As Filed Pursuant to Rule 424(b)(3)
Registration Statement No. 333-91966
Prospectus
Charming Shoppes, Inc.
9,525,993 Shares of Common Stock
($0.10 par value)
This prospectus covers 9,525,993 shares of our common stock which we
issued in 2001 to a subsidiary of Limited Brands in connection with our Lane
Bryant acquisition. All of the common stock offered by this prospectus is being
sold by the selling shareholder. We will not receive any of the proceeds from
the sale of such common stock. The prices at which the selling shareholder may
sell the common stock will be determined by the prevailing market price for the
common stock or in negotiated transactions. We are registering the common stock
pursuant to an agreement between us and the selling shareholder. See "Plan of
Distribution."
Our common stock is listed on the Nasdaq National Market under the
symbol "CHRS."
Investing in our common stock involves risks. See "Risk Factors"
beginning on page 2.
These securities have not been approved or disapproved by the
Securities and Exchange Commission or any state securities commission nor has
the Securities and Exchange Commission or any state securities commission passed
upon the accuracy or adequacy of this prospectus. Any representation to the
contrary is a criminal offense.
This prospectus is dated August 9, 2002
Table of Contents
-----------------
SUMMARY ................................................................... 1
RISK FACTORS .............................................................. 2
SELECTED FINANCIAL DATA ................................................... 7
USE OF PROCEEDS ........................................................... 9
SELLING SHAREHOLDER ....................................................... 9
PLAN OF DISTRIBUTION ...................................................... 10
LEGAL MATTERS ............................................................. 11
EXPERTS ................................................................... 11
WHERE YOU CAN FIND MORE INFORMATION ....................................... 11
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS ......................... 13
i
SUMMARY
This summary provides an overview of selected information and does not
contain all the information you should consider. You should read this entire
prospectus, including "Risk Factors" below and the documents incorporated by
reference into this prospectus, carefully before making an investment decision.
We are the leading specialty apparel retailer primarily focused on
plus-size women's apparel through our three distinct brands: Lane Bryant,
Fashion Bug, and Catherine's Plus Sizes. As a result of our Lane Bryant
acquisition in August 2001, our sales of plus-size apparel increased to
approximately 66% of our total net sales during Fiscal 2002 and now exceed 70%
of our total net sales. Through our fashion content, store layouts, and broad
merchandise assortments, we seek to appeal to customers from a broad range of
demographic and cultural profiles. As of May 4, 2002, we operated 2,415 stores
in 48 states.
Our principal brands are each designed to attract a distinct customer:
. Lane Bryant. Lane Bryant is a leader in plus-size fashion. Through
private labels, such as Venezia Jeans Clothing Co.(R) and Cacique(TM),
Lane Bryant offers fashionable and sophisticated casual, career and
intimate apparel in plus sizes 14-28 and targets customers ranging in
age from 25 to 45 years old. Lane Bryant has a loyal customer base,
that shops for fashionable merchandise in the moderate price range.
Lane Bryant seeks to differentiate itself through its innovative
product design. Primarily a mall-based destination store, Lane Bryant
currently operates 653 stores in 46 states that average approximately
6,100 square feet.
. Fashion Bug and Fashion Bug Plus. Fashion Bug and Fashion Bug Plus
stores specialize in selling a wide variety of plus-size, misses, and
junior sportswear, dresses, coats, lingerie, accessories, and casual
footwear. Fashion Bug target customers range in age from 20 to 49
years old and shop in the low-moderate price range. The majority of
our 1,249 Fashion Bug stores are located in strip shopping centers
across the United States and average approximately 8,900 square feet.
. Catherine's Plus Sizes. Catherine's specializes in plus-sizes with an
emphasis on extended sizes (over size 28) and petite plus-sizes.
Catherine's has developed a proprietary body basics fit program, which
is designed to help a woman choose merchandise styles that most
flatter her figure. Catherine's offers classic apparel and accessories
for career and casual lifestyles to target customers who range in age
from 40 to 65 years old, shop in the moderate price range, and are
concerned with fit and value when purchasing apparel. Catherine's
seeks to differentiate itself through customer service and by
emphasizing a one-on-one selling environment. Our 463 Catherine's
stores are located in 45 states, primarily in strip shopping centers
in the Southeast, Mid-Atlantic, and Eastern Central regions of the
United States, and average approximately 4,100 square feet.
Charming Shoppes, Inc. was incorporated in Pennsylvania in 1969. Our
principal offices are located at 450 Winks Lane, Bensalem, Pennsylvania 19020.
Our telephone number is (215) 245-9100.
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RISK FACTORS
You should carefully consider and evaluate all of the information in this
prospectus and the documents incorporated by reference into this prospectus,
including the risk factors listed below. Any of these risks could materially and
adversely affect our business, financial condition and operating results. This,
in turn, could materially and adversely affect the price of our common stock.
Risks Related To Our Business And Industry
Our business is dependent upon our being able to accurately predict fashion
trends, customer preferences, and other fashion-related factors.
Customer tastes and fashion trends are volatile and tend to change rapidly,
particularly for women's apparel. Our success depends in part on our ability to
effectively predict and respond to quickly changing fashion tastes and consumer
demands, and to translate market trends into appropriate, saleable product
offerings. If we are unable to successfully predict or respond to changing
styles or trends and misjudge the market for our products or any new product
lines, our sales will be lower and we may be faced with a substantial amount of
unsold inventory or missed sales opportunities. In response, we may be forced to
rely on additional markdowns or promotional sales to dispose of excess, or
slow-moving inventory, which could have a material adverse effect on our
business, financial condition, and results of operations.
Existing and increased competition in the women's retail apparel industry may
reduce our net revenues, profits, and market share.
The women's specialty retail apparel industry is highly competitive. Our
competitors include individual and chain fashion specialty stores, department
stores, discount stores, and Internet-based retailers. As a result of this
competition, we may experience pricing pressures, increased marketing
expenditures, and loss of market share, which could have a material adverse
effect on our business, financial condition, and results of operations. We
believe that the principal bases upon which we compete are merchandise style,
size, selection, quality, and price, as well as store location, design,
advertising, promotion, and personalized service to the customers. Other women's
apparel companies with greater financial resources, marketing capabilities or
brand recognition may enter the plus-size business. We cannot assure you that we
will be able to compete successfully against existing or future competitors.
The decline in general economic conditions has led to reduced consumer demand
for our apparel and accessories and may continue to do so in the future.
Consumer spending habits, including spending for our apparel and
accessories, are affected by, among other things, prevailing economic
conditions, levels of employment, salaries, wage rates, the availability of
consumer credit, consumer confidence, and consumer perception of economic
conditions. The general slowdown in the United States economy and the uncertain
economic outlook have adversely affected consumer spending habits and mall
traffic, which have resulted in, and may continue to result in, lower net sales
by us. A prolonged economic downturn could have a material adverse effect on our
business, financial condition, and results of operations.
Our operating results fluctuate from season to season.
Our stores experience seasonal fluctuations in net sales and consequently
in operating income, with peak sales occurring during the Easter, Labor Day, and
Christmas seasons. In addition, extreme or unseasonable weather can affect our
sales. Any decrease in net sales or margins during our peak selling periods, or
in the availability of working capital needed in the months before these
periods, could have a material adverse effect on our business, financial
condition, and results of operations. We usually order merchandise in advance of
peak selling periods and sometimes before new fashion trends are confirmed by
customer purchases. We must carry a significant amount of inventory, especially
before the peak selling periods. If we are not successful in selling our
inventory, especially during our peak selling periods, we may be forced to rely
on markdowns or promotional sales to dispose of the
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inventory, or we may not be able to sell the inventory at all, which could have
a material adverse effect on our business, financial condition, and results of
operations.
We may not be able to obtain sufficient working capital financing.
Our business requires substantial investment in our inventory for a long
period before sales occur and consequently we require significant working
capital financing. We depend on the availability of credit to fund our working
capital, including credit we receive from our suppliers and their agents, on our
credit card securitization program, and on our revolving credit facility. If we
are unable to obtain sufficient financing at an affordable cost, we might be
unable to adequately merchandise our stores, which could have a material adverse
effect on our business, financial condition, and results of operations.
We face challenges in managing our recent growth.
Our operating challenges and management responsibilities are increasing as
we continue to grow. Successful growth will require that we continue to expand
and improve our internal systems and our operations, including our distribution
infrastructure. Our business plan depends on our ability to open and operate new
retail stores and to convert, where applicable, the formats of existing stores
on a profitable basis. In addition, we will need to identify, hire and retain a
sufficient number of qualified personnel to work in our new stores. We are also
seeking to complete the integration of Lane Bryant into our current operating
structure, and to transition away from certain services being provided to our
Lane Bryant operations by Limited Brands, from which we acquired Lane Bryant.
These objectives have created and may continue to create additional pressure on
our staff and on our operating systems. We cannot assure you that our business
plan will be successful, or that we will achieve our objectives as quickly or as
effectively as we hope.
We depend on key personnel and may not be able to retain or replace these
employees or recruit additional qualified personnel.
Our success and our ability to execute our business strategy depend largely
on the efforts and abilities of our Chief Executive Officer, Dorrit J. Bern, and
her management team. The loss of services of one or more of our key personnel
could have a material adverse effect on our business, as we may not be able to
find suitable management personnel to replace departing executives on a timely
basis. We do not maintain key-person life insurance policies with respect to any
of our employees.
We could be materially and adversely affected if any of our distribution centers
are shut down.
We operate distribution facilities in Greencastle, Indiana, Memphis,
Tennessee, and Columbus, Ohio. Most of the merchandise we purchase is shipped
directly to our distribution centers, where it is prepared for shipment to the
appropriate stores. If any of our distribution centers were to shut down or lose
significant capacity for any reason, the other distribution centers may not be
able to support the resulting additional distribution demands, in part because
of capacity constraints and in part because each distribution center services a
particular brand. As a result, we could incur significantly higher costs and
longer lead times associated with distributing our products to our stores during
the time it takes for us to reopen or replace the center.
War, acts of terrorism, or the threat of either may negatively impact the
availability of merchandise and otherwise adversely impact our business.
In the event of war or acts of terrorism, or if either are threatened, our
ability to obtain merchandise for sale in our stores may be negatively impacted.
A substantial portion of our merchandise is imported from other countries. If
imported goods become difficult or impossible to bring into the United States,
and if we cannot obtain such merchandise from other sources at similar costs,
our net sales and profit margins may be adversely affected. If commercial
transportation is curtailed or substantially delayed, our business may be
adversely impacted, as we may have difficulty shipping merchandise to our
distribution centers and stores. On September 11, 2001, in response to terrorist
attacks on the United States, a majority of our retail stores either did not
open or were closed early. Since
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then, the government has reported threats of further attacks against United
States locations, including malls. In the event of war or additional acts of
terrorism, or the threat of either, we may be required to suspend operations in
some or all of our stores, which could have a material adverse impact on our
business, financial condition, and results of operations.
We rely on foreign sources of production.
We purchase a significant portion of our apparel directly in foreign
markets and indirectly through domestic vendors with foreign sources. We face a
variety of risks generally associated with doing business in foreign markets and
importing merchandise from abroad, including:
. political instability;
. increased security requirements applicable to imported goods;
. imposition of duties, taxes, and other charges on imports;
. currency and exchange risks;
. delays in shipping; and
. increased costs of transportation.
New initiatives may be proposed that may have an impact on the trading
status of certain countries and may include retaliatory duties or other trade
sanctions that, if enacted, could increase the cost of products purchased from
suppliers in such countries or restrict the importation of products from such
countries. The future performance of our business will depend on our foreign
suppliers and may be adversely affected by the factors listed above, all of
which are beyond our control.
Issues of global workplace conditions may adversely affect our business.
If any one of our manufacturers or vendors:
. fails to operate in compliance with applicable laws and regulations;
. is perceived by the public as failing to meet certain labor standards
in the United States; or
. employs unfair labor practices,
our business could be adversely affected. Current global workplace concerns of
the public include perceived low wages, poor working conditions, age of
employees, and various other employment standards. These globalization issues
may affect the available supply of certain manufacturers' products, which may
result in increased costs to us. Furthermore, a negative customer perception of
any of our key vendors or their products may result in a lower customer demand
for our apparel.
We depend on strip shopping center and mall traffic and our ability to identify
suitable store locations.
Our sales are dependent in part on a high volume of strip shopping center
and mall traffic. Strip shopping center and mall traffic may be adversely
affected by, among other things, economic downturns, the closing of anchor
stores or changes in customer shopping preferences. A decline in the popularity
of strip shopping center or mall shopping among our target customers could have
a material adverse effect on our business.
4
To take advantage of customer traffic and the shopping preferences of our
customers, we need to maintain or acquire stores in desirable locations. We
cannot assure you that desirable store locations will continue to be available.
As a result of a recent accounting pronouncement, we will be required to
write-down a significant portion of the goodwill associated with our Catherine's
acquisition.
When we acquired Catherine's in January 2000, we included in goodwill the
value of the intangible assets (primarily trademarks) that we acquired. A recent
accounting pronouncement required us to test for impairment the goodwill
associated with this acquisition no later than the end of the second quarter of
Fiscal 2003. We have determined that there is impairment and consequently we
will write-down a significant portion of the goodwill associated with the
acquisition by the end of Fiscal 2003. As of February 2, 2002, the goodwill
associated with the Catherine's acquisition was $87,205,000.
We may be unable to protect our trademarks and other intellectual property
rights.
We believe that our trademarks and service marks are important to our
success and our competitive position due to their name recognition with our
customers. We devote substantial resources to the establishment and protection
of our trademarks and service marks on a worldwide basis. We are not aware of
any claims of infringement or challenges to our right to use any of our
trademarks and service marks in the United States. Nevertheless, there can be no
assurance that the actions we have taken to establish and protect our trademarks
and service marks will be adequate to prevent imitation of our products by
others or to prevent others from seeking to block sales of our products as a
violation of the trademarks, service marks and proprietary rights of others.
Also, others may assert rights in, or ownership of, our trademarks and other
proprietary rights, and we may not be able to successfully resolve these types
of conflicts to our satisfaction. In addition, the laws of certain foreign
countries may not protect proprietary rights to the same extent as do the laws
of the United States.
Other Risks
Our common stock has experienced significant price fluctuations.
The stock market has from time to time experienced extreme price and volume
fluctuations which have often been unrelated to the operating performance of
particular companies. Our common stock has also experienced significant price
fluctuations.
The market price of our common stock could be affected by the substantial number
of shares that are eligible for future sale.
As of July 1, 2002, we had 124,988,150 shares of common stock outstanding.
Also as of that date, we had outstanding options to purchase 12,438,253 shares
of our common stock. As of July 1, 2002, the holders of our existing 4.75%
Senior Convertible Notes due 2012 had the right to convert such notes into an
aggregate of 15,182,186 shares of our common stock. In connection with the sale
of our 4.75% Senior Convertible Notes due 2012, we and our executive officers
and directors have agreed that we and they will not, without the prior written
consent of J.P. Morgan Securities Inc., (1) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, lend or otherwise
transfer or dispose of, directly or indirectly, any shares of our common stock;
(2) enter into any swap or other arrangement that transfers to another, in whole
or in part, any of the economic consequences of ownership of our common stock;
or (3) publicly disclose any intention to enter into any of the transactions
described in (1) or (2) above, until August 20, 2002, subject to certain
exceptions. We cannot predict the effect, if any, that future sales of our
common stock, including common stock issuable upon conversion of our existing
notes, or the availability of the shares of common stock for future sale, will
have on the market price of our common stock prevailing from time to time.
Anti-takeover provisions in our governing documents and Pennsylvania law may
discourage other companies from attempting to acquire us.
5
Some provisions of our articles of incorporation and bylaws and of
Pennsylvania law may discourage some transactions where we would otherwise
experience a change in control. For example, our articles of incorporation and
bylaws contain provisions that:
. classify our board into three classes, with one class being elected
each year;
. do not permit cumulative voting;
. permit our board to issue "blank check" preferred stock without
shareholder approval;
. require certain advance notice procedures with regard to the
nomination of candidates for election as directors, other than
nominations by or at the direction of our board;
. prohibit us from engaging in some types of business combinations with
a holder of 10% or more of our voting securities without
super-majority shareholder or board approval;
. prevent our directors from being removed without cause except upon
super-majority shareholder approval; and
. prevent a holder of 20% or more of our common stock from taking
certain actions without certain approvals.
We also have adopted a Shareholder Rights Plan. This plan may make it more
difficult and more expensive to acquire us, and may discourage open market
purchases of our common stock or a non-negotiated tender or exchange offer for
such stock, and, accordingly, may limit a shareholder's ability to realize a
premium over the market price of our common stock in connection with any such
transaction.
6
SELECTED FINANCIAL DATA
The following selected financial data should be read in conjunction with
our financial statements and related notes incorporated in this prospectus by
reference.
In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS
No. 141 requires the use of the purchase method of accounting for business
combinations initiated after June 30, 2001, and expands the definition of
intangible assets that are to be recorded separately from goodwill. For business
combinations accounted for under the purchase method that were completed prior
to July 1, 2001, previously recorded goodwill and intangibles are to be
evaluated against the criteria in SFAS No. 141, which may result in the
reclassification of certain intangible assets into or out of recorded goodwill.
SFAS No. 142 requires that goodwill and intangible assets with an indefinite
useful life not be amortized, but be reviewed for impairment at least annually
and written down in periods in which the recorded value of the goodwill or
intangible asset exceeds its fair value. The transition provisions of SFAS No.
142 require the continuation of amortization of goodwill acquired prior to June
30, 2001, and require non-amortization of goodwill and indefinite-lived
intangible assets acquired subsequent to June 30, 2001, until the provisions of
SFAS No. 142 are adopted in full.
We adopted the provisions of SFAS No. 142 in full as of February 3, 2002.
Our consolidated balance sheet as of February 2, 2002 included $87,205,000 of
goodwill related to the acquisition of Catherine's Stores Corporation
("Catherine's"). We recognized $4,485,000 of amortization of the Catherine's
goodwill during each of the fiscal years ended February 2, 2002 and February 3,
2001. Commencing February 3, 2002, we are no longer amortizing the Catherine's
goodwill. However, the goodwill will be subject to periodic impairment reviews
in accordance with the provisions of SFAS No. 142.
At the time of the Catherine's acquisition, we did not separately recognize
or account for intangible assets acquired (primarily trademarks and tradenames)
that would be amortized over the same period as goodwill, and included the value
of these intangible assets in goodwill. In accordance with the provisions of
SFAS No. 142, we tested the Catherine's goodwill for impairment at the end of
our second fiscal quarter and we determined that there had been impairment.
Consequently, we will be required to write-down a significant portion of the
goodwill associated with the Catherine's acquisition. Such write-down will be
presented in our Consolidated Statements of Operations and Comprehensive Income
(Loss) for the fiscal year ended February 1, 2003 as the cumulative effect of an
accounting change as of February 3, 2002.
We have evaluated our trademarks in accordance with the provisions of SFAS
No. 142 as of February 3, 2002, and have determined that there has been no
impairment.
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The pro forma effect of applying the non-amortization provisions of SFAS
No. 142 for the fiscal years ended February 2, 2002, February 3, 2001, and
January 29, 2000 is as follows:
Year Ended
February 2, February 3, January 29,
2002 2001 2000
---- ---- ----
(In thousands, except per share data)
Income (loss) before extraordinary item and cumulative effect
of accounting change, as reported ...................................... $ (4,406) $ 51,638 $ 43,827
Pro forma effect of excluding amortization of goodwill (1) .................. 4,885 4,885 0
-------- -------- --------
Pro forma income before extraordinary item and cumulative
effect of accounting change ............................................ 479 56,523 43,827
Extraordinary gain on early retirement of debt,
net of income taxes of $664 ............................................ 0 0 1,232
Cumulative effect of accounting change, net of income
tax benefit of $334 .................................................... 0 (540) 0
-------- -------- --------
Pro forma net income ........................................................ $ 479 $ 55,983 $ 45,059
======== ======== ========
Basic net income (loss) per share:
Income (loss) before extraordinary item and cumulative
effect of accounting change, as reported ............................. $ (.04) $ .51 $ .45
Pro forma effect of excluding goodwill amortization (1) .............. .04 .05 .00
-------- ------- --------
Pro forma income before extraordinary item and cumulative
effect of accounting change .......................................... .00 .56 .45
Extraordinary gain, net of income taxes ................................ .00 .00 .01
Cumulative effect of accounting change, net of income taxes ............ .00 (.01) .00
-------- -------- --------
Pro forma net income per share ......................................... $ .00 $ .55 $ .46
======== ======= ========
Fully diluted net income (loss) per share
Income (loss) before extraordinary item and cumulative
effect of accounting change, as reported ........................ $ (.04) $ .49 $ .42
Pro forma effect of excluding goodwill amortization (1) ................ .04 .05 .00
-------- -------- --------
Pro forma income before extraordinary item and cumulative
effect of accounting change ........................................ .00 .54 .42
Extraordinary gain, net of income taxes ................................ .00 .00 .01
Cumulative effect of accounting change, net of income taxes ............ .00 (.01) .00
-------- -------- --------
Pro forma net income per share ......................................... $ .00 $ .53 $ .43
======== ======== ========
-------------------------------
(1) The goodwill amortization is not deductible for tax purposes and therefore
has no related tax effect.
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USE OF PROCEEDS
We will not receive any proceeds from the sale by the selling shareholder
of the common stock. See "Selling Shareholder."
SELLING SHAREHOLDER
LFAS, Inc., the selling shareholder, may offer and sell the common stock
using this prospectus. Limited Brands, formerly named The Limited, Inc., as the
sole stockholder of the selling shareholder, beneficially and indirectly owns
the 9,525,993 shares of common stock.
The common stock being offered was acquired by the selling shareholder
pursuant to a stock purchase agreement between us, the selling shareholder,
Limited Brands and certain other parties, dated July 9, 2001, whereby we
purchased Lane Bryant from Limited Brands for consideration consisting in part
of 9,525,993 shares of our common stock. These shares were issued to the selling
shareholder under Section 4(2) of the Securities Act of 1933 and the rules and
regulations promulgated thereunder.
In connection with the Lane Bryant acquisition, we entered into various
agreements with Limited Brands, which are more fully described in our Annual
Report on Form 10-K for our fiscal year ended February 2, 2002, which
description is incorporated by reference into this prospectus. These agreements
include arrangements relating to transitional services, the lease of our
Columbus, Ohio distribution center and the lease of a number of retail
properties. We have agreed to reimburse Limited Brands for certain obligations
with respect to such leases and have agreed to certain limitations on our
ability to incur debt, make distributions to our shareholders and purchase our
shares. We also entered into a sourcing agreement with Mast, Industries, Inc., a
wholly owned subsidiary of Limited Brands, pursuant to which we purchase apparel
products from Mast Industries. We and the selling shareholder also entered into
a registration agreement dated as of August 16, 2001. In the registration
agreement, we undertook to use our reasonable efforts to cause a shelf
prospectus for the common stock issued to the selling shareholder to become
effective. The registration agreement also includes certain indemnification
arrangements with the selling shareholder.
The following table contains information we received from the selling
shareholder on or before July 1, 2002 with respect to the selling shareholder
and the common stock beneficially owned by it before this offering and that may
be offered using this prospectus:
Number of Shares of
Common Stock Number of Shares of Percentage of
Beneficially Owned Common Stock That Common Stock
Prior to Offering (1) May be Sold Outstanding (2)
-------------------------------------------------------------
Name:
LFAS, Inc. ........ 9,525,993 9,525,993 7.6%
--------------
(1) This registration statement shall also cover any additional common stock
which becomes issuable in connection with the common stock registered for
sale hereby by reason of any stock dividend, stock split, recapitalization
or other similar transaction effected without the receipt of consideration
which results in an increase in the number of shares of outstanding common
stock.
(2) Calculated based on using 124,988,150 shares of common stock outstanding as
of July 1, 2002.
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PLAN OF DISTRIBUTION
The selling shareholder's common stock may be sold from time to time
directly by the selling shareholder, and its successor, which includes its
transferee, pledgee or donee, or, alternatively, through underwriters,
broker-dealers or agents. We have registered the common stock covered by this
prospectus for offer and sale by the selling shareholder so that the common
stock may be freely sold by it to the public. The common stock may be sold in
one or more transactions at fixed prices, at prevailing market prices at the
time of sale, at varying prices determined at the time of sale, or at negotiated
prices. Registration of the common stock covered by this prospectus does not
mean, however, that such common stock necessarily will be offered or sold, and
there can be no assurance that the selling shareholder will sell any or all of
the common stock offered by it hereunder.
We will not receive any proceeds from any sale by the selling shareholder.
See "Use of Proceeds." We will pay all costs, expenses and fees in connection
with the registration of the common stock, including fees of our counsel and
accountants, fees payable to the Commission and listing fees. The selling
shareholder will pay all underwriting fees, discounts and commissions, if any,
attributable to the sale of the common stock covered by this prospectus.
The sales of the common stock may be effected in transactions (which may
involve crosses or block transactions) (i) on any national securities exchange
or U.S. inter-dealer quotation system of a registered national securities
association on which the common stock may be listed or quoted at the time of
sale, (ii) in the over-the-counter market, (iii) in transactions otherwise than
on such exchanges or services, or (iv) through the writing of options. The
selling shareholder may also enter into hedging transactions. For example, the
selling shareholder may:
. enter into transactions with a broker-dealer, affiliate thereof or
other third party in connection with which such other party may engage
in sales of our common stock pursuant to this prospectus, in which
case such other party may use shares of our common stock received from
the selling shareholder to close out any short positions created;
. sell our common stock short itself pursuant to this prospectus and use
shares of our common stock held by it to close out its short
positions;
. enter into option or other types of transactions that require the
selling shareholder to deliver our common stock to a broker-dealer or
an affiliate thereof or other third party, who may then resell or
transfer the common stock pursuant to this prospectus; or
. loan or pledge our common stock to a broker-dealer or an affiliate
thereof or other third party, who may sell the loaned shares or, in an
event of default in the case of a pledge, sell the pledged shares
pursuant to this prospectus.
In connection with the sale of the common stock covered by this prospectus
through underwriters, underwriters may receive compensation in the form of
underwriting discounts or commissions and may also receive commissions from
purchasers of common stock for whom they may act as agent. Underwriters may sell
to or through dealers, and such dealers may receive compensation in the form of
discounts, concessions or commissions from the underwriters and/or commissions
from the purchasers for whom they may act as agent.
The aggregate proceeds to the selling shareholder from the sale of the
common stock will be the purchase price of the common stock sold less the
aggregate agents' commissions, if any, and other expenses of issuance and
distribution not borne by us. The selling shareholder and any dealers or agents
that participate in the distribution of the common stock may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, and any profit
on the sale of the common stock by them and any commissions received by any such
dealers or agents might be deemed to be underwriting discounts and commissions
under the Securities Act of 1933.
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To the extent required, the specific number of shares of common stock to be
sold, the name of the selling shareholder, purchase price, public offering
price, the names of any such agent, dealer or underwriter, and any applicable
commission or discount with respect to a particular offering will be set forth
in an accompanying prospectus supplement.
The registration agreement between us and the selling shareholder, which
has been filed as an exhibit to the registration statement of which this
prospectus is a part, provides that we and the selling shareholder will
indemnify each other and each other's directors, officers and controlling
persons against specified liabilities, including liabilities under the
Securities Act of 1933, and that we and the selling shareholder will be entitled
to contribution from each other in connection with these liabilities.
The selling shareholder has agreed not to sell the common stock pursuant to
this prospectus during certain periods and under certain circumstances in
accordance with the terms of the registration agreement between us and the
selling shareholder.
Any shares of common stock covered by this prospectus which qualify for
sale pursuant to Rule 144 under the Securities Act of 1933 may be sold under
that Rule rather than pursuant to this prospectus.
The selling shareholder and any person participating in the sale of the
shares of common stock will be subject to the Exchange Act, which includes
Regulation M, which may limit the timing of any sales.
LEGAL MATTERS
The legality of the issuance of the common stock offered by this prospectus
will be passed upon for us by Drinker Biddle & Reath LLP, Philadelphia,
Pennsylvania.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements included in our Annual Report on Form 10-K for the year
ended February 2, 2002, as set forth in their report, which is incorporated by
reference in this prospectus and registration statement. Our financial
statements are incorporated by reference in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.
The financial statements of Lane Bryant, Inc. and Subsidiaries incorporated
by reference in this Prospectus for the years ended February 3, 2001 and January
29, 2000 and for the three years in the period ended February 3, 2001 have been
so incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Commission. You may read and copy materials that we have
filed with the Commission at the following Commission public reference rooms:
450 Fifth Street, N.W. 233 Broadway 175 W. Jackson Blvd.
Room 1024 New York, New York 10048 Chicago, Illinois 60604
Washington, D.C. 20549
Please call the Commission at 1-800-SEC-0330 for further information on the
public reference rooms.
Our common stock is quoted on the Nasdaq National Market under the symbol
"CHRS," and our Commission filings can also be read at the following Nasdaq
address:
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Nasdaq Operations, 1735 K Street, N.W., Washington, D.C. 20006
Our Commission filings are also available to the public on the Commission's
website at http://www.sec.gov.
We incorporate by reference into this prospectus the documents listed below
and any future filings we make with the Commission under Sections 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934, including any filings after
the date of this registration statement, until the selling shareholder has sold
all of the common stock to which this registration statement relates or the
offering is otherwise terminated. The information we incorporate by reference is
an important part of this prospectus. Any statement in a document specifically
identified below as incorporated by reference into this registration statement
will be deemed to be modified or superseded to the extent that a statement
contained in (1) this registration statement or (2) any other subsequently filed
document that is incorporated by reference into this registration statement
modifies or supersedes the statement.
. Our Annual Report on Form 10-K for our fiscal year ended February 2,
2002;
. Our Quarterly Report on Form 10-Q for the quarterly period ended May
4, 2002;
. Our Current Reports on Form 8-K filed on August 31, 2001 (as amended
on October 30, 2001 and May 17, 2002), May 21, 2002, May 22, 2002, May
28, 2002, May 30, 2002, and July 3, 2002; and
. The registration statement on Form 8-A filed by us with the Commission
relating to or common stock and the description of the stock purchase
rights attached to common stock contained in our Amended Form 8A/12B
filed with the Commission on April 28, 1999 (File No. 000-07258), as
amended on May 3, 2002.
You may request a copy, at no cost, of any or all of the documents referred
to above, other than exhibits to the documents that are not specifically
incorporated by reference in the documents. You should direct written or
telephone requests to Charming Shoppes, Inc., 450 Winks Lane, Bensalem,
Pennsylvania 19020, Attention: Colin D. Stern, Esq., Executive Vice President,
General Counsel and Secretary, telephone (215) 245-9100.
You should rely only on the information incorporated by reference or
provided in this prospectus. You should not assume that the information in this
prospectus is accurate as of any date other than the date on the front cover of
those documents. We have not authorized anyone to provide you with different or
additional information.
Our logo appearing on the front and back covers of this prospectus and
"Lane Bryant(R)", "Catherines(R)", and "Fashion Bug(R)" are trademarks of
Charming Shoppes, Inc. Other brands, names and trademarks contained in this
prospectus are the property of their respective owners.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains or incorporates by reference certain statements
and information that are "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These statements may include, but are not limited to,
statements regarding our growth, earnings, sales performance, store openings and
closings, cost savings, capital requirements, our exposure to fluctuations in
interest rates, and other matters. The words "expect," "intend," "project,"
"estimate," "predict," "anticipate," "believes," and similar expressions are
also intended to identify forward-looking statements.
Forward-looking statements are inherently subject to risks and
uncertainties, some of which cannot be predicted or quantified. Some of these
risks are discussed above under "Risk Factors." Should one or more of these
risks or uncertainties materialize, or should our underlying assumptions prove
incorrect, actual outcomes may vary materially from those indicated. Factors
that could cause our results of operations or financial condition to differ from
those described in this prospectus include, but are not necessarily limited to,
the following:
. Our business is dependent upon our being able to accurately predict
rapidly changing fashion trends, customer preferences and other
fashion-related factors, which we may not be able to successfully
accomplish in the future.
. The general slowdown in the United States economy and the uncertain
economic outlook has led to reduced consumer demand for our apparel
and accessories and may continue to do so in the future.
. The women's specialty retail apparel industry is highly competitive
and we may be unable to compete successfully against existing or
future competitors.
. We cannot assure the successful implementation of our business plan
for increased profitability and growth in our plus-size women's
apparel business.
. Our business plan is largely dependent upon the continued growth in
the plus-size women's apparel market which may not continue.
. We depend on key personnel, particularly our Chief Executive Officer,
Dorrit J. Bern, and we may not be able to retain or replace these
employees or recruit additional qualified personnel.
. We depend on our distribution centers and could incur significantly
higher costs and longer lead times associated with distributing our
products to our stores if any of these distribution centers were to
shut down for any reason.
. We depend for our working capital needs on the availability of credit,
including credit we receive from our suppliers and their agents, and
on our credit card securitization program. If we were unable to obtain
sufficient financing at affordable cost, our ability to merchandise
our stores would be adversely affected.
. We rely significantly on foreign sources of production and face a
variety of risks (including political instability, imposition of
duties or quotas, increased security requirements applicable to
imports, delays in shipping, increased costs of transportation, and
issues relating to compliance with domestic or international labor
standards) generally associated with doing business in foreign markets
and importing merchandise from abroad.
. Our stores experience seasonal fluctuations in net sales and operating
income. Any decrease in sales or margins during our peak sales
periods, or in the availability of working capital needed in
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the months preceding such periods, could have a material adverse
effect on our business. In addition, extreme or unseasonable weather
conditions may have an impact on our sales.
. War, acts of terrorism, or the threat of either may negatively impact
availability of merchandise, customer traffic to our stores and
otherwise adversely impact our business.
. We may be unable to obtain adequate insurance for our operations at a
reasonable cost.
. We may be unable to protect our trademarks and other intellectual
property rights, which we believe are important to our success and our
competitive position.
. We may be unable to hire and retain suitable sales associates at our
stores.
. We may be unable to successfully implement our restructuring plan.
. Our manufacturers may be unable to manufacture and deliver merchandise
to us in a timely manner or to meet our quality standards.
. Our sales are dependent upon a high volume of traffic in the strip
centers and malls in which our stores are located and our future
growth is dependent upon the availability of suitable locations for
new stores.
. We may be unable to successfully integrate Lane Bryant into our
current operating structure, and we currently rely on management
information systems and logistics services from Limited Brands with
respect to our Lane Bryant stores.
We operate in a rapidly changing and competitive environment. New risk
factors emerge from time to time and it is not possible for us to predict all
risk factors that may affect us. Future events, actual results, performance and
achievements could differ materially from those set forth in, contemplated by or
underlying the forward-looking statements, which speak only as of the date on
which they were made. We assume no obligation to update any forward-looking
statement to reflect actual results or changes in or additions to the factors
affecting such forward-looking statements. Given those risks and uncertainties,
investors should not place undue reliance on forward-looking statements as a
prediction of actual results.
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