the IRS could
disagree with portions of this discussion.
A "U.S. Holder" is:
o an individual U.S. citizen or resident alien;
o a corporation--or entity taxable as a corporation for U.S. federal
income tax purposes--that was created under U.S. law (federal or
state);
o an estate whose worldwide income is subject to U.S. federal income
tax; or
o a trust if a United States court can exercise primary supervision
over the trust's administration and one or more United States
persons are authorized to control all substantial decisions of the
trust.
If a partnership holds notes or shares, the tax treatment of a partner
will generally depend upon the status of the partner and upon the activities
of the partnership. If you are a partner of a partnership holding notes or
shares, we suggest that you consult your tax advisor.
The term "Non-U.S. Holder" refers to any beneficial owner of a note or
shares of Jones Apparel Group common stock who or which is not a U.S. Holder.
If you are considering buying notes, we urge you to consult your tax
advisor about the particular federal, state, local and foreign tax
consequences of the acquisition, ownership and disposition of the notes,
including the conversion of the notes into shares of Jones Apparel Group
common stock, and the effect that your particular circumstances may have on
these tax consequences.
U.S. Holders
Original Issue Discount. The notes were issued with original issue discount
("OID"). The amount of OID on a note is the note's stated principal amount at
maturity minus the note's issue price. The "issue price" of a note is the
first price at which a substantial amount of the notes are sold to the public.
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Because the notes have OID, the following consequences arise:
o You must include the total amount of OID as ordinary income over the
life of the note. You must include OID in income as the OID accrues
on the notes, even if you are on the cash method of accounting. This
means that you are required to report OID income, and pay tax on
that income, before you receive the cash that corresponds to that
income.
o OID accrues on a note on a "constant yield" method. This method
takes into account the compounding of interest. Under this method,
the accrual of OID on a note will result in you being taxable at
approximately a constant percentage of your unrecovered investment
(including your previously accrued OID) in the note.
o The accruals of OID on a note will generally be less in the early
years and more in the later years.
Market Discount. If you purchase a note for an amount that is less than its
issue price (increased by any previously accrued OID), the amount of the
difference will be treated as "market discount" for federal income tax
purposes, unless such difference is less than a specified de minimis amount.
Under the market discount rules, you will be required to treat any partial
principal payment on, or any gain on the sale, exchange, retirement or other
disposition of, a note as ordinary income to the extent of the market discount
which has not previously been included in income. In addition, you may be
required to defer, until the maturity of the note or its earlier disposition
in a taxable transaction, the deduction of all or a portion of the interest
expense on any indebtedness incurred or continued to purchase or carry such
note. Any market discount will be considered to accrue ratably during the
period from the date of acquisition to the maturity date of the note, unless
you elect to accrue the discount on a constant-yield method. You may elect to
include market discount in income currently as it accrues (on either a ratable
or constant-yield method), in which case the rule described above regarding
deferral of interest expense deductions will not apply. This election to
include market discount in income currently, once made, applies to all market
discount obligations that you acquire on or after the first taxable year to
which the election applies and may not be revoked without the consent of the
Internal Revenue Service.
Acquisition Premium. If you purchase a note for an amount that is greater than
its issue price (increased by any previously accrued OID) but less than its
principal amount, you will be considered to have purchased such note at an
"acquisition premium." The amount of OID you are required to include in your
gross income with respect to such note will be reduced by such acquisition
premium over the life of the note.
Constant-Yield Election. You may elect to include in gross income all interest
that accrues on a note using the constant- yield method. For purposes of this
election, interest includes stated interest, OID, de minimis OID, market
discount, de minimis market discount and unstated interest, as adjusted by any
acquisition premium. This election may not be revoked without the consent of
the Internal Revenue Service.
Liquidated Damages for Failure to Register Under the Securities Act. As more
fully described under "Registration Rights," we may be required to pay
liquidated damages to holders of notes or holders of common stock issued upon
conversion of the notes.
o Although the matter is not free from doubt, we intend to take the
position that liquidated damages paid to a holder of a note will be
ordinary income for U.S. federal income tax purposes at the time it
accrues or is received in accordance with such holder's method of
accounting. It is possible, however, that the Internal Revenue
Service may take a different position, in which case the treatment
of liquidated damage payments may be different.
o Although the matter is not free from doubt, we intend to take the
position that liquidated damages paid to a holder of common stock
will be subject to the treatment described below under
"--Distributions on Shares of Common Stock." It is possible,
however, that the liquidated damages payment may be taxable as
ordinary income.
Adjustment of Conversion Rate. The conversion rate of the notes is subject to
adjustment under certain circumstances, as described under "Description of the
Notes--Conversion Rights." Certain adjustments to the conversion rate may
cause you to be treated as having received a distribution. This distribution
would be taxable to you as a dividend, return of capital or capital gain in
accordance with the earnings and profits rules discussed below under
"Distributions on Shares of Common Stock."
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Sale, Exchange or Redemption of Notes. On the sale, retirement or redemption
of your note:
o You will have taxable gain or loss equal to the difference between
the amount received by you and your tax basis in the note. Your tax
basis in the note is initially your cost. It increases by any OID
and accrued market discount, if any, previously included in income.
It decreases by any principal payments you receive on the note.
o Except as described above under "--Market Discount," your gain or
loss will be capital gain or loss, and will be long-term capital
gain or loss if you held the note for more than one year. For an
individual, the maximum tax rate on long term capital gains is 20%
(or 18% if the note is acquired on or after January 1, 2001 and held
for more than five years).
Conversion of Notes. If you convert your notes into shares of common stock:
o You will not recognize gain or loss on the conversion of the notes
solely into shares of common stock, other than cash received in lieu
of fractional shares.
o Your tax basis in the shares of common stock received upon
conversion of the notes will be equal to your aggregate tax basis in
the notes converted, less any portion allocable to cash received in
lieu of a fractional share.
o The holding period of the shares of common stock you receive upon
conversion of notes generally will include the period during which
you held the notes prior to the conversion. However, the holding
period for common stock attributable to accrued OID may commence on
the day following the conversion date.
o Cash received in lieu of a fractional share of common stock should
be treated as a payment in exchange for the fractional share (rather
than as a dividend). Gain or loss recognized on the receipt of cash
paid in lieu of the fractional share should equal the difference
between the amount of cash received for the fractional share and
your tax basis allocable to the fractional share exchanged. Any such
gain or loss will be capital gain or loss, and generally will be
long-term capital gain or loss if you held the notes for more than
one year at the time of conversion.
Exercise of Holder's Put Option. If you exercise your option to require us to
purchase or repurchase your notes, we may elect to pay for the notes with
cash, common stock or a combination thereof. (See "Description of the
Notes--Purchase of Notes at the Option of the Holder" and " --Fundamental
Change Permits Holder to Require Us to Repurchase Notes.")
o If you elect to exercise your option to tender a note to us on a
purchase date or a repurchase date and we deliver solely cash in
satisfaction of the purchase price, you would recognize gain or
loss, measured by the difference between the amount of cash
transferred by us to you and your tax basis in the tendered note.
Gain or loss recognized would generally be capital gain or loss.
o If the purchase price or repurchase price is paid solely in common
stock, you would not recognize gain or loss, except as described
below with respect to a fractional share.
o Subject to the discussion below, if the purchase price or repurchase
price is paid in a combination of shares of common stock and cash
(other than cash received in lieu of a fractional share), gain (but
not loss) realized by you would be recognized, but only to the
extent such gain does not exceed such cash.
o Your tax basis in the common stock received in the exchange will be
the same as your tax basis in the note tendered to us in exchange
for the common stock (exclusive of any tax basis allocable to a
fractional share interest as described below). However, this tax
basis will be decreased by the amount of cash (other than cash
received in lieu of a fractional share), if any, received in the
exchange and increased by the amount of any gain recognized by you
on the exchange (other than gain with respect to a fractional
share).
o Your holding period for common stock received in the exchange will
include the holding period for the note tendered to us in exchange
for the common stock (assuming each is held as a capital asset).
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However, the holding period for common stock attributable to
accrued OID may commence on the day following the purchase date
or repurchase date.
o Cash received in lieu of a fractional share of common stock
should be treated as a payment in exchange for the fractional
share (rather than as a dividend). Gain or loss recognized on the
receipt of cash paid in lieu of the fractional share should equal
the difference between the amount of cash received for the
fractional share and your tax basis allocable to the fractional
share exchanged. Any such gain or loss will be capital gain or
loss, and generally will be long-term capital gain or loss if you
held the notes for more than one year by the purchase date or
repurchase date.
Notwithstanding the foregoing, if the purchase price or repurchase
price is paid in a combination of shares of common stock and cash (other
than cash received in lieu of a fractional share), the Internal Revenue
Service may treat the exercise of your put option differently than
described above. Under the alternate analysis, you might recognize less
gain or recognize loss, as the case may be, and you would have a
corresponding reduction in your tax basis in the common stock received in
the exchange.
Distributions on Shares of Common Stock. Distributions on shares of common
stock will constitute dividends for U.S. federal income tax purposes to the
extent of our current or accumulated earnings and profits as determined
under U.S. federal income tax principles. If you are a U.S. corporation,
dividends paid to you may qualify for the dividends-received deduction.
To the extent that you receive distributions on shares of common stock
that would otherwise constitute dividends for U.S. federal income tax
purposes but that exceed our current and accumulated earnings and profits,
the distribution will be treated first as a non-taxable return of capital
reducing your basis in the shares of common stock. Any distribution in
excess of your basis in the shares of common stock will be treated as
capital gain.
Sale or Exchange of Common Stock. If you sell or exchange your shares of
common stock, you will recognize gain or loss equal to the amount realized
on the sale or exchange minus your adjusted tax basis in the shares. Any
such gain or loss will generally be long-term capital gain or loss if you
have held or are deemed to have held the shares for more than one year.
Optional Conversion to Semi-annual Cash Pay Note Upon Tax Event. The
modification of the terms of the notes by us upon a Tax Event as described
in "Description of Notes--Optional Conversion to Semi-annual Cash Pay Note
Upon Tax Event," will not be a taxable event. The modification may,
however, alter the timing of your income recognition with respect to the
semi-annual payments of interest due after the Option Exercise Date.
Nevertheless, after the modification, the tax consequences described in
this section "Certain United States Federal Income Tax Considerations"
generally will continue to apply to you.
Non-U.S. Holders
Withholding Taxes on Interest on Notes. Generally, payments of
principal and interest on the notes will not be subject to U.S. withholding
taxes.
However, for the exemption from withholding taxes to apply to you, you
must meet one of the following requirements. These requirements have been
changed for interest paid on or after January 1, 2001.
o You provide a completed Form W-8BEN (or substitute form) to the
bank, broker or other intermediary through which you hold your
notes. The Form W-8BEN contains your name, address and a
statement that you are the beneficial owner of the notes and that
you are not a U.S. Holder.
o You hold your notes directly through a "qualified intermediary,"
and the qualified intermediary has sufficient information in its
files indicating that you are not a U.S. Holder. A qualified
intermediary is a bank, broker or other intermediary that (1) is
either a U.S. or non-U.S. entity, (2) is acting out of a non-
U.S. branch or office and (3) has signed an agreement with the
IRS providing that it will administer all or part of the U.S. tax
withholding rules under specified procedures.
o You are entitled to an exemption from withholding tax on interest
under a tax treaty between the U.S. and your country of
residence. To claim this exemption, you must generally complete
Form W-8BEN
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and claim this exemption on the form. In some cases, you may
instead be permitted to provide documentary evidence of your
claim to the intermediary, or a qualified intermediary may
already have some or all of the necessary evidence in its files.
o The interest income on the notes is effectively connected with
the conduct of your trade or business in the U.S., and is not
exempt from U.S. tax under a tax treaty. To claim this exemption,
you must complete Form W-8ECI.
Even if you meet one of the above requirements, interest paid to you
will be subject to withholding tax under any of the following
circumstances:
o The withholding agent or an intermediary knows or has reason to
know that you are not entitled to an exemption from withholding
tax. Specific rules apply for this test.
o The IRS notifies the withholding agent that information that you
or an intermediary provided concerning your status is false.
o An intermediary through which you hold the notes fails to comply
with the procedures necessary to avoid withholding taxes on the
notes. In particular, an intermediary is generally required to
forward a copy of your Form W-8BEN (or other documentary
information concerning your status) to the withholding agent for
the notes. However, if you hold your notes through a qualified
intermediary--or if there is a qualified intermediary in the
chain of title between yourself and the withholding agent for the
notes--the qualified intermediary will not generally forward this
information to the withholding agent.
o You own 10% or more of the voting stock of the Company, are a
"controlled foreign corporation" with respect to the Company, or
are a bank making a loan in the ordinary course of its business.
In these cases, you will be exempt from withholding taxes only if
you are eligible for a treaty exemption or if the interest income
is effectively connected with your conduct of a trade or business
in the U.S., as discussed above.
Interest payments made to you will generally be reported to the IRS
and to you on Form 1042-S. However, this reporting does not apply to you if
one of the following conditions applies:
o You hold your notes directly through a qualified intermediary and
the applicable procedures are complied with.
o You file Form W-8ECI.
Withholding Taxes on Dividends on Shares of Common Stock. Unless an
exception applies, all dividends paid to a Non- U.S. Holder will be subject
to U.S. withholding tax at a rate of 30%. These taxes will be withheld
either by the paying agent or by the bank, broker, or other intermediary
through which you hold your shares.
In general, the entire dividend we pay is subject to withholding tax.
However, special rules apply if we pay a dividend that is greater than our
current or accumulated earnings and profits as calculated for U.S. federal
income tax purposes. In that case, either:
o We (or the intermediary) may elect to withhold only on the
portion of the dividend that is out of our earnings and profits.
In this case, the remainder of the dividend would not be subject
to withholding tax.
o We (or the intermediary) may withhold on the entire dividend. In
that case, you would be entitled to obtain a refund from the IRS
for the withholding tax on the portion of the dividend that
exceeds our earnings and profits.
You may be entitled to a reduced rate of withholding taxes--or
exemption from withholding taxes--if you are eligible for a tax treaty
between the United States and your country of residence. The particular
withholding tax rate that
-35-
would apply to you depends on your tax status and on the particular tax
treaty. However, the rate under most treaties is 15% for a typical
portfolio investor.
To be eligible for a tax treaty, you generally must meet each of the
following requirements:
o You are the beneficial owner of the shares. That is, you are not
holding the shares on behalf of someone else.
o You are a resident of the tax treaty jurisdiction and you satisfy
all the other requirements in the treaty.
o You comply with the documentation requirements discussed below.
o If you are treated as a partnership or other pass-through entity
either for U.S. federal income tax purposes or under the tax laws
of the treaty jurisdiction, you must satisfy additional
requirements.
In order to comply with the documentation requirements to claim tax
treaty benefits, you must satisfy one of the following conditions. These
conditions have been significantly changed for dividends paid on or after
January 1, 2001.
o You complete Form W-8BEN and provide it to the intermediary. The
Form W-8BEN must contain your name and address, and you must fill
out Part II of the form to state your claim for treaty benefits.
As long as the shares remain actively traded, you are not
required to obtain a Taxpayer Identification Number to claim
treaty benefits.
o You hold your shares directly through a "qualified intermediary."
In this case, you need not file Form W-8BEN if the qualified
intermediary has in its files, or obtains from you, certain
information concerning your eligibility for treaty benefits. A
qualified intermediary is an intermediary that (1) is either a
U.S. or non-U.S. entity, (2) is acting out of a non-U.S. branch
or office and (3) has signed an agreement with the IRS providing
that it will administer all or part of the U.S. tax withholding
rules under specified procedures.
o In some limited circumstances, you may be permitted to provide
documentary evidence in lieu of Form W-8BEN even if you hold your
shares through an intermediary that is not a qualified
intermediary.
Alternatively, dividends paid to you will be exempt from U.S.
withholding tax if the dividend income is effectively connected with the
conduct of your trade or business in the U.S., and is not exempt from U.S.
tax under a tax treaty. To claim this exemption, you must generally
complete Form W-8ECI.
Even if you meet one of the above requirements, you will not be
entitled to the reduction in--or exemption from--withholding tax on
dividends paid to you under any of the following circumstances:
o The withholding agent or an intermediary knows or has reason to
know that you are not entitled to the reduction in rate or the
exemption from withholding tax. Specific rules apply for this
test.
o The IRS notifies the withholding agent that information that you
or an intermediary provided concerning your status is false.
o An intermediary through which you hold the shares fails to comply
with the necessary procedures. In particular, an intermediary is
generally required to forward a copy of your Form W-8BEN (or
other documentary information concerning your status) to the
withholding agent for the shares. However, if you hold your
shares through a qualified intermediary--or if there is a
qualified intermediary in the chain of title between yourself and
the withholding agent for the shares--the qualified intermediary
will not generally forward this information to the withholding
agent.
The amount of dividends paid to you, and the amount withheld from the
dividends, will generally be reported to the IRS and to you on Form 1042-S.
However, this reporting does not apply to you if you hold your shares
directly through a qualified intermediary and the applicable procedures are
complied with.
-36-
The rules regarding withholding are complex and vary depending on your
individual situation. They are also subject to change, and certain
transition rules apply for calendar year 2001. In addition, special rules
apply to certain types of non-U.S. holders of shares, including
partnerships, trusts, and other entities treated as pass- through entities
for U.S. federal income tax purposes. We suggest that you consult with your
tax advisor regarding the specific methods for satisfying these
requirements.
Sales or Exchange of Notes or Shares of Common Stock. You generally will
not be subject to U.S. federal income tax on gain recognized upon the sale
or other disposition of the notes or shares of common stock unless:
o The gain is, or is treated as, effectively connected with a trade
or business that you conduct within the U.S.; or
o You are an individual present in the U.S. for 183 or more days
during the year in which you dispose of the notes or shares and
certain other conditions are satisfied.
U.S. Trade or Business. If you hold your notes or shares of common stock in
connection with a trade or business that you are conducting in the U.S.:
o Any interest on the notes, or any dividends on the shares and any
gain from disposing of the notes or shares, generally will be
subject to income tax as if you were a U.S. Holder.
o If you are a corporation, you may be subject to the "branch
profits tax" on your earnings that are connected with your U.S.
trade or business, including earnings from the notes or shares.
This tax is 30%, but may be reduced or eliminated by an
applicable income tax treaty.
Conversion of Notes. A Non-U.S. Holder generally will not be subject to
U.S. federal income tax on the conversion of a note into shares of common
stock. To the extent a Non-U.S. Holder received cash in lieu of a
fractional share on conversion, the cash may give rise to gain that would
be subject to the rules described above with respect to the sale or
exchange of a note or common stock.
Liquidated Damages for Failure to Register Under the Securities Act. As
more fully described under "Registration Rights," we may be required to pay
liquidated damages to holders of notes or holders of common stock issued
upon conversion of the notes. Payments of liquidated damages to holders of
notes or common stock, if any, may be subject to U.S. withholding tax at a
30% or lower applicable treaty rate. If you hold your notes or shares of
common stock in connection with your U.S. trade or business, payments of
liquidated damages may be subject to U.S. tax as provided above under "
- --U.S. Trade or Business."
Federal Estate Taxes. If you are an individual, your notes will not be
subject to U.S. estate tax when you die. However, this rule only applies
if, at your death, payments on the notes were not connected to a trade or
business that you were conducting in the U.S.
If you are an individual, your shares of common stock will be subject
to U.S. estate tax when you die unless you are entitled to the benefits of
an estate tax treaty.
Information Reporting and Backup Withholding
U.S. Holders. Under the tax rules concerning information reporting to the
IRS:
o Assuming you hold your notes or shares through a broker or other
securities intermediary, the intermediary must provide
information to the IRS and to you concerning interest and
retirement proceeds on your notes, or dividends and sale proceeds
on your shares, unless an exemption applies.
o Similarly, unless an exemption applies, you must provide the
intermediary with certain identifying information.
o If you are subject to these requirements but do not properly
comply, the intermediary must withhold 31% of all amounts payable
to you on the notes (including principal payments) or shares.
This is called
-37-
"backup withholding." If the intermediary withholds payments, you
may use the withheld amount as a credit against your federal
income tax liability.
o Some holders, including all corporations, are exempt from these
requirements.
Non-U.S. Holders. The information reporting and backup withholding rules
described above apply to Non-U.S. Holders as follows:
o Principal and interest payments you receive will be automatically
exempt from the usual rules if you are a Non-U.S. Holder exempt
from withholding tax on interest, as described above. The
exemption does not apply if the withholding agent or an
intermediary knows or has reason to know that you should be
subject to the usual information reporting or backup withholding
rules. In addition, as described above, interest payments made to
you may be reported to the IRS on Form 1042-S.
o Dividends paid to you will be exempt from the usual information
reporting rules if you are eligible for a reduced withholding
rate under a tax treaty as discussed above. However, as described
above, dividends paid to you may be reported to the IRS on Form
1042-S.
o If you are not eligible for a tax treaty and do not provide
information to the intermediary identifying yourself as a
Non-U.S. Holder, in some cases you may be subject to backup
withholding on dividends at the rate of 31% instead of the
regular dividend withholding rate of 30%. If necessary, you may
provide the intermediary with Form W-8BEN, without claiming
treaty benefits, in order to claim the 30% rate.
o Sale proceeds you receive on a sale of your notes or shares
through a broker may be subject to information reporting and/or
backup withholding if you are not eligible for an exemption. In
particular, information reporting and backup withholding may
apply if you use the U.S. office of a broker, and information
reporting (but not backup withholding) may apply if you use the
foreign office of a broker that has certain connections to the
U.S. In general, you may file Form W-8BEN to claim an exemption
from information reporting and backup withholding. We suggest
that you consult your tax advisor concerning information
reporting and backup withholding on a sale.
SELLING SECURITYHOLDERS
We initially issued the notes to the initial purchasers who then sold
the notes in transactions exempt from the registration requirements of the
Securities Act to "qualified institutional buyers" (as defined in Rule 144A
under the Securities Act) and buyers outside the United States in
accordance with Regulation S under the Securities Act. The selling
securityholders (which term includes their transferees, pledgees, donees or
their successors) may from time to time offer and sell pursuant to this
prospectus any or all of the notes and Jones Apparel Group common stock
issued upon conversion of the notes.
The following table sets forth the name, principal amount at maturity
of notes and number of shares beneficially owned by the selling
securityholders intending to sell the notes or common stock and the
principal amount at maturity of notes or shares of common stock to be
offered. Based on information provided to us by the applicable selling
securityholder, the table also discloses whether any selling securityholder
selling in connection with the prospectus or prospectus supplement has held
any position or office with, been employed by or otherwise has had a
material relationsihp with us or any of our affiliates during the three
years prior to the date of the prospectus or prospectus supplement.
-38-
Number of
Principal amount at shares of
maturity of notes common
beneficially owned Percentage of stock that Percentage of
that may be sold notes may be sold common stock Material
Name hereby outstanding hereby(1) outstanding(2) relationship
- ---- ----------------------- ------------ ------------ --------------- ------------
AAM/Zazove Institutional Income
Fund L.P. ............................... $ 2,500,000 0.31% 24,526.25 *% None
Allstate Insurance Company................. 5,000,000 0.62 49,052.50 * None
Allstate Life Insurance Company............ 6,000,000 0.74 58,863.00 * None
American Fidelity Assurance Company........ 475,000 0.06 4,659.99 * None
American Motorist Insurance Company........ 1,146,000 0.14 11,242.83 * None
Amerisure Companies/Michigan Mutual
Insurance Company........................ 1,000,000 0.12 9,810.50 * None
Arapahoe County Colorado................... 112,000 0.01 1,098.78 * None
Arbitex Master Fund, L.P................... 10,000,000 1.24 98,105.00 * None
Associated Electric & Gas Insurance
Services Limited......................... 1,000,000 0.12 9,810.50 * None
Aventis Pension Master Trust............... 900,000 0.11 8,829.45 * None
Banc of America Securities LLC............. 12,500,000 1.55 122,631.25 * (4)
Bancroft Convertible Fund, Inc............. 2,000,000 0.25 19,621.00 * None
BBT Fund, L.P.............................. 20,000,000 2.48 196,210.00 * None
BC McCabe Foundation....................... 1,000,000 0.12 9,810.50 * None
Bear, Stearns & Co. Inc.................... 7,500,000 0.93 73,578.75 * (5)
Black Diamond Offshore, Ltd................ 3,496,000 0.43 34,297.51 * None
Blue Cross Blue Shield of Florida.......... 3,800,000 0.47 37,279.90 * None
Boilermaker - Blacksmith Pension Trust..... 5,600,000 0.70 54,938.80 * None
British Virgin Island Social Security
Board.................................... 85,000 0.01 833.89 * None
BS Debt Income Fund - Class A.............. 30,000 0.00 294.32 * None
CALAMOS(R)Convertible Fund - CALAMOS(R)
Investment Trust......................... 10,650,000 1.32 104,481.83 * None
CALAMOS(R)Convertible Growth and Income Fund
- CALAMOS(R) Investment Trust............ 6,100,000 0.76 59,844.05 * None
CALAMOS(R)Convertible Portfolio
- CALAMOS(R) Advisors Trust.............. 470,000 0.06 4,610.94 * None
CALAMOS(R)Global Convertible Fund
- CALAMOS(R) Investment Trust............ 425,000 0.05 4,169.46 * None
CapitalCare, Inc........................... 135,000 0.02 1,324.42 * None
CareFirst of Maryland, Inc................. 600,000 0.07 5,886.30 * None
CFFX LLC.................................. 10,000,000 1.24 98,105.00 * None
City of Albany Pension Plan................ 505,000 0.06 4,954.30 * None
City of Birmingham Retirement & Relief
System................................... 4,000,000 0.50 39,242.00 * None
City of Knoxville Pension System........... 1,160,000 0.14 11,380.18 * None
City of New Orleans........................ 463,000 0.06 4,542.26 * None
City University of New York................ 276,000 0.03 2,707.70 * None
Clarica Life Insurance Co. - U.S........... 1,400,000 0.17 13,734.70 * None
Coastal Convertibles Ltd................... 1,000,000 0.12 9,810.50 * None
Conseco Annuity Assurance Company -
Multi-Bucket Annuity Convertible Bond Fund 4,000,000 0.50 39,242.00 * None
DeAm Convertible Arbitrage Fund............ 3,000,000 0.37 29,431.50 * None
Delta Airlines Master Trust................ 9,900,000 1.23 97,123.95 * None
Delta Pilots Disability and Survivorship
Trust.................................... 1,900,000 0.24 18,639.95 * None
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Deutsche Banc Alex Brown Inc............... 24,400,000 3.03 239,376.20 * None
1976 Distribution Trust FBO A.K.
Lauder/Zinterhoffer...................... 32,000 0.00 313.94 * None
1976 Distribution Trust FBO Jane A. Lauder. 31,000 0.00 304.13 * None
Dorinco Reinsurance Company................ 3,000,000 0.37 29,431.50 * None
Double Black Diamond Offshore LDC.......... 15,738,000 1.95 154,397.65 * None
Drury University........................... 185,000 0.02 1,814.94 * None
Elf Aquitaine.............................. 625,000 0.08 6,131.56 * None
Ellsworth Convertible Growth and Income
Fund, Inc................................ 2,000,000 0.25 19,621.00 * None
Employee Benefit Convertible Securities Fund 500,000 0.06 4,905.25 * None
FreeState Health Plan, Inc................. 175,000 0.02 1,716.84 * None
Genesee County Employees' Retirement System 550,000 0.07 5,395.78 * None
GLG Market Neutral Fund.................... 20,000,000 2.48 196,210.00 * None
Goldman Sachs & Company.................... 481,000 0.06 4,718.85 * None
Grady Hospital Foundation.................. 243,000 0.03 2,383.95 * None
Granville Capital Corporation.............. 20,000,000 2.48 196,210.00 * None
Greek Catholic Union....................... 115,000 0.01 1,128.21 * None
Greek Catholic Union II.................... 95,000 0.01 932.00 * None
Group Hospitalization and Medical Services,
Inc...................................... 700,000 0.09 6,867.35 * None
Healthcare Underwriters Mutual Insurance
Company.................................. 1,725,000 0.21 16,923.11 * None
HealthNow New York, Inc.................... 175,000 0.02 1,716.84 * None
H.K. Porter Company, Inc................... 135,000 0.02 1,324.42 * None
Highbridge Capital Corporation............. 35,000,000 4.34 343,367.50 * None
Independence Blue Cross.................... 230,000 0.03 2,256.42 * None
Jackson County Employees' Retirement System 550,000 0.07 5,395.78 * None
Jersey (IMA) Ltd........................... 2,000,000 0.25 19,621.00 * None
Julius Baer Securities Inc................. 1,680,000 0.21 16,481.64 * None
KBC Financial Products USA................. 1,500,000 0.19 14,715.75 * None
Kettering Medical Center Funded
Depreciation Account..................... 340,000 0.04 3,335.57 * None
Key Asset Management, Inc.................. 8,000,000 0.99 78,484.00 * None
Knoxville Utilities Board Retirement System 790,000 0.10 7,750.30 * None
Lancer Securities Cayman LTD............... 1,500,000 0.19 14,715.75 * None
Libertyview Funds L.P...................... 8,000,000 0.99 78,484.00 * None
Lincoln National Global Asset Allocation
Fund, Inc................................ 102,000 0.01 1,000.67 * None
Lydian Overseas Partners Master Fund....... 55,000,000 6.83 539,577.50 * None
Local Initiatives Support Corporation...... 126,000 0.02 1,236.12 * None
Louisiana Workers' Compensation Corporation 760,000 0.09 7,455.98 * None
Macomb County Employees' Retirement System. 2,050,000 0.25 20,111.53 * None
Mag Mutual Insurance Company............... 475,000 0.06 4,659.99 * None
Medical Liability Mutual Insurance Company. 55,000,000 6.83 539,577.50 * None
Merrill Lynch Insurance Group.............. 793,000 0.10 7,779.73 * None
Morgan Stanley Dean Witter Convertible
Securities Trust......................... 5,000,000 0.62 49,052.50 * (6)
Municipal Employees........................ 242,000 0.03 2,374.14 * None
Museum of Fine Arts, Boston................ 49,000 0.01 480.71 * None
Nabisco Holdings........................... 71,000 0.01 696.55 * None
Nashville Electric Service................. 700,000 0.09 6,867.35 * None
Nations Convertible Securities Fund........ 10,000,000 1.24 98,105.00 * None
New Orleans Firefighters Pension/Relief Fund 252,000 0.03 2,472.25 * None
New York Life Insurance Company............ 18,000,000 2.23 176,589.00 * None
New York Life Insurance and Annuity
Corporation.............................. 2,000,000 0.25 19,621.00 * None
-40-
NCMIC Insurance Company.................... 650,000 0.08 6,376.83 * None
NORCAL Mutual Insurance Company............ 850,000 0.11 8,338.93 * None
Occidental Petroleum Corporation........... 471,000 0.06 4,620.75 * None
OHIL Insurance Company..................... 1,000,000 0.12 9,810.50 * None
Ohio Bureau of Workers' Compensation....... 300,000 0.04 2,943.15 * None
Oxford, Lord Abbett & Co................... 4,500,000 0.56 44,147.25 * None
Palladin Securities LLC.................... 750,000 0.09 7,357.88 * (7)
Parker-Hannifin Corporation................ 162,000 0.02 1,589.30 * None
Pell Rudman Trust Company.................. 4,950,000 0.61 48,561.98 * None
PGEP III LLC............................... 750,000 0.09 7,357.88 * None
Physicians' Reciprocal Insurers Account #7 5,500,000 0.68 53,957.75 * None
Policemen and Firemen Retirement System of
the City of Detroit...................... 1,216,000 0.15 11,929.57 * None
Port Authority of Allegheny County
Retirement and Disability Allowance Plan
for the Employees Represented by Local 85
of the Amalgamated Transit Union......... 5,900,000 0.73 57,881.95 * None
Promutual.................................. 1,381,000 0.17 13,548.30 * None
Putnam Asset Allocation Funds - Balanced
Portfolio................................ 796,000 0.10 7,809.16 * None
Putnam Asset Allocation Funds - Conservative
Portfolio................................ 613,000 0.08 6,013.84 * None
Putnam Convertible Income - Growth Trust... 6,604,000 0.82 64,788.54 * None
Putnam Convertible Opportunities and Income
Trust.................................... 212,000 0.03 2,079.83 * None
Putnam Variable Trust - Putnam VT Global
Asset Allocation Fund.................... 214,000 0.03 2,099.45 * None
Radian Guaranty Inc........................ 4,500,000 0.56 44,147.25 * None
Raytheon Master Pension Trust.............. 1,236,000 0.15 12,125.78 * None
RJR Reynolds............................... 213,000 0.03 2,089.64 * None
Salomon Smith Barney Inc................... 15,467,000 1.92 151,739.00 * (8)
San Diego County Employees Retirement
Association.............................. 4,000,000 0.50 39,242.00 * None
SCI Endowment Care Common Trust Fund -
Suntrust................................. 180,000 0.02 1,765.89 * None
Scudder Dividend & Growth Fund............. 780,000 0.10 7,652.19 * None
SG Cowen Securities Corp................... 39,000,000 4.84 382,609.50 * None
Shell Pension Trust........................ 972,000 0.12 9,535.81 * None
Southern Farm Bureau Life Insurance Company 2,750,000 0.34 26,978.88 * None
SPT........................................ 4,480,000 0.56 43,951.04 * None
State of Florida, Office of the Treasurer.. 4,500,000 0.56 44,147.25 * None
State of Maryland Retirement Agency........ 5,843,000 0.73 57,322.75 * None
The Cockrell Foundation.................... 150,000 0.02 1,471.58 * None
The Dow Chemical Company Employees'
Retirement Plan.......................... 11,000,000 1.37 107,915.50 * None
The Fondren Foundation..................... 355,000 0.04 3,482.73 * None
The Greble Foundation...................... 213,000 0.03 2,089.64 * None
The Reciprocal of America.................. 725,000 0.10 7,112.61 * None
Tokai Asia Limited......................... 32,000,000 3.97 313,936.00 * None
Triborough Partners QP, LLC................ 3,000,000 0.37 29,431.50 * None
UBS O'Connor LLC F/B/O UBS Global Equity
Arbitrage Master Limited................. 19,000,000 2.36 186,399.50 * None
Unifi, Inc. Profit Sharing Plan and Trust.. 545,000 0.07 5,346.72 * None
United Food and Commercial Workers Local
1262 and Empoyees' Pension Fund.......... 2,435,000 0.30 23,888.57 * None
Value Line Convertible Fund, Inc........... 2,000,000 0.25 19,621.00 * None
Van Kampen Harbor Fund..................... 14,000,000 1.74 137,347.00 * None
Van Waters & Rogers, Inc. Retirement Plan.. 1,545,000 0.19 15,157.22 * None
White River Securities L.L.C............... 7,500,000 0.93 73,578.75 * None
Worldwide Transactions, Ltd................ 766,000 0.10 7,514.84 * None
Any other holder of notes or future
transferee, pledgee, donee, or successor of
any such holder(3)......................... 148,345,000 18.48 1,455,338.62 * None
* Less than 1%.
-41-
(1) Assumes conversion of all of the holder's notes at a conversion price
of 9.8105 shares of Jones Apparel Group common stock per $1,000
principal amount at maturity of the notes. This conversion price,
however, will be subject to adjustment as described under "Description
of the Notes--Conversion Rights." As a result, the number of shares of
Jones Apparel Group common stock issuable upon conversion of the notes
may increase or decrease in the future.
(2) Calculated based on Rule 13d-3(d)(i) of the Exchange Act using 119,840,155
shares of common stock outstanding as of April 2, 2001. In calculating
this amount, we treated as outstanding the number of shares of common
stock issuable upon conversion of all of that particular holder's
notes. However, we did not assume the conversion of any other holder's
notes.
(3) Information about other selling securityholders will be set forth in
one or more prospectus supplements, if required. Assumes that any
other holders of notes, or any future transferees, pledgees, donees or
successors of or from any such other holders of notes, do not
beneficially own any common stock other than the common stock issuable
upon conversion of the notes at the initial conversion rate.
(4) Banc of America Corporation, the parent company of Banc of America
Securities LLC, is a lender under our Senior Credit Facilities.
(5) Bear, Stearns & Co. Inc. was an initial purchaser of the notes. The notes
being sold by Bear, Stearns & Co. Inc. pursuant to this prospectus were
purchased in secondary market trading. In 1999, Bear, Stearns & Co. Inc.
served as financial advisor to Nine West in connection with Jones Apparel
Group's acquisition of Nine West. In that capacity, Bear, Stearns & Co.
Inc. rendered an opinion that, among other things, the consideration to
be received in the transaction by the stockholders of Nine West was fair,
from a financial point of view, to the stockholders of Nine West. Bear,
Stearns & Co. Inc. was an initial purchaser of the 6 1/4% Notes in 1998
and was an initial purchaser of the 7 1/2% Notes and the 7 7/8% Notes in
1999.
(6) Morgan Stanley Dean Witter, the parent company of Morgan Stanley Dean
Witter Convertible Securities Trust, is serving as our financial advisor in
connection with the Merger.
(7) Palladin Capital Group, Inc., the parent company of Palladin
Securities LLC, served as our investment advisor in 1999 in
connection with our acquisition of Nine West. For its services as
such, Palladin Capital Group, Inc. received a fee of $9.6 million,
plus reimbursement of out-of-pocket expenses. Palladin Capital Group,
Inc. also
-42-
served as our investment advisor in 1998 in connection with our
acquisition of Sun Apparel, Inc. For its services as such, Palladin
Capital Group, Inc. received a fee of $2.3 million, plus reimbursement of
out-of-pocket expenses. In addition, as part of its fee for services in
the Sun Apparel, Inc. acquisition, Palladin Capital Group, Inc. received
$178,370 in April 1999 and $227,930 in April 2000, will receive $5,150 in
April 2001 and will receive 0.5% of the additional consideration which
may become payable to the former Sun Apparel, Inc. stockholders based on
Sun Apparel, Inc.'s performance for the year 2001. From June 15, 1999
until February 6, 2000, Mark J. Schwartz, President and Chief Executive
Officer of Palladin Capital Group, Inc., served as Chairman and Chief
Executive Officer of Nine West.
(8) Salomon Smith Barney Inc. was an initial purchaser of the notes. The
notes being sold by Salomon Smith Barney Inc. pursuant to this prospectus
were purchased in secondary market trading. Salomon Smith Barney Inc.
is also a co-arranger for the Senior Credit Facilities.
We prepared this table based on the information supplied to us by the
selling securityholders named in the table, and we have not sought to verify
such information.
The selling securityholders listed in the above table may have sold or
transferred, in transactions exempt from the registration requirements of
the Securities Act, some or all of their notes or shares of Jones Apparel
Group common stock since the date on which the information in the above
table was provided to us. Information about the selling securityholders may
change over time.
Because the selling securityholders may offer all or some of their
notes or the shares of Jones Apparel Group common stock issuable upon
conversion of the notes from time to time, we cannot estimate the amount of
the notes or number of shares of Jones Apparel Group common stock that will
be held by the selling securityholders upon the termination of any
particular offering by such selling securityholder. See "Plan of
Distribution."
PLAN OF DISTRIBUTION
The selling securityholders intend to distribute the notes and the
shares of Jones Apparel Group common stock issuable upon conversion of the
notes from time to time only as follows (if at all):
o to or through underwriters, brokers or dealers;
o directly to one or more other purchasers;
o through agents on a best-efforts basis; or
o otherwise through a combination of any such methods of sale.
If a selling securityholder sells the notes or shares of Jones Apparel
Group common stock issuable upon conversion of the notes through
underwriters, dealers, brokers or agents, such underwriters, dealers,
brokers or agents may receive compensation in the form of discounts,
concessions or commissions from the selling securityholder and/or the
purchasers of the notes or shares of Jones Apparel Group common stock.
The notes and the shares of Jones Apparel Group common stock issuable
upon conversion of the notes may be sold from time to time:
o in one or more transactions at a fixed price or prices, which may
be changed;
o at market prices prevailing at the time of sale;
o at prices related to such prevailing market prices;
o at varying prices determined at the time of sale; or
o at negotiated prices.
Such sales may be effected in transactions:
o on any national securities exchange or quotation service on which
the notes or the Jones Apparel Group common stock may be listed
or quoted at the time of sale;
-43-
o in the over-the-counter market;
o in block transactions in which the broker or dealer so engaged
will attempt to sell the notes or shares of Jones Apparel Group
common stock issuable upon conversion thereof as agent but may
position and resell a portion of the block as principal to
facilitate the transaction, or in crosses, in which the same
broker acts as an agent on both sides of the trade;
o in transactions otherwise than on such exchanges or services or
in the over-the-counter market;
o through the writing of options; or
o through other types of transactions.
In connection with sales of the notes or Jones Apparel Group common
stock or otherwise, the selling securityholder may enter into hedging
transactions with brokers-dealers or others, which may in turn engage in
short sales of the notes or Jones Apparel Group common stock in the course
of hedging the positions they assume. The selling securityholder may also
sell notes or Jones Apparel Group common stock short and deliver notes or
Jones Apparel Group common stock to close out such short positions, or loan
or pledge notes or Jones Apparel Group common stock to brokers-dealers or
others that in turn may sell such securities. The selling securityholder
may pledge or grant a security interest in some or all of the notes or
Jones Apparel Group common stock issued upon conversion of the notes owned
by it and, if it defaults in the performance of its secured obligations,
the pledgees or secured parties may offer and sell the notes or the Jones
Apparel Group common stock from time to time pursuant to this prospectus.
The selling securityholder also may transfer and donate notes or shares of
Jones Apparel Group common stock issuable upon conversion of the notes in
other circumstances in which case the transferees, donees, pledgees or
other successors in interest will be the selling securityholder for
purposes of the prospectus. The selling securityholder may sell short the
Jones Apparel Group common stock and may deliver this prospectus in
connection with such short sales and use the shares of Jones Apparel Group
common stock covered by the prospectus to cover such short sales. In
addition, any notes or shares of Jones Apparel Group common stock covered
by this prospectus that qualify for sale pursuant to Rule 144, Rule 144A or
any other available exemption from registration under the Securities Act
may be sold under Rule 144, Rule 144A or such other available exemption.
At the time a particular offering of notes or shares of Jones Apparel
Group common stock issuable upon conversion thereof is made, a prospectus
supplement, if required, will be distributed which will set forth the
aggregate amount of notes or number of shares of Jones Apparel Group common
stock being offered and the terms of the offering, including the name or
names of any underwriters, dealers, brokers or agents, if any, and any
discounts, commissions or concessions allowed or reallowed to be paid to
brokers or dealers.
Selling securityholders and any underwriters, dealers, brokers or
agents who participate in the distribution of the notes or shares of Jones
Apparel Group common stock may be deemed to be "underwriters" within the
meaning of the Securities Act and any profits on the sale of the notes or
shares of Jones Apparel Group common stock by them and any discounts,
commissions or concessions received by any such underwriters, dealers,
brokers or agents may be deemed to be underwriting discounts and
commissions under the Securities Act.
The selling securityholders and any other person participating in such
distribution will be subject to applicable provisions of the Exchange Act
and the rules and regulations thereunder, including, without limitation,
Regulation M which may limit the timing of purchases and sales of the notes
and shares of Jones Apparel Group common stock by the selling
securityholders and any other such person. Furthermore, Regulation M under
the Exchange Act may restrict the ability of any person engaged in a
distribution of the notes or shares of Jones Apparel Group common stock to
engage in market-making activities with respect to the notes and shares of
Jones Apparel Group common stock being distributed for a period of up to
five business days prior to the commencement of such distribution. All of
the foregoing may affect the marketability of the notes and shares of Jones
Apparel Group common stock and the ability of any person or entity to
engage in market-making activities with respect to the notes and shares of
Jones Apparel Group common stock.
Pursuant to the registration rights agreement entered into in
connection with the offer and sale of the notes by us, each of us on the
one hand and the selling securityholders on the other hand will be
indemnified by the other against certain liabilities, including certain
liabilities under the Securities Act, or will be entitled to contribution
in connection therewith.
-44-
We will pay all expenses of the shelf registration statement, provided
that each selling securityholder will pay any broker's commission, agency
fee or underwriter's discount or commission.
LEGAL MATTERS
The validity of the securities offered by this prospectus has been
passed upon by Ira M. Dansky, Esq., our General Counsel. With respect to
certain matters concerning Pennsylvania law, he will rely on Schnader,
Harrison, Segal & Lewis LLP, Philadelphia, Pennsylvania. As of May 7,
2001, Mr. Dansky owned no shares of Jones Apparel Group common stock but
had options to purchase 205,585 shares of Jones Apparel Group common stock.
EXPERTS
The consolidated financial statements and financial statement schedule
of Jones incorporated by reference in this prospectus to the Annual Report
on Form 10-K for the year ended December 31, 2000 have been audited by BDO
Seidman, LLP, independent certified public accountants, to the extent and
for the periods set forth in their reports incorporated herein, and are
incorporated herein in reliance upon such reports given upon the authority
of said firm as experts in accounting and auditing.
-45-
================================================================================
$805,645,000
Jones Apparel Group, Inc.
Jones Apparel Group Holdings, Inc.
Jones Apparel Group USA, Inc.
Nine West Group Inc.
Zero Coupon Convertible Senior Notes due 2021
and Shares of Common Stock of Jones Apparel Group, Inc.
Issuable Upon Conversion of the Notes
------------------
Prospectus
------------------
o , 2001
================================================================================
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses payable by us in
connection with the registration of the offering of the securities. All
expenses other than the SEC registration fee are estimates. Each selling
securityholder will pay all costs and expenses of selling its securities,
including all agency fees and commissions and underwriting discounts and
commissions and all fees and disbursements of its counsel or other advisors
or experts retained by such selling securityholder, other than the counsel
and experts specifically referred to in the registration rights agreement
relating to the securities.
Securities and Exchange Commission registration fee............ $ 50,000.00
Accounting fees and expenses................................... 101,229.48
Legal fees and expenses........................................ 150,000.00
Miscellaneous expenses......................................... 50,000.00
-----------
Total:.................................................... $351,229.48
===========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by the Pennsylvania Business Corporation Law of 1988 (the
"Pennsylvania Business Corporation Law"), Section 8.1 of the By-laws of
Jones Apparel Group, Inc. and Section 7.1 of the By-laws of Jones Apparel
Group USA, Inc. provide that a director shall not be personally liable for
monetary damages for any action taken or failed to be taken, other than as
expressly provided in the Pennsylvania Business Corporation Law.
Furthermore, such By-laws provide that the applicable corporation shall
indemnify each officer and director to the full extent permitted by the
Pennsylvania Business Corporation Law, and shall pay and advance expenses
for any matters covered by such indemnification.
Section 1741 of the Pennsylvania Business Corporation Law provides
that a corporation shall have the power to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending
or completed action or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the
corporation), by reason of the fact that he or she is or was a
representative of the corporation, or is or was serving at the request of
the corporation as a representative of another domestic or foreign
corporation for profit or not-for-profit, partnership, joint venture, trust
or other enterprise, against expenses (including attorney's fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with the action or proceeding if he or
she acted in good faith and in a manner he or she reasonably believed to be
in, or not opposed to, the best interests of the corporation and, with
respect to any criminal proceeding, had no reasonable cause to believe his
or her conduct was unlawful. The termination of any action or proceeding by
judgment, order, settlement or conviction or upon a plea of nolo contendere
or its equivalent shall not of itself create a presumption that the person
did not act in good faith and in a manner that he or she reasonably
believed to be in, or not opposed to, the best interests of the corporation
and, with respect to any criminal proceeding, had reasonable cause to
believe that his or her conduct was unlawful.
Section 1742 of the Pennsylvania Business Corporation Law provides
that a corporation shall have the power to indemnify any person who was or
is a party, or is threatened to be made a party, to any threatened, pending
or completed action by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he or she is or was a
representative of the corporation or is or was serving at the request of
the corporation as a representative of another domestic or foreign
corporation for profit or not-for-profit, partnership, joint venture, trust
or other enterprise, against expenses (including attorneys' fees) actually
and reasonably incurred by him or her in connection with the defense or
settlement of the action if he or she acted in good faith and in a manner
he or she reasonably believed to be in, or not opposed to, the best
interest of the corporation. Indemnification shall not be made under
Section 1742 in respect of any claim, issue or matter as to which the
person has been adjudged to be liable to the corporation unless and only to
the extent that the court of common pleas of the judicial district
embracing the county in which the registered office of the corporation is
located or the court in which the action was brought determines upon
application, that, despite the adjudication of liability but in view of all
the circumstances of the case, the person is fairly and reasonably entitled
to indemnity for the expenses that the court of common pleas or other court
deems proper.
II-1
Section 1743 of the Pennsylvania Business Corporation Law provides
that to the extent that a representative of a corporation has been
successful on the merits or otherwise in defense of any action or
proceeding referred to in Sections 1741 or 1742 or in defense of any claim,
issue or matter therein, he or she shall be indemnified against expenses
(including attorney fees) actually and reasonably incurred by him or her in
connection therewith.
The Certificate of Incorporation of Jones Apparel Group Holdings,
Inc., a Delaware corporation ("Jones Holdings") and the Certificate of
Incorporation of Nine West Group Inc., a Delaware corporation ("Nine
West"), provide that no director of Jones Holdings or Nine West shall be
personally liable to Jones Holdings, Nine West or their stockholders for
monetary damages for breach of a fiduciary duty other than as expressly
provided in the General Corporation Law of Delaware (the "DGCL"). Section
102(b)(7) of the DGCL eliminates liability except (1) for any breach of the
director's duty of loyalty to Jones Holdings, Nine West or their
stockholders, (2) for acts or omissions not in good faith or which involve
intentional misconduct or knowing violation of law, (3) under Section 174
of the DGCL or (4) for any transaction from which the director derives an
improper personal benefit. Furthermore, the Certificate of Incorporation
and By-laws of Jones Holdings and Nine West each provide that Jones
Holdings and Nine West shall indemnify their officers, directors, employees
and agents to the full extent permitted by the DGCL, and shall pay and
advance expenses for any matters covered by such indemnification. In
addition, Jones Apparel Group, Inc. has entered into executive employment
agreements with Sidney Kimmel, Jackwyn Nemerov, Irwin Samelman and Wesley
R. Card pursuant to which Jones Apparel Group, Inc. has agreed to indemnify
such officers and directors to the maximum extent permitted by applicable
law against any liability incurred by such officers and directors in their
capacities as such.
Subsection (a) of Section 145 of the DGCL empowers a corporation to
indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an
action by or in the right of the corporation) by reason of the fact that he
or she is or was a director, employee or agent of the corporation or is or
was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or their enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with such action, suit or proceeding
if he or she acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the corporation
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe that his or her conduct was unlawful.
Subsection (b) of Section 145 of the DGCL empowers a corporation to
indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor by reason of
the fact that such person acted in any of the capacities set forth above,
against expenses (including attorneys' fees) actually and reasonably
incurred by him or her in connection with the defense or settlement of such
action or suit if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification may be made in respect of
any claim, issue or matter as to which such person shall have been adjudged
to be liable to the corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought
shall determine that despite the adjudication of liability such person is
fairly and reasonably entitled to indemnity for such expenses which the
court shall deem proper.
Section 145 of the DGCL further provides that (1) to the extent a
director, officer, employee or agent of a corporation has been successful
in the defense of any action, suit or proceeding referred to in subsections
(a) and (b) or in the defense of any clam, issue or matter therein, he or
she shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him or her in connection therewith; (2)
indemnification or advancement of expenses provided for by Section 145
shall not be deemed exclusive of any other rights to which the indemnified
party may be entitled; and (3) the corporation shall have the power to
purchase and maintain insurance on behalf of a director, officer, employee
or agent of the corporation against any liability asserted against him or
her or incurred by him or her in any such capacity or arising out of his or
her status as such whether or not the corporation would have the power to
indemnify him or her against such liabilities under Section 145.
II-2
ITEM 16. EXHIBITS
Exhibit No. Description
- ----------- -----------
4.1 Indenture dated February 1, 2001 by and among Jones Apparel Group,
Inc., Jones Apparel Group Holdings, Inc., Jones Apparel Group USA,
Inc., Nine West Group Inc., and The Bank of New York as trustee.(1)
4.2 Form of Note (included in Exhibit 4.1).(1)
4.3 Registration Rights Agreement dated February 1, 2001 by and among
Jones Apparel Group, Inc., Jones Apparel Group USA, Inc., Jones
Apparel Group Holdings, Inc., Nine West Group Inc., and Salomon
Smith Barney Inc., and Bear, Stearns & Co. Inc., as initial
purchasers.(2)
5.1 Opinion of Ira M. Dansky, Esq.*
5.2 Opinion of Schnader, Harrison, Segal & Lewis LLP.*
12.1 Statement regarding computation of Ratio of Earnings to Fixed
Charges.*
23.1 Consent of BDO Seidman, LLP.
23.2 Consent of Ira M. Dansky, Esq. (included in opinion filed as
Exhibit 5.1).*
23.3 Consent of Schnader, Harrison, Segal & Lewis LLP (included in
opinion filed as Exhibit 5.2).*
24.1 Power of Attorney (included in signature page).*
25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The Bank of New York, as trustee under the
indenture.*
* Previously filed.
(1) Incorporated by reference to Exhibit 4.22 previously filed with Jones
Apparel Group, Inc.'s Annual Report on Form 10-K for the fiscal year
ended December 31, 2000.
(2) Incorporated by reference to Exhibit 4.23 previously filed with Jones
Apparel Group, Inc.'s, Annual Report on Form 10-K for the fiscal year
ended December 31, 2000.
ITEM 17. UNDERTAKINGS.
(a) Each undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made of the securities registered hereby, a post-effective amendment
to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in this registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in this registration
statement; and
II-3
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this
registration statement or any material change to such
information in this registration statement;
provided, however, that the undertaking set forth in paragraphs (i)
and (ii) above do not apply if the information required to be included
in a post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by the
registrants pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in this
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) Each undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing
of the registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrants pursuant to the foregoing provisions
or otherwise, the registrants has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrants of expenses incurred or paid by
a director, officer or controlling person of the registrants in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the registrants will, unless in the opinion of their
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification
by them is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
(d) Each undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the time it was
declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post- effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act, each of the
registrants certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing this Amendment No. 1 to the
registration statement on Form S-3 and has duly caused this Amendment No. 1
to the registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of
New York on May 7, 2001.
JONES APPAREL GROUP, INC.
By /s/ Wesley R. Card
-------------------------------------
Wesley R. Card
Chief Financial Officer
JONES APPAREL GROUP HOLDINGS, INC.
By /s/ Ira M. Dansky
-------------------------------------
Ira M. Dansky
President
JONES APPAREL GROUP USA, INC.
By /s/ Wesley R. Card
-------------------------------------
Wesley R. Card
Chief Financial Officer
NINE WEST GROUP INC.
By /s/ Wesley R. Card
-------------------------------------
Wesley R. Card
Chief Financial Officer
II-5
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the registration statement has been signed by the following persons in
the capacities and on the dates indicated.
SIGNATURE TITLE DATE
JONES APPAREL GROUP, INC.
* Chairman and Director May 7, 2001
- ---------------------------------- (Principal Executive Officer)
Sidney Kimmel
* President and Director May 7, 2001
- ----------------------------------
Jackwyn Nemerov
/s/ Wesley R. Card Chief Financial Officer May 7, 2001
- ---------------------------------- (Principal Financial Officer)
Wesley R. Card
* Senior Vice President and Corporate Controller May 7, 2001
- ---------------------------------- (Principal Accounting Officer)
Patrick M. Farrell
* Executive Vice President/Marketing May 7, 2001
- ---------------------------------- and Director
Irwin Samelman
Director
- ----------------------------------
Geraldine Stutz
Director
- ----------------------------------
Howard Gittis
* Director May 7, 2001
- ----------------------------------
Eric A. Rothfeld
Director
- ----------------------------------
Anthony Scarpa
JONES APPAREL GROUP HOLDINGS, INC.
/s/ Ira M. Dansky President and Director May 7, 2001
- ---------------------------------- (Principal Executive Officer)
Ira M. Dansky
* Vice President/Finance and Director May 7, 2001
- ---------------------------------- (Principal Financial Officer and Principal
Joseph T. Donnalley Accounting Officer)
* Director May 7, 2001
- ----------------------------------
Patricia F. Genzel
II-6
JONES APPAREL GROUP USA, INC.
* Chairman and Director May 7, 2001
- ---------------------------------- (Principal Executive Officer)
Sidney Kimmel
* President and Director May 7, 2001
- ----------------------------------
Jackwyn Nemerov
/s/ Wesley R. Card Chief Financial Officer May 7, 2001
- ---------------------------------- (Principal Financial Officer)
Wesley R. Card
* Senior Vice President and Corporate Controller May 7, 2001
- ---------------------------------- (Principal Accounting Officer)
Patrick M. Farrell
* Executive Vice President/Marketing and Director May 7, 2001
- ----------------------------------
Irwin Samelman
NINE WEST GROUP INC.
* Chairman and Director May 7, 2001
- ---------------------------------- (Principal Executive Officer)
Jackwyn Nemerov
/s/ Wesley R. Card Chief Financial Officer and Director May 7, 2001
- ---------------------------------- (Principal Financial Officer)
Wesley R. Card
* Senior Vice President May 7, 2001
- ---------------------------------- (Principal Accounting Officer)
Patrick M. Farrell
* Director May 7, 2001
- ----------------------------------
Sidney Kimmel
* Director May 7, 2001
- ----------------------------------
Irwin Samelman
* /s/ Ira M. Dansky May 7, 2001
- ----------------------------------
Ira M. Dansky
Attorney-in-fact
II-7
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
4.1 Indenture dated February 1, 2001 by and among Jones Apparel
Group, Inc., Jones Apparel Group Holdings, Inc., Jones
Apparel Group USA, Inc., Nine West Group Inc., and The Bank
of New York as trustee.(1)
4.2 Form of Note (included in Exhibit 4.1).(1)
4.3 Registration Rights Agreement dated February 1, 2001 by and
among Jones Apparel Group, Inc., Jones Apparel Group USA,
Inc., Jones Apparel Group Holdings, Inc., Nine West Group
Inc., and Salomon Smith Barney Inc., and Bear, Stearns & Co.
Inc., the initial purchasers.(2)
5.1 Opinion of Ira M. Dansky, Esq.*
5.2 Opinion of Schnader, Harrison, Segal & Lewis LLP.*
12.1 Statement regarding computation of Ratio of Earnings to
Fixed Charges.*
23.1 Consent of BDO Seidman, LLP.
23.2 Consent of Ira M. Dansky, Esq. (included in opinion filed as
Exhibit 5.1).*
23.3 Consent of Schnader, Harrison, Segal & Lewis LLP (included
in opinion filed as Exhibit 5.2).*
24.1 Power of Attorney (included in signature page).*
25.1 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The Bank of New York, as trustee
under the indenture.*
(1) Incorporated by reference to Exhibit 4.22 previously filed with
Jones Apparel Group, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 2000.
(2) Incorporated by reference to Exhibit 4.23 previously filed with
Jones Apparel Group, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 2000.
* Previously filed.
E-1