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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the quarterly period ended May 3, 2003
-----------
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from ________________ to ________________
Commission file number 333-81307
G+G Retail, Inc.
----------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 22-3596083
-------- ----------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
520 Eighth Avenue, New York, New York 10018
- -------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (212) 279-4961
--------------
______________________________________________________________________
Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report.
Indicate by check [X] whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]
Indicate by check mark [X] whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act). Yes [_] No [X]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Class B Outstanding at June 16, 2003
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Common $.01 par value 10 shares
CONTENTS
Page No.
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Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets - May 3, 2003 and
February 1, 2003 3
Condensed Consolidated Statements of Operations - Three Months
Ended May 3, 2003 and May 4, 2002. 4
Condensed Consolidated Statements of Cash Flows - Three Months
Ended May 3, 2003 and May 4, 2002. 5
Notes to Unaudited Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations 7-11
Item 3. Quantitative and Qualitative Disclosures about Market Risk 11
Item 4. Controls and Procedures 11
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 12
Signature Page 13
Certifications 14-15
2
Part I. Financial Information
Item 1. Financial Statements
G+G Retail, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except par value and share data)
May February
3, 2003 1, 2003
--------- --------
Assets
Current assets:
Cash and short-term investments $ 6,751 $ 21,526
Accounts receivable 1,691 1,782
Merchandise inventories 22,640 15,575
Prepaid taxes and other expenses 5,923 1,791
Deferred tax assets 2,436 2,436
--------- --------
Total current assets 39,441 43,110
Property and equipment 54,057 52,983
Deferred financing cost 2,716 2,971
Goodwill, net 57,720 57,720
Trademarks, net 45,900 45,900
Other assets 182 184
--------- --------
Total assets $ 200,016 $202,868
========= ========
Liabilities and stockholder's equity
Current liabilities:
Accounts payable $ 20,081 $ 16,756
Accrued expenses 19,567 20,609
Accrued interest 5,460 2,517
Current portion of capital lease 1,770 1,719
--------- --------
Total current liabilities 46,878 41,601
Deferred tax liability 2,032 3,220
Capital lease 473 944
Long-term debt 102,842 102,563
--------- --------
Total liabilities 152,225 148,328
Commitments and contingencies
Stockholder's equity:
Class B common stock, par value $.01 per share, 1,000
shares authorized, 10 shares issued and outstanding -- --
Additional paid-in capital 50,298 50,298
(Accumulated deficit) retained earnings (2,507) 4,242
--------- --------
Total stockholder's equity 47,791 54,540
--------- --------
Total liabilities and stockholder's equity $ 200,016 $202,868
========= ========
See accompanying notes.
3
G+G Retail, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three months Three months
ended ended
May 3, 2003 May 4, 2002
------------ ------------
(In Thousands)
Net sales $ 87,793 $ 95,494
Cost of sales (including occupancy costs) 57,227 59,455
Selling, general, administrative and buying expenses 32,046 30,764
Depreciation and amortization 2,928 2,773
-------- --------
Operating (loss) income (4,408) 2,502
Interest expense 3,569 3,584
Interest income 43 47
-------- --------
Loss before benefit for income taxes (7,934) (1,035)
Benefit for income taxes (1,185) (440)
-------- --------
Net loss $ (6,749) $ (595)
======== ========
See accompanying notes.
4
G+G Retail, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three months Three months
ended ended
May 3, 2003 May 4, 2002
------------ ------------
Operating activities
Net loss $ (6,749) $ (595)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 2,928 2,773
Amortization of debt issue costs 534 504
Write-off of closed store fixed assets 33 37
Deferred taxes (1,185) (440)
Changes in assets and liabilities:
Accounts receivable, prepaid expenses and other assets (4,042) (3,606)
Merchandise inventories (7,065) (7,131)
Accounts payable, accrued expenses and accrued interest 5,226 5,200
-------- -------
Net cash used in operating activities (10,320) (3,258)
Investing activities
Capital expenditures (4,035) (2,906)
-------- -------
Net cash used in investing activities (4,035) (2,906)
Financing activities
Payment of capital lease obligations (420) (370)
-------- -------
Net cash used in financing activities (420) (370)
-------- -------
Net decrease in cash and short-term investments (14,775) (6,534)
Cash and short-term investments, beginning of period 21,526 15,328
-------- -------
Cash and short-term investments, end of period $ 6,751 $ 8,794
======== =======
Supplemental cash flow disclosures
Cash paid for:
Interest $ 94 $ 139
======== =======
Income taxes, net of cash refunds of $0 and $3,
respectively $ 58 $ 51
======== =======
See accompanying notes.
5
G+G Retail, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
1. Principles of Consolidation and Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States ("GAAP") for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by GAAP for complete
financial statements. In the opinion of the Company's management, the
accompanying unaudited condensed consolidated financial statements contain all
adjustments (consisting of normal recurring adjustments) considered necessary to
present fairly: (1) its financial position as of May 3, 2003, (2) the results of
its operations for the three-month period ended May 3, 2003 and May 4, 2002 and
(3) its cash flows for the three-month period ended May 3, 2003 and May 4, 2002.
The balance sheet at February 1, 2003 has been derived from financial statements
at that date but does not include all of the information and footnotes required
by GAAP for complete financial statements. These financial statements should be
read in conjunction with the consolidated financial statements and footnotes
thereto included in the Company's Form 10-K for the fiscal year ended February
1, 2003 filed on April 30, 2003. The interim operating results are not
necessarily indicative of the results that may be expected for an entire year.
2. Short-Term Borrowings
The Company is party to a Loan and Security Agreement that expires on May 1,
2006 or alternatively, on May 1, 2007 if either of the following events occur
before May 1, 2006: (a) the maturity date of all of the Company's senior notes
due May 15, 2006 (the "Senior Notes") have been extended until after May 1,
2007; or (b) all of the Senior Notes have been redeemed, retired, purchased or
otherwise acquired with proceeds of equity securities sold by the Company or
with the proceeds of indebtedness incurred by the Company with a maturity date
after May 1, 2007. The Loan and Security Agreement provides for a revolving
credit facility (the "Facility"), subject to eligible inventory and credit card
receivables, not to exceed $30.0 million, of which $10.0 million can be used for
letters of credit. There were no outstanding borrowings under the Facility at
May 3, 2003. Outstanding letters of credit under the Facility totaled $432,500
at May 3, 2003. Interest on outstanding borrowings can range either from Prime
to Prime plus 0.25% or from 1.50% over the Eurodollar Rate to a maximum 2.25%
over the Eurodollar Rate, based on the profitability and amount of indebtedness
of the Company.
3. Goodwill and Other Indefinite Lived Intangible Assets
The Company adheres to Statement of Accounting Standards ("SFAS") No. 142,
"Goodwill and Other Intangible Assets." Under SFAS 142, goodwill and other
intangible assets that have indefinite useful lives are no longer amortized, but
are subject to at least an annual assessment of impairment by applying a fair
value based test, as specifically provided in the Statement. The Company
performed an impairment test in the first quarter of fiscal 2004 on its goodwill
and its indefinite lived intangible assets (trademarks). It was determined that
there was no impairment to its recorded goodwill or indefinite lived intangible
assets. The accumulated amortization of goodwill and trademarks as of May 3,
2003 and February 1, 2003 was $13.3 million.
6
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
We are a leading national mall-based retailer of popular price female junior and
pre-teen apparel. For over 30 years, we and our predecessors have built a
reputation for providing fashion apparel and accessories distinctly targeted at
teenaged women. Our core customers are young women principally between the ages
of 13 to 19 years old. We sell substantially all of our merchandise under
private label names including Rave, Rave Up, Rave Girl, R4R, and Shut Eye, which
provide our customers with fashionable, high quality apparel and accessories at
lower prices than brand name merchandise. Our emphasis on sourcing merchandise
domestically and our efficient distribution system allow for short inventory
lead times, which facilitates quick response to the latest fashion trends. As of
May 2003, we had 582 operating stores principally located in major enclosed
regional shopping malls throughout the United States, Puerto Rico, and the U.S.
Virgin Islands primarily under the G+G, Rave and Rave Girl names. Our G+G/Rave
stores average approximately 2,400 gross square feet with approximately 25 feet
of mall frontage and are designed to create a lively and exciting shopping
experience for teenaged customers.
In July 1999, we started our Rave Girl chain of stores, which sells fashion
apparel and accessories targeted at girls aged 7 to 12 years old. As of May
2003, there were 110 Rave Girl stores in operation throughout the United States
and Puerto Rico. Our Rave Girl stores are approximately 2,000 gross square feet
and are designed with bright colors, unique lighting and exciting graphics.
Results of Operations
Comparison of The First Quarter of Fiscal 2004 and The First Quarter of Fiscal
2003
Net sales decreased to $87.8 million in the first quarter of fiscal 2004 from
$95.5 million in the first quarter of fiscal 2003. The $7.7 million or 8.0%
decrease in net sales was due to a $12.7 million or 13.8% decrease in same store
sales compared to the first quarter of fiscal 2003. This decrease was offset by
the opening of new stores, which contributed $5.0 million to net sales in the
first quarter of fiscal 2004. Average sales per gross square foot decreased
12.3% to $64 in the first quarter of fiscal 2004 from $73 in the first quarter
of fiscal 2003. We operated 582 stores at the end of the first quarter of fiscal
2004 as compared to 547 stores at the end of fiscal 2003, as a result of opening
53 stores and closing 18 stores.
Cost of sales, including occupancy costs, decreased 3.9% to $57.2 million in the
first quarter of fiscal 2004 from $59.5 million in the first quarter of fiscal
2003. As a percentage of net sales, cost of sales including occupancy costs,
increased 2.8% from 62.3% in the first quarter of fiscal 2003 to 65.1% in the
first quarter of fiscal 2004. This 2.8% increase resulted from a 0.5% increase
in the cost of sales and a 2.3% increase in occupancy costs as a percent of
sales compared to the first quarter of fiscal 2003. The increase in the cost of
sales as a percentage of net sales was due to an increase in markdowns in the
first quarter of fiscal 2004 compared to the first quarter of fiscal 2003 offset
by an increase in the initial mark-on. The occupancy cost increase as a percent
of sales resulted from an increase in occupancy costs and the associated
decrease in same store sales.
In the first quarter of fiscal 2004, selling, general, administrative and buying
expenses totaled $32.0 million compared to $30.8 million in the first quarter of
fiscal 2003. As a percent of sales, these expenses increased from 32.3% in the
first quarter of fiscal 2003 to 36.4% in the first quarter of fiscal 2004.
Fiscal 2004 expenses reflect additional selling costs related to new store
openings, an increase in same store
7
selling expenses and an increase in administrative costs. The increase as a
percent of sales resulted from the additional selling costs coupled with the
decrease in same store sales.
Depreciation and amortization expense for the first quarter of fiscal 2004 was
$2.9 million as compared to $2.8 million for the first quarter of fiscal 2003.
Interest expense in the first quarter of fiscal 2004 was $3.6 million or 4.1% of
net sales as compared to $3.6 million or 3.8% of net sales for the first quarter
of fiscal 2003. Net interest expense in both the first quarter of fiscal 2004
and 2003 reflect interest on our senior notes, amortization of the $7.3 million
original issue discount on our senior notes, the $470,000 value assigned to the
warrants issued by G&G Retail Holdings, Inc., our parent company, the deferred
financing costs associated with the senior notes and interest on our capital
leases.
The income tax benefit for the first quarter of fiscal 2004 was $1.2 million or
a 15.0% income tax benefit rate as compared to $440,000, or an income tax
benefit rate of 42.5% in the first quarter of fiscal 2003. The income tax
benefit rate of 15.0 % for fiscal 2004 is based on the estimated realization of
the deferred tax asset.
The net loss increased from $595,000 in the first quarter of fiscal 2003 to a
loss of $6.7 million in the first quarter of fiscal 2004 due to the factors
discussed above.
Liquidity and Capital Resources
Our primary sources of liquidity are cash flow from operating activities and
borrowings under our revolving credit facility. Our primary cash requirements
are for: (i) seasonal working capital; (ii) the construction of new stores;
(iii) the remodeling or upgrading of existing stores; (iv) upgrading and
maintaining our computer system; and (v) interest on our senior notes.
As of May 1, 2003, we extended the expiration date of our revolving credit
facility without change to the other terms and conditions thereof. Our revolving
credit facility now expires on May 1, 2006 or alternatively on May 1, 2007 if
either of the following events occur before May 1, 2006: (a) the maturity date
of all of the Senior Notes have been extended until after May 1, 2007 or (b) all
of the Senior Notes have been redeemed, retired, purchased or otherwise acquired
with proceeds of equity securities sold by us or with the proceeds of
indebtedness incurred by us with a maturity date after May 1, 2007. Our
revolving credit facility provides for a line of credit in an amount of up to
$30.0 million (including a sub limit of $10.0 million for letters of credit). We
may use the revolving credit facility for general operating, working capital and
other corporate purposes. Amounts available under the revolving credit facility
are subject to the value of our eligible inventory and credit card receivables,
subject to certain conditions. The borrowing base provides for seasonal
fluctuations in inventory with peak borrowing availability during the months of
July through November. Interest on outstanding borrowings can range either from
Prime to Prime plus 0.25% or from 1.50% over the Eurodollar Rate to a maximum
2.25% over the Eurodollar Rate, based on the profitability and amount of
indebtedness of the Company. If the excess availability under the facility is
$7.5 million or less during any month, the revolving credit facility subjects us
to a minimum net worth, as defined, covenant of $40.0 million. The facility also
contains other customary restrictive covenants including limitations on changes
of ownership, transactions with affiliates, dividends, additional indebtedness,
creation of liens, asset sales, acquisitions, conduct of business and capital
expenditures. Our obligations under the revolving credit facility are secured by
a lien on all or substantially all of our assets, excluding our leasehold
interests. As of May 3, 2003, we had no borrowings outstanding under the
revolving credit facility, but had approximately $432,500 of letters of credit
outstanding.
8
Net cash used in operating activities in the first quarter of fiscal 2004 was
$10.3 million as compared to $3.3 million in the first quarter of fiscal 2003.
The increase in net cash used in operating activities in the first quarter of
fiscal 2004, as compared to the first quarter of fiscal 2003, was principally
due to an increase of $6.9 million in our loss before benefit for income taxes.
Capital expenditures for the first quarter of fiscal 2004 and the first quarter
of fiscal 2003 were $4.0 million and $2.9 million, respectively. The increase in
capital expenditures was due to our opening more stores in the first quarter of
fiscal 2004, as compared to the first quarter of fiscal 2003. Management has
reduced planned capital expenditures for fiscal 2004 from $14.0 million to
approximately $10.0 million.
We review the operating performance of our stores on an ongoing basis to
determine which stores, if any, to expand or close. We closed 17 stores in
fiscal 2003, two stores in the first quarter of fiscal 2004 and anticipate
closing an additional 13 stores during the remaining nine months of fiscal 2004.
One store was closed in the first quarter of fiscal 2003.
As of May 3, 2003, our capital lease obligation for the purchase of the point of
sale equipment and software was $2.2 million. The lease term is five years from
the date the initial equipment was financed with variable interest rates, based
on the purchase date. Principal and interest payments are $1.9 million and
$961,000 for the fiscal years ending 2004 and 2005, respectively.
As of May 3, 2003, we had $6.7 million in cash. We historically have maintained
negligible accounts receivable balances since our customers primarily pay for
their purchases with cash, checks and third-party credit cards which are
promptly converted to cash.
As of May 3, 2003, our indebtedness under our senior notes totaled $102.8
million, which reflects the aggregate face amount of the notes of $107.0
million, net of $4.0 million of unamortized original issue discount, and
approximately $204,000 of unamortized value assigned to the warrants issued by
G&G Retail, Inc., our parent company, in connection with our senior note
issuance. The senior notes are due May 15, 2006 and bear interest at 11% per
annum, which is payable semi-annually on May 15 and November 15.
We have minimum lease commitments (excluding percentage rents and early
termination provisions) under noncancelable operating leases as follows:
Fiscal year ending in: (In Thousands)
- ---------------------- --------------
2004 $ 31,356
2005 28,035
2006 24,862
2007 19,367
2008 15,327
Thereafter 41,235
--------
$160,182
========
We believe that our cash flow from operating activities, cash on hand and
borrowings available under the revolving credit facility will be sufficient to
meet our operating and capital expenditure requirements through the end of
fiscal 2004. In addition, we believe that cash flow from operations will be
sufficient to cover the interest expense arising from the revolving credit
facility, our capitalized leases and our long-term debt. However, the
sufficiency of our cash flow is affected by numerous factors affecting our
operations, including factors beyond our control. See the "Statement Regarding
Forward Looking Disclosures" below.
9
If a "change of control" (as defined in the indenture agreement for our senior
notes) occurs, we will be required under the indenture to offer to repurchase
all the notes. However, we may not have sufficient funds at the time of the
change of control to make the required repurchases, or restrictions in our
revolving credit facility may prohibit the repurchases. We may not be able to
raise enough money to finance the change of control offer required by the
indenture related to the senior notes. If there is a change of control, we could
be in default under the indenture. In addition, upon a change of control our
parent company may not have sufficient funds to redeem its preferred stock
unless we pay a dividend of such amount to it.
Critical Accounting Policies
The preparation of the foregoing condensed consolidated financial statements in
conformity with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the amounts
reported in the condensed consolidated financial statements and accompanying
notes. These estimates and assumptions are based on management's judgment and
available information and, consequently, actual results could be different from
these estimates.
The condensed consolidated financial statements should be read in conjunction
with the audited consolidated financial statements included in our Annual Report
on Form 10-K for the fiscal year ended February 1, 2003 for a description of our
critical accounting policies involving significant judgment by our management.
Seasonality and Quarterly Operating Results
Our fourth fiscal quarter historically accounts for the largest percentage of
our annual net sales. Our first fiscal quarter historically accounts for the
smallest percentage of annual net sales. In fiscal 2003, our first quarter and
fourth quarter accounted for approximately 23.2% and 29.2% of annual net sales,
respectively.
Our quarterly results of operations may also fluctuate significantly as a result
of a variety of factors, including the timing of store openings, the amount of
revenue contributed by new stores, changes in the mix of products sold, the
timing and level of markdowns, the timing of store closings and expansions,
competitive factors, weather fluctuations and general economic conditions.
Inflation
We do not believe that inflation has had a material effect on the results of
operations during the past three fiscal years. However, our business may be
affected by inflation in the future.
Statement Regarding Forward Looking Disclosures
Certain sections of this Report, including the preceding "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
contain various 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, which represent our expectations or beliefs concerning future events. We
caution that these statements are further qualified by important factors that
could cause actual results to differ materially from those in the forward
looking statements, including, without limitation, our ability to expand and to
increase comparable store sales, the sufficiency of our working capital and cash
flows from operating activities, a decline in the demand for our merchandise,
our ability to locate and obtain acceptable store sites and lease terms or renew
existing leases, our ability to gauge the fashion tastes of our customers and
provide merchandise that satisfies customer demand, our management's ability to
manage expansion, the
10
effect of economic conditions, changes in customer shopping habits, including
the effect that the September 11, 2001 terrorist attacks had on the United
States and events following the attacks may have on mall shopping, the effect of
severe weather or natural disasters and the effect of competitive pressures from
other retailers. For a discussion of these and other factors that could cause
results to differ from the expectations and projections expressed in this
report, see Item 1. Business - Risk Factors section of our Annual Report on Form
10-K for the fiscal year ended February 1, 2003, filed with the Securities and
Exchange Commission on April 30, 2003.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable
Item 4. Controls and Procedures
Within the 90-day period prior to the filing date of this report, an evaluation
was carried out under the supervision and with the participation of the
Company's management, including the Chief Executive Officer ("CEO") and Chief
Financial Officer ("CFO"), of the effectiveness of the design and operation of
our disclosure controls and procedures. Based on that evaluation, the CEO and
CFO have concluded that the Company's disclosure controls and procedures are
effective to ensure that material information relating to the Company and its
consolidated subsidiaries is made know to them, particularly during the period
when our periodic reports are being prepared. Subsequent to the date of
management's evaluation, there were no significant changes in the Company's
internal controls or in other factors that could significantly affect the
internal controls, including any corrective actions with regard to significant
deficiencies and material weaknesses.
11
Part II. Other Information
Item 6 - Exhibits and Reports on Form 8-K:
(a) Exhibits
3.01 Certificate of Incorporation of G+G Retail, Inc., incorporated by
reference to the registrant's Registration Statement on Form S-4,
declared effective by the SEC on October 4, 1999 (File No.
333-81307) (the "S-4").
3.02 Amended and Restated By-Laws of G+G Retail, Inc., incorporated by
reference to the S-4.
4.01 Indenture, dated as of May 17, 1999, by and between G+G Retail,
Inc., as issuer, and U.S. Bank Trust National Association, as
trustee, incorporated by reference to the S-4.
4.02 Form of 11% Senior Note due 2006 of G+G Retail, Inc.,
incorporated by reference to the S-4.
4.03 A/B Exchange Registration Rights Agreement, dated as of May 17,
1999, by and between G+G Retail, Inc. and U.S. Bancorp Libra,
incorporated by reference to the S-4.
10.01 First Amendment to Loan and Security Agreement between The CIT
Group/Business Credit, Inc. and G+G Retail, Inc., dated as of May
1, 2003.
99.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K
None
12
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
G+G RETAIL, INC.
Date: June 16, 2003 By:/s/ Michael Kaplan
----------------------------------------
Michael Kaplan, Chief Financial Officer
(signing on behalf of the registrant and
as principal financial officer)
13
CERTIFICATION PURSUANT TO RULE 13a-14 OF THE SECURITIES
EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Jay Galin, Chief Executive Officer of G + G Retail, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q of G+G Retail, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report; and
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report.
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a. Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
b. Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c. Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a. All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b. Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Dated: June 16, 2003
/s/ Jay Galin
---------------------------------
Jay Galin
Chief Executive Officer
CERTIFICATION PURSUANT TO RULE 13a-14 OF THE SECURITIES
EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Michael Kaplan, Chief Financial Officer of G + G Retail, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q of G+G Retail, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report; and
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report.
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a. Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
b. Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c. Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a. All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b. Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Dated: June 16, 2003
/s/ Michael Kaplan
---------------------------------
Michael Kaplan
Chief Financial Officer
EXHIBIT INDEX
Exhibit Description
- ------- -----------
3.01 Certificate of Incorporation of G+G Retail, Inc., incorporated by
reference to the registrant's Registration Statement on Form S-4,
declared effective by the SEC on October 4, 1999 (File No. 333-81307)
(the "S-4").
3.02 Amended and Restated By-Laws of G+G Retail, Inc., incorporated by
reference to the S-4.
4.01 Indenture, dated as of May 17, 1999, by and between G+G Retail, Inc.,
as issuer, and U.S. Bank Trust National Association, as trustee,
incorporated by reference to the S-4.
4.02 Form of 11% Senior Note due 2006 of G+G Retail, Inc., incorporated by
reference to the S-4.
4.03 A/B Exchange Registration Rights Agreement, dated as of May 17, 1999,
by and between G+G Retail, Inc. and U.S. Bancorp Libra, incorporated
by reference to the S-4.
10.01 First Amendment to Loan and Security Agreement between The CIT
Group/Business Credit, Inc. and G+G Retail, Inc., dated as of May 1,
2003.
99.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.