-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UG+IkmihM3gGSdLXY41+yQ0AytNrSyVxYaqHKRhnb+6C0UZ4khTGeTEo4mxBgcu5 oMF9cHcUPHTX7ly05lv88g== 0000950149-01-500126.txt : 20010307 0000950149-01-500126.hdr.sgml : 20010307 ACCESSION NUMBER: 0000950149-01-500126 CONFORMED SUBMISSION TYPE: 424B1 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20010301 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GOOD GUYS INC CENTRAL INDEX KEY: 0000785931 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-RADIO TV & CONSUMER ELECTRONICS STORES [5731] IRS NUMBER: 942366177 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 424B1 SEC ACT: SEC FILE NUMBER: 333-55770 FILM NUMBER: 1559383 BUSINESS ADDRESS: STREET 1: 7000 MARINA BLVD CITY: BRISBANE STATE: CA ZIP: 94005 BUSINESS PHONE: 4156155000 MAIL ADDRESS: STREET 1: 7000 MARINA BLVD STREET 2: 7000 MARINA BLVD CITY: BRISBANE STATE: CA ZIP: 94005 424B1 1 f69761be424b1.txt THE GOOD GUYS, INC. 424B1 FILING 1 PROSPECTUS THE GOOD GUYS, INC. 5,911,969 SHARES OF COMMON STOCK This prospectus covers 5,911,969 shares of The Good Guys, Inc. common stock, par value $.001 per share, which may be offered for sale by the Selling Shareholders who have acquired or will acquire such shares in transactions not involving a public offering, including 2,444,322 shares which may be offered for sale by the Selling Shareholders who may acquire such shares pursuant to the exercise of warrants granted to them covering such shares. The Selling Shareholders received their shares of common stock and warrants in private placements of our shares completed in June 1999 and August 2000. The warrants provide for appropriate anti-dilutive adjustments in the number of shares of common stock issuable upon their exercise, and any additional shares of common stock issued pursuant to such adjustments will also be shares whose resale is covered by this prospectus. We are registering the shares, including the shares underlying the warrants, under the Securities Act of 1933, as amended, on behalf of the Selling Shareholders, pursuant to agreements entered into with them at the time of their acquisitions of the shares and warrants, in order to permit the public sale or other distribution of the shares. The shares may be offered and sold from time to time by the Selling Shareholders through ordinary brokerage transactions, in negotiated transactions or otherwise, at market prices prevailing at the time of sale or at negotiated prices. We will not realize any proceeds from the sale by the Selling Shareholders of the shares, but we will receive proceeds upon the exercise by the Selling Shareholders of the warrants. Our common stock trades on the Nasdaq National Market under the symbol "GGUY." On February 26, 2001, the last reported sale price of the common stock was $6.063. - -------------------------------------------------------------------------------- SEE NOTE REGARDING FORWARD-LOOKING STATEMENTS AND RISK FACTORS ON PAGE 2 FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE SECURITIES OFFERED HEREBY. - -------------------------------------------------------------------------------- Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved the securities to be issued under this prospectus or determined if this prospectus is accurate or adequate. Any representation to the contrary is a criminal offense. THE DATE OF THIS PROSPECTUS IS FEBRUARY 27, 2001. 2 TABLE OF CONTENTS
PAGE THE COMPANY 2 NOTE REGARDING FORWARD-LOOKING STATEMENTS 2 RISK FACTORS 2 USE OF PROCEEDS 5 SELLING SHAREHOLDERS 5 PLAN OF DISTRIBUTION 7 DESCRIPTION OF SECURITIES 8 LEGAL MATTERS 10 EXPERTS 10 WHERE YOU CAN FIND MORE INFORMATION 10
3 THE COMPANY We were incorporated in California in 1976. On March 4, 1992, we changed our state of incorporation from California to Delaware by merging into a wholly owned Delaware subsidiary formed for that purpose. On September 1995, we transferred substantially all of our assets and liabilities to The Good Guys--California, Inc., our wholly-owned operating subsidiary. We are a leading specialty retailer of consumer electronics products and currently operate 79 stores, 3/4 of which are located in California, with the balance in Washington, Oregon and Nevada. Our principal executive offices and corporate headquarters are located at 1600 Harbor Bay Parkway, Alameda, California 94502, where our telephone number is (510) 521-7100. NOTE REGARDING FORWARD-LOOKING STATEMENTS This prospectus and the documents incorporated in this prospectus by reference may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act, and Section 21E of the Exchange Act. Forward-looking statements are identified by words such as "believe," "anticipate," "expect," "intend," "plan," "will," "may" and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements reflect our current expectations and are based upon currently available data. There are a variety of factors and risks that could cause actual results experienced to differ materially from the anticipated results or other expectations expressed in the forward-looking statements or affect the decision to invest in our securities, including, but not limited to those set forth in our Form 10-K Annual Report for the fiscal year ended September 30, 2000 and the risks and uncertainties described below. RISK FACTORS FAILURE TO RETURN TO PROFITABILITY COULD MATERIALLY AFFECT OUR VENDOR AND LENDER RELATIONSHIPS. We have experienced operating losses for the fiscal years ended September 30, 2000 and 1999 of approximately $17.3 million and $39.9 million, respectively. Although we believe we will be able to successfully implement the turn-around strategy and return to profitability, there can be no assurance that we will be able to do so. Failure to return to profitability could have a material adverse effect on our relationships with our vendors and lenders. 2 4 LOSS OF KEY PERSONNEL COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION. Our success depends upon the active involvement of senior management personnel, particularly Ronald Unkefer, our Chairman and Chief Executive Officer and Kenneth A. Weller, our President. The loss of the full-time services of Ronald Unkefer, Kenneth A. Weller or other members of our senior management team could have a material adverse effect on our results of operations and financial condition. COMPETITIVE FACTORS COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION. The retail consumer electronics industry is highly competitive. We currently compete against a diverse group of retailers, including several national and regional large format merchandisers and superstores, such as Circuit City and Best Buy. Those competitors sell, among other products, audio and video consumer electronics products similar and often identical to those we sell. Certain of these competitors have substantially greater financial resources than we have. A number of different competitive factors could have a material adverse effect on our results of operations and financial condition, including, but not limited to: - Increased operational efficiencies of competitors; - Competitive pricing strategies; - Expansion by existing competitors; - Entry by new competitors into markets in which we are currently operating; and - Adoption by existing competitors of innovative store formats or retail - sales methods. OUR SALES FLUCTUATE SEASONALLY AND QUARTERLY. Like many retailers, seasonal shopping patterns affect our business. We are changing our fiscal year to end on the last day of February. After a five-month transitional period ending February 28, 2001, the next complete fiscal year (fiscal 2002) will begin on March 1, 2001. In the future, the fourth calendar quarter will include the December holiday shopping period, which has historically contributed, and is expected to continue to contribute, a substantial portion of our operating income for the entire fiscal year. As a result, any factors negatively affecting us during such calendar quarter of any year could have a material adverse effect on results of operations for this entire year. More generally, our quarterly results of operations also may fluctuate based upon such factors as: 3 5 - Competition; - General regional and national economic conditions; - Consumer trends; - Changes in our product mix; - Timing of promotional events; - New product introductions; and - Our ability to execute our business strategy effectively. CHANGES IN CONSUMER DEMAND MAY LOWER OUR SALES OR PROFITS. Our success depends on our ability to anticipate and respond in a timely manner to consumer demand and preferences regarding audio and video consumer products and changes in such demand and preferences. Consumer spending patterns, particularly discretionary spending for products such as those we offer, are affected by, among other things, prevailing economic conditions. In addition, the periodic introduction and availability of new products and technologies at price levels which generate wide consumer interest stimulate the demand for audio and video consumer electronics products. It is possible that these products or other new products will never achieve widespread consumer acceptance. Furthermore, the introduction or expected introduction of new products or technologies may depress sales of existing products and technologies. Significant deviations from the projected demand for products we sell would have a materially adverse effect on our results of operations and financial condition, either from lost sales or lower margins due to the need to mark down excess inventory. LOSS OF KEY SUPPLIERS COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION. The success of our business and growth strategy depends to a significant degree upon our maintaining a good relationship with our suppliers, particularly brand-name suppliers of stereo and video equipment such as JVC, Mitsubishi, Panasonic and Sony. The loss of any of these key vendors or our failure to establish and maintain relationships with these or other vendors could have a material adverse effect on our results of operations and financial condition. WE DEPEND UPON FOREIGN VENDORS. We purchase a significant portion of our inventory from overseas vendors, particularly vendors headquartered in Japan. Changes in trade regulations, currency fluctuations or other factors may increase the cost of items we purchase from foreign vendors or create shortages of such items, which could in turn have a material adverse effect on our results of operations and financial condition. Conversely, significant reductions in the cost of such items in U.S. dollars may cause a significant reduction in retail price levels of those products and may limit or eliminate our ability to successfully differentiate The Good Guys, Inc. from other competitors, thereby resulting in an adverse effect on our sales, margin or competitive position. 4 6 SALE OF SHARES ELIGIBLE FOR FUTURE SALE UNDER OPTIONS OR WARRANTS MAY ADVERSELY AFFECT STOCK PRICE. As of February 26, 2001, we have outstanding stock options and warrants to purchase an aggregate of 7,065,077 shares of common stock at exercise prices ranging from $2.87 to $20.50, of which options and warrants to purchase 4,059,410 shares are exercisable now. As of February 26, 2001, we had 3,467,647 outstanding restricted shares that have registration rights, which include shares being registered in this offering. The sale of shares covered by such options or warrants by the holders thereof, pursuant to existing registration statements or pursuant to exemptions from registration, could have an adverse effect on the market price for our common stock. USE OF PROCEEDS We will not receive any proceeds from the sale of any shares of common stock, including the shares underlying warrants by the Selling Shareholders, but will pay all expenses related to the registration of the shares, including the shares underlying warrants. We could receive up to $9,556,670 from the exercise of the warrants covered by this prospectus. SELLING SHAREHOLDERS The following table sets forth information concerning the beneficial ownership of our common stock and warrants by the Selling Shareholders as of the date of this prospectus, the number of shares, including the shares underlying warrants, included for sale in the offering and the beneficial ownership of common stock by such Selling Shareholders after the offering (assuming sale of all of the shares offered by all of the Shareholders). Such information was furnished to us by the Selling Shareholders. The Selling Shareholders received 3,467,647 shares and warrants covering 2,443,322 shares in private placements made by us and such shares including the shares underlying the warrants are being registered herein pursuant to registration rights given to the Selling Shareholders at the time of purchase of the shares and warrants. With the exception of James I. Stansell, Jr., the Selling Shareholders are all directors or officers or former directors or officers of Good Guys or trusts or accounts established or controlled by such directors and officers. 5 7
- ------------------------------------------------------------------------------------------------ Shares Owned Prior To Shares To Be Sold In Name The Offering (1) The Offering (1) - ------------------------------------------------------------------------------------------------ Stanley R. Baker (2) 433,278 242,425 - ------------------------------------------------------------------------------------------------ Joseph P. Clayton (2) 60,011 30,000 - ------------------------------------------------------------------------------------------------ Richard G. Gazlay (3) 62,162 16,161 - ------------------------------------------------------------------------------------------------ Ravensgate Partners Trust (4) 269,813 161,616 - ------------------------------------------------------------------------------------------------ W. Howard Lester (2) 248,219 161,616 - ------------------------------------------------------------------------------------------------ Bank of America, N.A., Safekeeping Cust. for 47,838 47,838 the IRA of John E. Martin under Adoption Agrmt. dated 8/3/00. (5) - ------------------------------------------------------------------------------------------------ Bank of America, N.A., Safekeeping Cust. for 275,395 275,395 the IRA of John Martin Trustee, John Martin Living Trust Collateral Acct. under Security Agrmt. dated 4/12/00. (5) - ------------------------------------------------------------------------------------------------ Joseph M. Schell (2) 450,644 323,233 - ------------------------------------------------------------------------------------------------ Michael T. Solomon Trust 8,081 8,081 - ------------------------------------------------------------------------------------------------ David Solomon Trust 8,080 8,080 - ------------------------------------------------------------------------------------------------ Ronald A. Unkefer 3,854,702 3,854,702 - ------------------------------------------------------------------------------------------------ James I. Stansell, Jr. 32,322 32,322 - ------------------------------------------------------------------------------------------------ Kenneth R. Weller 750,000 750,000 - ------------------------------------------------------------------------------------------------
(1) Includes 1,008,822 shares of common stock issuable upon exercise of the warrants issued in August 2000 and 1,435,500 shares of common stock issuable upon exercise of warrants issued to Ronald A. Unkefer in June 1999. All of the warrants are presently exercisable, with the exception of warrants covering 957,000 shares held by Ronald A. Unkefer which become exercisable in equal amounts on June 1, 2001 and June 1, 2002, respectively. (2) Includes shares issuable upon the exercise of outstanding stock options held by the named individual that are exercisable within 60 days. (3) Includes 8,000 shares held by Kimberly Gazlay, as well as shares issuable upon the exercise of outstanding stock options held by Mr. Gazlay that are exercisable within 60 days. (4) Includes shares held by Gary M. Lawrence or issuable upon the exercise of options held by him that are exercisable within 60 days. Mr. Lawrence is the Trustee of the Ravensgate Partners Trust. (5) Does not include shares held by John E. Martin or issuable upon the exercise of options held by him that are exercisable within 60 days. 6 8 Because the Selling Shareholders may use this prospectus to sell all or some portion of the common stock they presently own, no estimate can be given as to the number of shares that each Selling Shareholder will hold after any sale. In addition, the Selling Shareholders may have sold, transferred or otherwise disposed of all or a portion of their shares in a transaction exempt from the registration requirements of the Securities Act since the date on which they provided the information to us. Only Selling Shareholders identified above who beneficially own the common stock in the table on the effective date of the registration statement of which this prospectus is a part may sell shares pursuant to this prospectus. We may from time to time include additional Selling Shareholders in supplements to this prospectus. PLAN OF DISTRIBUTION We are registering the shares, including shares underlying warrants, on behalf of the Selling Shareholders. As used herein, "Selling Shareholders" includes donees and pledgees, transferees or other successors-in-interest selling shares and warrants received from a Selling Shareholder as a gift, pledge, partnership distribution or other non-sale related transfer after the date of this prospectus. All costs, expenses and fees in connection with the registration of the shares, including the shares underlying warrants, offered hereby will be borne by us. Brokerage commissions and similar selling expenses, if any, attributable to the sale of shares, including the shares underlying warrants, will be borne by the Selling Shareholders. Sales of shares and warrants may be effected by Selling Shareholders from time to time in one or more types of transactions (which may include block transactions) on the Nasdaq National Market, in the over-the-counter market, in negotiated private transactions not effected on any exchange, through put or call options transactions relating to the shares, including the shares underlying warrants, through short sales or a combination of such methods of sale, at market prices prevailing at the time of sale, or at negotiated prices. Such transactions may or may not involve brokers or dealers. The Selling Shareholders have advised us that they have not entered into any agreements, understandings or arrangements with any underwriter or coordinating broker acting in connection with the proposed sale of shares by Selling Shareholders. The Selling Shareholders may effect such transactions by selling directly to purchasers or to or through broker-dealers, which may act as agents or principals. Such broker-dealers may receive compensation in the form of discounts, concessions, or commissions from the Selling Shareholders and/or the purchasers of shares and warrants for whom such broker-dealers may act as agents or to whom they sell as principal, or both (which compensation as to a particular broker-dealer might be in excess of customary commissions). The Selling Shareholders and any broker-dealers that act in connection with the sale of shares, including the shares underlying warrants, might be deemed to be "underwriters" within the meaning of Section 2(11) of the Securities Act, and any commissions received by such broker-dealers and any profit on the resale of the shares, including the shares and underlying warrants, sold by them while acting as principals might be deemed to be underwriting discounts or commissions under the Securities Act. The Selling Shareholders may agree to indemnify any agent, dealer or broker-dealer that participates in transactions involving sales of the shares, including the shares underlying warrants, against certain liabilities, including liabilities arising under the Securities Act. 7 9 Because Selling Shareholders may be deemed to be "underwriters" within the meaning of Section 2(11) of the Securities Act, the Selling Shareholders will be subject to the prospectus delivery requirements of the Securities Act. We have informed the Selling Shareholders that the anti-manipulative provisions of Regulation M promulgated under the Exchange Act may apply to their sales in the market. Selling Shareholders also may resell all or a portion of the shares, including shares underlying warrants, in open market transactions in reliance upon Rule 144 under the Securities Act, provided they meet its criteria and conform to its requirements. Upon our notification by a Selling Shareholder that any material arrangement has been entered into with a broker-dealer for a sale through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, a supplement to this prospectus will be filed, if required, pursuant to Rule 424(b) under the Securities Act, disclosing: - the name of each such selling shareholder and of the participating broker-dealer(s); - the number of shares involved; - the price at which such shares were sold; - the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable; - that such broker-dealer(s) did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus; and - other facts material to the transaction. In addition, upon our notification by a Selling Shareholder that a donee, pledgee, transferee or other successor-in-interest intends to sell more than 500 shares, a supplement to this prospectus will be filed. DESCRIPTION OF SECURITIES Common Stock. All of our outstanding shares of common stock are fully paid and non-assessable. Subject to the prior rights to the holders of preferred stock which may be issued in the future, the holders of common stock are entitled to received dividends if and when declared by the Board of Directors out of funds legally available therefor and in the event of our dissolution, to share ratably in all assets remaining after payment of liabilities and satisfaction of the liquidation preferences of the holders of such preferred stock. Each holder of common stock is entitled to one vote for each share held of record on all matters presented to a vote at a shareholders meeting, including the election of directors. Holders of common stock have no cumulative voting rights or preemptive rights to purchase or subscribe for any stock or other securities and there are no conversion rights or redemption or sinking fund provisions with respect to such stock. Additional shares of authorized common stock may be issued without shareholder approval. 8 10 Our Transfer Agent and Registrar is Chase Mellon Shareholder Services, 235 Montgomery Street, 23rd Floor, San Francisco, CA 94104. Preferred Stock. We have authorized in our Certificate of Incorporation 2,000,000 shares of preferred stock, $.001 par value per share, none of which has been issued. Authorized but unissued preferred stock is available for issuance from time to time at the discretion of our board of directors without shareholder approval. Our board of directors has the authority to prescribe for each series of preferred stock that it establishes the number, designation, preferences, limitations and relative rights of the shares of such series, subject to applicable law and provisions of any outstanding series of preferred stock. The terms of any series of preferred stock, including, but not limited to, dividend rate, redemption price, liquidation rights, sinking fund provisions, conversion rights and voting rights, and any corresponding effect on other shareholders, will be dependent largely on factors existing at the time of issuance. Such terms and effects could include restrictions on dividends on the common stock if dividends on the preferred stock are in arrears, dilution of the voting power of other shareholders to the extent a series of the preferred stock has voting rights and reduction of amounts available on liquidation as a result of any liquidation preference granted to any series of preferred stock. Warrants. The warrants issued in August 2000, covering 1,008,822 shares of our common stock, are exercisable from time to time, for any number of shares covered thereby, during the period that commenced on August 16, 2000 and will end on August 15, 2003, at an exercise price of $4.6406 per share covered by the warrants. The warrants issued in June 1999 to Ronald A. Unkefer, covering in the aggregate 1,435,500 shares of our common stock, were issued in three series, each of which covered 478,500 shares. All of the warrants are exercisable at a price of $3.39612 per share. The first series became exercisable on June 1, 2001 and the second and third series will become exercisable on June 1, 2001 and June 1, 2002, respectively. The warrants in each series remain exercisable for a period of five years from the date on which the warrants first became exercisable. The number of shares and exercise price covered by the warrants is subject to adjustment in the event of stock dividends, subdivisions and combinations of our shares of common stock, reclassifications exchanges or substitutions of common stock by us or reorganizations, mergers, consolidations or sales of our assets. A warrant may be exercised on any business day by surrendering the warrant at our principal office at 7000 Marina Boulevard, Brisbane, California, 94005 (or at such other office in the United States as we may designate from time to time by notice in writing to the holder of the warrants), with the subscription form attached thereto fully executed, together with payment in cash or immediately available funds in an amount equal to the exercise price. 9 11 LEGAL MATTERS The legality of the common stock and warrants offered hereby will be passed upon for us by Howard, Rice, Nemerovski, Canady, Falk & Rabkin, A Professional Corporation. EXPERTS The financial statements incorporated in this registration statement by reference from the Company's Annual Report on Form 10-K for the year ended September 30, 2000 have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report (which report includes an explanatory paragraph relating to the restatement described in Note 14), which is incorporated herein by reference, and have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. WHERE YOU CAN FIND MORE INFORMATION We file annual, quarterly and special reports, proxy statements and other information with the Securities Exchange Commission. You may read and copy any document we file at the SEC's public reference rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0300 for further information on the public reference rooms. Our SEC filings are also available to the public at the SEC's web site at http://www.sec.gov. The SEC allows us to "incorporate by reference" the information we file with them, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus, and later information filed with the SEC will update and supersede this information. We incorporate by reference our Annual Report on Form 10-K for the year ended September 30, 2000, and our Report on Form 10-Q for the quarter ended December 31, 2000. All documents filed by us pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of this prospectus and prior to the termination of the offering of the common stock offered hereby shall be deemed to be incorporated by reference in this prospectus on the date of filing such documents. Any statement contained in a document or information incorporated or deemed to be incorporated herein by reference shall be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in this prospectus or in any subsequently filed document that also is, or is deemed to be, incorporated by reference, modifies or supersedes such 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. 10 12 The making of a modifying or superseding statement shall not be deemed an admission that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made. We will furnish without charge to each person to whom this prospectus is delivered, on the written or oral request of such person, a copy of any or all of the documents incorporated herein by reference, except for the exhibits to such documents. Request should be made to: Robert A. Stoffregen Vice President, Finance, Chief Financial Officer The Good Guys, Inc. 7000 Marina Boulevard Brisbane, California 94005-1030 (650) 615-5000 11 -----END PRIVACY-ENHANCED MESSAGE-----