<PAGE>
As filed with the Securities and Exchange Commission on July 15, 1998
Registration No. 333-58629
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
Pre-Effective
Amendment No. 1 to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
THE NORTH FACE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 94-3204082
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
2013 FARALLON DRIVE
SAN LEANDRO, CALIFORNIA 94577
(510) 618-3500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
--------------------------
JAMES FIFIELD
CHIEF EXECUTIVE OFFICER
THE NORTH FACE, INC.
2013 FARALLON DRIVE
SAN LEANDRO, CALIFORNIA 94577
(510) 618-3500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
--------------------------
COPIES TO:
PATRICK J. SCHULTHEIS, ESQ.
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CA 94304
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are offered pursuant to
dividend or interest reinvestment plans, check the following box. / /
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. /x/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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- -------------------------------------------------------------------------------------------------------------------------------
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS AMOUNT OFFERING AGGREGATE AMOUNT OF
OF SECURITIES TO TO BE PRICE OFFERING REGISTRATION
BE REGISTERED REGISTERED PER SECURITY(1) PRICE FEE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.0025 par value 1,698,395 $24.25 $41,186,078.75 $12,149.89
- -------------------------------------------------------------------------------------------------------------------------------
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</TABLE>
(1) The price of $24.25 per share, which was the average of the high and low
prices of the Registrant's Common Stock on the Nasdaq National Market on
July 3, 1998, is set forth solely for the purposes of calculating the
registration fee in accordance with Rule 457(c) of the Securities Act of
1933, as amended.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that
this registration statement shall thereafter become effective in
accordance with section 8(a) of the Securities Act of 1933 or until the
registration statement shall become effective on such date as the
Commission, acting pursuant to said section 8(a), may determine.
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- ------------------------------------------------------------------------------
<PAGE>
THE INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
AN OFFER TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JULY 15, 1998
1,698,395 SHARES
THE NORTH FACE, INC.
COMMON STOCK
------------------------
This Prospectus relates to the public offering, which is not being
underwritten, of 1,698,395 shares (the "Shares") of Common Stock, $0.0025 par
value, of The North Face, Inc., a Delaware corporation (the "Company"). The
Shares are outstanding shares of Company Common Stock that may be sold from
time to time by or on behalf of certain stockholders of the Company or by
pledges, donees, transferees or other successors in interest that receive
such Shares as a gift, distribution or other non-sale related transfer (the
"Selling Stockholders"). The Selling Stockholders acquired the Shares in
private transactions in which the Company acquired La Sportiva USA, Inc., a
Colorado corporation ("LUSA"), pursuant to a Stock Purchase Agreement by and
among the Company, LUSA and certain stockholders of LUSA, dated July 1,
1998, or in accordance with that certain Employment Agreement by and between
the Company and James Fifield, dated May 13, 1998, which Employment Agreement
contained provisions for the purchase for cash and a promissory note of
665,060 shares of Company Common Stock and the grant of an option to purchase
up to 900,000 shares of Company Common Stock.
The Shares may be offered by the Selling Stockholders from time to time
in transactions on the Nasdaq National Market, in privately negotiated
transactions, or by a combination of such methods of sale, at fixed prices
that may be changed, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices. The
Selling Stockholders may effect such transactions by selling the Shares to or
through broker-dealers and such broker-dealers may receive compensation in
the form of discounts, concessions or commissions from the Selling
Stockholders or the purchasers of the Shares for whom such broker-dealers may
act as agent or to whom they sell as principal or both (which compensation to
a particular broker-dealer might be in excess of customary commissions). See
"Selling Stockholders" and "Plan of Distribution."
The Company will not receive any of the proceeds from the sale of the
Shares by the Selling Stockholders. The Company has agreed to bear certain
expenses in connection with the registration and sale of the Shares being
offered by the Selling Stockholders. In addition, the Company has agreed to
indemnify the Selling Stockholders against certain liabilities, including
liabilities arising under the Securities Act of 1933, as amended (the
"Securities Act"), or the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
1
<PAGE>
On July 3, 1998, the closing bid price of the Company's Common Stock on
the Nasdaq National Market was $23.375 per share. The Common Stock is traded
under the Nasdaq symbol "TNFI."
------------------
The Selling Stockholders and any broker-dealers or agents that participate
with the Selling Stockholders in the distribution of the Shares may be deemed
to be "underwriters" within the meaning of Section 2(11) of the Securities
Act, and any commissions received by them and any profit on the resale of the
Shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.
------------------
SEE "RISK FACTORS" COMMENCING ON PAGE 6 FOR A DISCUSSION OF RISK FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS IN THE SECURITIES OFFERED
HEREBY.
------------------
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 REPRESENTATI0N
TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------
The date of this Prospectus is July 15, 1998
------------------
2
<PAGE>
TRADEMARKS
This Prospectus contains trademarks of the Company, including The North
Face-Registered Trademark-, Tekware-TM- and Ascentials. This Prospectus may
contain other trademarks as well.
------------------
AVAILABLE INFORMATI0N
The Company is subject to the informational requirements of the Exchange
Act and in accordance therewith files or filed, as the case may be, reports,
proxy statements and other information with the Securities & Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information filed with the Commission by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional
offices located at 500 West Madison Street, Room 1400, Chicago, Illinois
60661 and at 7 World Trade Center, Suite 1300, New York, New York 10048.
Copies of such material can be obtained from the Public Reference Section of
the Commission at 450 Fifth Street, Washington, D.C. 20549, at prescribed
rates, or on the World Wide Web at http://www.sec.gov. Copies of other
materials concerning the Company can be inspected at the offices of the
National Association of Securities Dealers, Inc. at 1735 K Street, N.W.,
Washington, D.C. 20006.
------------------
ADDITIONAL INFORMATION
The Company has filed with the Commission a registration statement on
Form S-3, including this Prospectus and other information (herein, together
with all amendments, exhibits and schedules, referred to as the "Registration
Statement"), under the Securities Act, with respect to the Shares offered
hereby. This Prospectus does not contain all the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission, and to which reference is hereby
made. Statements made in this Prospectus as to the contents of any document
referred to are not necessarily complete. With respect to each such document
filed as an exhibit to the Registration Statement, reference is made to the
exhibit for a more complete description of the matter involved, and each such
statement shall be deemed qualified in its entirety by such reference. The
Registration Statement, including the exhibits and schedules thereto, may be
inspected at the public reference facilities maintained by the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
Copies of such material may be obtained from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates.
3
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission (File No.
0-28596) pursuant to the Exchange Act are incorporated by reference in this
Prospectus:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1997 filed with the Commission on March 6, 1998;
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998 filed with the Commission on May 15, 1998;
3. The Company's Current Report on Form 8-K filed with the Commission
on July 15, 1998;
4. The description of the Company's Common Stock contained in its
Registration Statement on Form 8-A filed with the Commission on
June 24, 1996, including any amendments or reports filed for the
purpose of updating such description;
5. The description of the Company's Preferred Share Purchase Rights
contained in its Registration Statement on Form 8-A filed with the
Commission on July 15, 1998, including any amendments or reports filed
for the purpose of updating such description.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus but
prior to the termination of the offering to which this Prospectus relates
shall be deemed to be incorporated by reference in this Prospectus and to be
part hereof from the date of filing of such documents. Any statement
contained in a document incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any other subsequently filed document
which also is incorporated herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, in its unmodified
form, to constitute a part of this Prospectus.
Upon written or oral request, the Company will provide without charge to
each person to whom a copy of this Prospectus is delivered a copy of any of
the documents incorporated by reference herein (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference
into such documents). Requests for such documents should be submitted to
Christopher F. Crawford, Chief Financial Officer, at the principal executive
offices of the Company in writing at The North Face, Inc., 2013 Farallon
Drive, San Leandro, California 94577 or by telephone at (510) 618-3500.
------------------
FORWARD-LOOKING STATEMENTS
This Prospectus, including the documents incorporated by reference
herein, contains forward-looking statements that involve risks and
uncertainties. The statements contained in this Prospectus or incorporated by
reference herein that are not purely historical are forward-looking
statements within the meaning of Section 27A of the Securities Act and
Section 21E of the Exchange Act, including without limitation statements
regarding the Company's expectations, beliefs, intentions or strategies
regarding the future. All forward-looking statements included in this
document or incorporated by reference herein are based on information
available to the Company on the date hereof, and the Company assumes no
obligation to update any such forward-looking statements. The Companys actual
results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including those
set forth in "Risk Factors" and elsewhere in this Prospectus.
4
<PAGE>
THE COMPANY
The North Face, Inc., together with its consolidated subsidiaries,
designs and distributes technically sophisticated outerwear, skiwear,
functional sportswear, tents, sleeping bags, backpacks and daypacks, all
under The North Face-Registered Trademark- name. The Company believes that
The North Face-Registered Trademark- is the world's premier brand of
high-perforrnance outdoor apparel and equipment.
The Company offers a broad range of high-performance,
technically-oriented outerwear, skiwear, outdoor equipment and functional
sportswear ("Tekware") designed for extreme applications, such as high
altitude mountaineering, ice climbing, rock climbing, backpacking, skiing,
snowboarding, hiking, training and adventure travel. The Company
characterizes its apparel-related products as "equipment for the body." As a
result of the experience gained over more than 30 years as the brand of
choice for many of the world's most challenging high altitude and polar
expeditions, The North Face-Registered Trademark- has achieved a unique level
of authenticity. The Company's broad product line and manifesto: "For over
thirty years, individuals whose lives depend on the performance of their gear
consistently choose The North Face," truly differentiates The North Face from
any other company in the world. The North Face-Registered Trademark- products
are original designs and carry a lifetime warranty for the original owner
against defects in materials and workmanship. In 1996, sales of outerwear,
equipment, skiwear, Tekware and other products represented approximately 52%,
25%, 12%, 7% and 4%, of net sales, respectively. In 1997, sales of outerwear,
equipment, skiwear, Tekware, Ascentials and other products represented
approximately 48%, 22%, 10%, 12%, 4%, and 4%, of net sales, respectively.
The Company's goal is to offer the most technically advanced products in
its field and to establish the industry standard in each product category.
The Company designs many of its products for extreme applications, such as
high altitude mountaineering, ice climbing and back-country skiing, which it
believes represent only a small fraction of its potential customers. These
products serve to reinforce The North Face-Registered Trademark- brand image
while appealing to non-extreme users. The Company also strives to offer
products at more moderate price-points that remain "best of class" by
incorporating many of the features, materials and technology used in its
leading edge designs. The Company believes that this product design
philosophy enhances The North Face-Registered Trademark- brand while
appealing to the broader consumer market.
The Company is a Delaware corporation originally incorporated on May 16,
1994. The Company's principal executive offices are located at 2013 Farallon
Drive, San Leandro, California 94577. Its telephone number at that address is
(510) 618-3500.
RECENT DEVELOPMENTS
RECENT ACQUISITIONS.
On July 1, 1998, the Company acquired 100% of the outstanding share
capital of La Sportiva USA, Inc., a Colorado corporation ("LUSA"), pursuant
to the terms and conditions of that certain Stock Purchase Agreement by and
among the Company, LUSA, Mr. Colin Lantz, Mr. C. Edward Sampson and Mr. Heinz
Mariacher, dated July 1, 1998. The Company issued 133,335 shares of Company
Common Stock to the stockholders of LUSA in exchange for their combined
ownership interest. The acquisition was accounted for as a purchase. LUSA is
a North American distributor of specialty outdoor footwear based in Boulder,
Colorado.
On June 30, 1998, The North Face, Inc., a Delaware corporation (the
"Company"), acquired 20% of the outstanding capital stock of La Sportiva
S.r.l., a corporation duly organized and existing under the laws of Italy
("LSRL"), pursuant to the terms and conditions of that certain Share Purchase
Agreement by and among the Company, LSRL, Mr. Francesco Delladio, Mr. Lorenzo
Delladio and Mr. Marco Delladio, dated on or about June 30, 1998. The Company
is also committed to acquire an additional 31% of the outstanding capital
stock of LSRL over the course of the next two to five years pursuant to other
terms and conditions. The consideration paid by the Company for the combined
51% interest in LSRL will be approximately $6.6 million. LSRL is a premier
manufacture and distributor of specialty outdoor footwear based in Ziano di
Fiemme, Italy.
RELOCATION OF CORPORATE HEADQUARTERS.
On July 6, 1998, the Company announced that it is currently negotiating
to acquire approximately 36 acres of land in Carbondale, Colorado as the site
of its future corporate headquarters. The Company will relocate a portion of
its executive offices to Carbondale in August 1998 while maintaining its
current facility in San Leandro, California. The Company's Marketing,
Research Design and Development, Product Acquisition and the majority of its
Executive Team will be moved to the Carbondale site.
PREFERRED SHARE PURCHASE RIGHTS
On July 6, 1998, pursuant to a Preferred Shares Rights Agreement between
the Company and American Stock Transfer & Trust, Co. as Rights Agent, the
Company's Board of Directors declared a dividend of one right (a "Right") to
purchase one one-thousandth of a share of the Company's Series A
Participating Preferred Stock, $1.00 par value per share, ("Series A
Preferred") for each outstanding share of Common Stock, $0.0025 par value per
share, of the Company. The dividend is payable on July 20, 1998 to
stockholders of record as of the close of business on that day. Each Right
entitles the registered holder to purchase from the Company one
one-thousandth of a share of Series A Preferred at an exercise price of
$140.00, subject to adjustment.
5
<PAGE>
------------------
RISK FACTORS
THIS PROSPECTUS, INCLUDING THE DOCUMENTS INCORPORATED BY REFERENCE
HEREIN, CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. THE STATEMENTS CONTAINED IN THIS PROSPECTUS OR INCORPORATED BY
REFERENCE HEREIN THAT ARE NOT PURELY HISTORICAL ARE FORWARD-LOOKING
STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT AND
SECTION 21E OF THE EXCHANGE ACT, INCLUDING WITHOUT LIMITATION STATEMENTS
REGARDING THE COMPANY'S EXPECTATIONS, BELIEFS, INTENTIONS OR STRATEGIES
REGARDING THE FUTURE. ALL FORWARD-LOOKING STATEMENTS INCLUDED IN THIS
DOCUMENT OR INCORPORATED BY REFERENCE HEREIN ARE BASED ON INFORMATION
AVAILABLE TO THE COMPANY ON THE DATE HEREOF, AND THE COMPANY ASSUMES NO
OBLIGATION TO UPDATE ANY SUCH FORWARD-LOOKING STATEMENTS. THE COMPANY'S
ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE
FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING THOSE
SET FORTH IN "RISK FACTORS" AND ELSEWHERE IN THIS PROSPECTUS.
CONSUMER PREFERENCES. Consumer demand for the Company's products may be
adversely affected if consumer interest in outdoor activities does not grow
or declines. If the Company is unable to respond successfully to changes in
consumer preferences, or if consumer preferences shift toward competing
products or away from the Company's product categories altogether, the
Company's business would be adversely affected. The Company cannot assure
future growth or consumer demand for its products.
MANAGING GROWTH. If the Company's business grows, the Company may have
increased difficulties in managing product design, hiring, marketing,
distribution, management information and other resources, and in obtaining
supplies, manufacturing services and working capital. The Company's future
profitability will be critically dependent on its ability to achieve and
manage potential future growth effectively.
WHOLESALE STRATEGY. The Company's wholesale customers consist, primarily,
of specialty outdoor product retailers. The Company cannot assure that its
existing customers will increase their purchases of the Company's products,
that future pre-season wholesale orders will increase, or that the Company will
be able to fill re-orders during each season. Because the Company expects its
wholesale business to constitute an increasing percentage of total sales
going forward, overall gross margins may continue to decline in the future.
The Company's wholesale strategy also depends on its ability to achieve
increased sales through its Summit Shop program. Risks of this program
include sourcing and managing higher inventory levels, funding all or most of
the cost of the Summit Shop fixtures without assurance of additional sales
and profits, and the need to supply products that maintain consumer demand on
a year-round basis. There can be no assurance that additional Summit Shops
will be opened in a timely manner or that their cost or performance will meet
the Company's expectations. If the Summit Shop program is unsuccessful, the
Company risks writeoffs of inventory and fixtures that could have a material
adverse effect on the Company's business. The Company believes that the
success of its Summit Shop program will be highly dependent on market
acceptance of its Tekware-TM- line of products, which was introduced in 1996.
DEPENDENCE ON NEW PRODUCTS. To continue its growth, the Company must
successfully introduce new products and improvements to existing products on
an ongoing basis. Risks of new product introductions include targeting new
markets involving more casual outdoor uses, offering products in wider price
ranges, product obsolescence, increased costs and competition, possible
consumer rejection of new products or styles and possible
6
<PAGE>
dilution of the Company's product image. In 1996, the Company introduced
"Tekware-TM-," a line of synthetic outdoor apparel. The Company's limited
experience in marketing casual apparel, limited distribution channels, and
possible consumer resistance to synthetic fabrics could result in slow sales
of Tekware-TM-. In May 1998, the Company announced its intention to design
and contract for the manufacturing of a line of outdoor performance footwear,
scheduled to launch in Spring 1999. There can be no assurance that this new
effort by the Company will be successful.
RELIANCE ON UNAFFILIATED MANUFACTURERS. The Company currently relies on
approximately 50 unaffiliated manufacturers to produce nearly all of its
products, with ten of the manufacturers producing approximately 75% of the
Company's products in 1997 and 1998. The Company has no long-term contracts
with its manufacturing sources, and it competes with other companies for
production facilities and import quota capacity. Any disruption in the
Company's ability to obtain manufacturing services could have a material
adverse effect on the Company's business. None of the manufacturers used by
the Company produces the Company's products exclusively. The Company has
occasionally received, and may in the future receive, shipments of products
from manufacturers that fail to conform to the Company's quality control
standards. The Company established its core inventory replenishment program
to facilitate re-orders of core products, and cannot assure that this program
will meet re-order requirements or avoid excess inventory.
The Company requires its independent manufacturers to operate in
compliance with applicable laws and regulations. Although the Company's
internal and vendor operating guidelines promote ethical business practices
and the Company's sourcing personnel periodically visit and monitor the
operations of its independent manufacturers, the Company does not control
these vendors or their labor practices. The violation of labor or other laws
by an independent manufacturer of the Company, or the divergence of an
independent manufacturer's labor practices from those generally accepted as
ethical in the United States, could result in adverse publicity for the
Company and could have a material adverse effect on the Company.
KEY SUPPLIERS. Certain important materials used in the Company's products
are only available from one or a limited number of independent suppliers. The
Company's future success may depend upon the Company's continued ability to
purchase supplies of technically advanced textiles developed by third
parties. The Company cannot assure that it will be able to obtain in the
future adequate supplies of technically advanced materials or that desired
purchase terms or other benefits of past purchases, such as suppliers'
funding of development costs and co-op advertising arrangements, will
continue.
FLUCTUATIONS IN SALES. Sales of the Company's products historically have
fluctuated due to conditions, such as weather and economic recessions or
other conditions which reduce consumer spending, which are beyond the
Company's control.
INTERNATIONAL OPERATIONS. The Company's business is subject to the risks
generally associated with doing business abroad. The Company imports more
than 60% of its merchandise from contract manufacturers located outside of
the United States, primarily in the Far East. A significant portion of the
Company's products is produced in China. From time to time, the U.S.
government has considered imposing punitive tariffs on apparel and other
exports from China. The imposition of any such tariffs could disrupt the
supply of the Company's products, which could have a material adverse effect
on the Company's results of operations.
COMPETITION AND TRADEMARKS. The Company faces intense competition from
major brand-name apparel companies, other large companies, and smaller
businesses specializing in outdoor products. The Company owns and uses a
number of trademarks, some of which may be important in maintaining or
creating a competitive advantage and consumer demand. Certain competitors in
the United States and abroad have copied and may in the future copy certain
of the Company's trademarks and designs. The Company is also aware of certain
counterfeiting of the Company's products. Without authorization by the
Company, a third party has filed an application in China to register as a
trademark the Chinese characters for "North Face" and a copy of the
7
<PAGE>
Company's "N" design. Unless successfully opposed, this application could
result in significant adverse consequences to the Company's business. There
is no assurance that the Company's efforts to stop or reduce the copying or
counterfeiting of its trademarks or products will be successful, that the
Company's trademarks will not violate the proprietary rights of others, or
that the Company will be able to avoid or successfully defend challenges to
its trademarks or other intellectual property in the United States or abroad.
KEY PERSONNEL. The Company's future success will depend, in part, upon
the continued efforts of its executive officers and other key personnel and
upon the Company's ability to successfully retain current personnel and
recruit and retain new personnel. There can be no assurance that any of such
persons will remain executive officers or employees of the Company in the
future. The loss of one or more current executive officer or key employees
could have a significant adverse effect on the Company's business. James P.
Reilly joined the Company as its Chief Operating Officer in March 1998 and
James Fifield joined the Company as President and Chief Executive Officer of
the Company in May, 1998. There can be no assurance that any newly hired
executive or key employee can successfully manage or contribute to the
Company's operations.
PRODUCT AND WARRANTY LIABILITY. The Company's products are often used in
severe weather and other extreme conditions. In 1997, the Company began
selling porta ledges used as sleeping platforms in big wall rock climbing.
There can be no assurance that insurance maintained by the Company will cover
possible future losses from product liability claims. The Company maintains a
warranty reserve for the lifetime warranty offered on its products, but
cannot assure that future claims will not exceed this reserve. Further, in
the event that the Company experiences problems with product quality or
reliability, its reputation as a provider of high quality products could
suffer, which could have a material adverse effect on the Company's business.
STOCK MARKET RISKS. The trading price of the Company's Common Stock has
fluctuated significantly since the Company's initial public offering in July
1996, and may fluctuate in the future as a result of many factors, including
the Company's operating results, new products introduced by the Company or
its competitors, market conditions for the Company's products, changes in
earnings estimates by analysts, actual results reported by the Company which
may be better or worse than estimates provided by analysts, insider selling
of common stock and speculation in the trade or business press. The trading
price may also be affected by retail industry, stock market, or economic
factors unrelated to the Company's operating performance. Future sales of
substantial amounts of Common Stock by existing stockholders may also
adversely affect prevailing market prices for the Common Stock and could
impair the Company's ability to raise equity capital in the future. As of
February 20, 1998, the Company's directors, officers and certain other
affiliates beneficially owned approximately 3.5% of the outstanding shares of
the Company's Common Stock.
YEAR 2000 COMPLIANCE. Many currently installed computer systems and
software products are coded to accept only two digit entries in the date code
field. These date code fields will need to accept four digit entries to
distinguish 21st century dates from 20th century dates. As a result, in less
than two years, computer systems and software used by many companies may need
to be upgraded to comply with such "Year 2000" requirements. Although the
Company has conducted an internal review of such matters and believes that
its products and internal systems will be Year 2000 compliant, the Company
believes that the purchasing patterns of customers and potential customers
may be affected by Year 2000 issues as companies expend significant resources
to upgrade their current software systems for Year 2000 compliance. These
expenditures may result in reduced funds available to purchase products such
as those offered by the Company, which could have a material adverse effect
on the Company's business, operating results, and financial condition.
-------------
SELLING STOCKHOLDERS
The following table lists the Selling Stockholders and the number of
shares of the Company's Common Stock which each owned or had the right to
acquire as of July 15, 1998. Because the Selling Stockholders may offer all or
some of the Shares which they hold pursuant to the offering contemplated by
this Prospectus, and because there are currently no agreements, arrangements
or understandings with respect to the sale of any of the Shares, no estimate
can be given as to the amount of Shares that will be held by the Selling
Stockholders after completion of this offering. The Shares are being
registered to permit public secondary trading of the Shares, and the Selling
Stockholders may offer the Shares for resale from time to time. See "Plan of
Distribution."
The Shares being offered by the Selling Stockholders were acquired from
the Company in connection with, (i) the Company's acquisition of 100% of the
issued and outstanding Common Stock of LUSA
8
<PAGE>
(the "LUSA Acquisition"), and (ii) that certain Employment Agreement by and
between the Company and James Fifield, dated May 13, 1998. The LUSA
Acquisition was accomplished pursuant to the terms and conditions of that
certain Stock Purchase Agreement, dated as of July 1, 1998, whereby the
Company acquired all of the issued and outstanding Common Stock of LUSA in
exchange for 133,335 shares of Company Common Stock.
The Company has filed with the Commission, under the Act, a Registration
Statement on Form S-3, of which this Prospectus forms a part, with respect to
the resale of the Shares from time to time on the Nasdaq National Market or
in privately-negotiated transactions. The Company has agreed to use
reasonable efforts to keep such Registration Statement effective for 365 days
from the date of effectiveness of the Registration Statement on Form S-3, of
which this Prospectus forms a part, subject to certain restrictions, or, if
earlier, until the distribution contemplated in this Prospectus has been
completed.
The Shares offered by this Prospectus may be offered from time to time
by the Selling Stockholders named below:
<TABLE>
<CAPTION>
Number of Shares of Common
Stock Beneficially Owned
Name of Selling Stockholder Prior to the Offering Percentage of Outstanding Shares
- --------------------------- -------------------------- --------------------------------
<S> <C> <C>
James Fifield 1,565,060(1) 11.8%
Colin Lantz 44,445 *
C. Edward Sampson 44,445 *
Heinz Mariacher 44,445 *
</TABLE>
- ----------
* Less than 1%
(1) Includes options to purchase up to 900,000 shares of Company Common
Stock pursuant to vesting schedules and other terms and conditions of that
certain Employment Agreement by and between the Company and James Fifield,
dated May 13, 1998.
--------------
PLAN OF DISTRIBUTION
All or a portion of the Shares offered hereby by the Selling
Stockholders may be delivered and/or sold from time to time in transactions
on the Nasdaq National Market, in privately negotiated transactions, or by a
combination of such methods of sale, at fixed prices that may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. After the effectiveness of
the Registration Statement of which this Prospectus is a part, the Selling
Stockholders may make short sales of the Company's Common Stock and may use
the Shares to cover the resulting short positions. The Selling Stockholders
may effect such transactions by selling the Shares to or through
broker-dealers and such broker-dealers may receive compensation in the form
of discounts, concessions or commissions from the Selling Stockholders or the
purchasers of the Shares for whom such broker-dealers may act as agent or to
whom they sell as principal or both (which compensation to a particular
broker-dealer might be in excess of customary commissions). There is no
assurance that any of the Selling Stockholders will sell any or all of the
Shares offered by them.
Any Selling Stockholder and any broker-dealers that participate in the
distribution may under certain circumstances be deemed to be "underwriters"
within the meaning of the Securities Act, and any commissions received by
such broker-dealers and any profits realized on the resale of Shares may be
deemed to be underwriting discounts and commissions under the Securities Act.
Each Selling Stockholder may agree to indemnify such broker-dealers against
certain liabilities, including liabilities under the Securities Act. In
addition, the Company has agreed to indemnify in certain circumstances
certain Selling Stockholders against certain liabilities, including
9
<PAGE>
liabilities arising under the Securities Act and Exchange Act. Certain
Selling Stockholders have agreed to indemnify in certain circumstances the
Company and certain related persons against certain liabilities, including
liabilities arising under the Securities Act and Exchange Act.
Any brbker-dealer participating in such transactions as agent may
receive commissions from a Selling Stockholder (and, if it acts as agent for
the purchase of such Shares, from such purchaser). Broker-dealers may agree
with such Selling Stockholder to sell a specified number of Shares at a
stipulated price per share, and, to the extent such a broker-dealer is unable
to do so acting as agent for such Selling Stockholder, to purchase as
principal any unsold Shares. Broker-dealers who acquire Shares as principal
may thereafter resell such Shares from time to time in transactions (which
may involve crosses and block transactions and which may involve sales to and
through other broker-dealers, including transactions of the nature described
above) on the Nasdaq National Market, in privately negotiated transactions,
or by a combination of such methods of sale, at fixed prices that may be
changed, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices, and in connection
with such resales may pay to or receive from the purchasers of such Shares
commissions computed as described above.
Each Selling Stockholder will be subject to applicable provisions of the
Exchange Act, and the rules and regulations thereunder, including, without
limitation, Regulation M, which provisions may limit the time of bids for and
purchases of shares of the Company's Common Stock by such Selling Stockholder.
Each Selling Stockholder will pay all commissions and other expenses
associated with the sale of the Shares by such Selling Stockholder. The
Shares offered hereby are being registered pursuant to contractual
obligations of the Company, and the Company has agreed to bear certain
expenses in connection with the registration and sale of the Shares being
offered by every such Selling Stockholder. The Company has not made any
underwriting arrangements with respect to the sale of Shares offered hereby.
---------------------
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Common Stock
by the Selling Stockholders.
---------------------
LEGAL MATTERS
The legality of the securities offered hereby will be passed upon for
the Company by Wilson Sonsini Goodrich & Rosati, Professional Corporation,
Palo Alto, California.
---------------------
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference from the Company's Annual Report on Form 10-K for the year ended
December 31, 1997, have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, 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.
---------------------
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
10
<PAGE>
INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE SELLING STOCKHOLDERS. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY OF
THE SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTTON IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT
IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE OF THIS PROSPECTUS.
11
<PAGE>
TABLE OF CONTENTS
Page
----
Trademarks 3
Available Information 3
Additional Information 3
Information Incorporated by Reference 4
Forward-Looking Statements 4
The Company 5
Risk Factors 6
Selling Stockholders 8
Plan of Distribution 9
Use of Proceeds 10
Legal Matters 10
Experts 10
1,698,395 SHARES
THE NORTH FACE, INC.
Common Stock
------------
July 15, 1998
------------
12
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The fees and expenses incurred by the Company in connection with the
offering are payable by the Company and, other than filing fees, are
estimated as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee ....... $ 12,149.89
NASDAQ Filing Fee ......................................... $ 15,967.90
Legal Fees and Expenses ................................... $ 8,000
Accounting Fees ........................................... $ 2,000
Miscellaneous ............................................. $ 1,500
Total ................................................. $ 39,617.79
</TABLE>
ITEM 15. INDEMMFICATION OF OFFICERS AND DIRECTORS.
Section 145 of the Delaware General Corporation law ("DGCL") empowers a
Delaware corporation to indemnify any persons who are, or are threatened to
be made, parties to any threatened, pending or completed legal action, suit
or proceedings, whether civil, criminal, administrative or investigative
(other than action by or in the right of such corporation), by reason of the
fact that such person was an officer or director of such corporation, or is
or was serving at the request of such corporation as a director, officer,
employee or agent of another corporation or enterprise. The indemnity may
include expenses (including attorneys' fees), judgments, fees and amounts
paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided that such officer
or director acted in good faith and in a manner he reasonably believed to be
in or not opposed to the corporation's best interest, and, for criminal
proceedings, had no reasonable cause to believe his conduct was illegal. A
Delaware corporation may indemnify officers and directors in an action by or
in the right of the corporation under the same conditions, except that no
indemnification is permitted without judicial approval if the officer or
director is adjudged to be liable to the corporation in the performance of
his duty. Where an officer or director is successful on the merits or
otherwise in the defense of any action referred to above, the corporation
must indemnify him against the expenses which such officer or director
actually and reasonably incurred.
In accordance with the DGCL, the Company's Amended and Restated
Certificate of Incorporation (the "Restated Certificate"), contains a
provision to limit the personal liability of the directors of the Registrant
for violations of their fiduciary duty. This provision eliminates each
director's liability to the Registrant or its stockholders for monetary
damages except (i) for any breach of the director's duty of loyalty to the
Registrant or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the DGCL providing for liability of directors for
unlawful payment of dividends or unlawful stock purchases or redemptions, or
(iv) for any transaction from which a director derived an improper personal
benefit. The effect of this provision is to eliminate the personal liability
of directors for monetary damages for actions involving a breach of their
fiduciary duty of care, including any such actions involving gross negligence.
II-1
<PAGE>
Article FOURTH, Section 9 of the Company's Restated Certificate and
Article 8 of the Company's Amended and Restated Bylaws provide for
indemnification of the officers and directors of the Registrant to the
fullest extent permitted by applicable law.
The Registrant has entered into indemnification agreements with each
director and executive officer which provide indemnification to such
directors and executive officers under certain circumstances for acts or
omissions which may not be covered by directors' and officers' liability
insurance.
ITEM 16. EXHIBITS.
The following exhibits are filed with this Registration Statement:
<TABLE>
<CAPTION>
Exhibit
Number Description
- ---------------------
<S> <C>
2.1* Stock Purchase Agreement by and among The North Face, Inc., a Delaware
corporation, La Sportiva USA, Inc., a Colorado corporation, Mr. Colin
Lantz, Mr. C. Edward Sampson and Mr. Heinz Mariacher, dated July 1,
1998.
2.2* Registration Rights Agreement by and between The North Face, Inc.,
a Delaware corporation, and the stockholders of La Sportiva USA, Inc.,
a Colorado corporation, dated July 1, 1998.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation.
10.1* Employment Agreement by and between The North Face, Inc., a
Delaware corporation, and James Fifield, dated May 13, 1998.
23.1 Consent of Wilson Sonsini Goodrich & Rosati, Professional
Corporation (included in Exhibit 5.1).
23.2 Consent of Deloitte & Touche LLP.
24.1* Power of Attorney (included on pg. II-4 of this Registration
Statement under the caption "Signatures").
</TABLE>
* Previously filed
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement: (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act; (ii) to
reflect in the prospectus any facts or events arising after the effective
date of the Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) (Section
230.424(b) of this chapter) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and (iii) to include any material
information with respect to the plan of distribution not previously disclosed
in the Registration Statement or any material change to such information in
the Registration Statement; provided, however, that (i) and (ii) do not apply
if the Registration Statement is on Form S-3, Form S-8
II-2
<PAGE>
or Form F-3, and the information required to be included in a post-effective
amendment by (i) and (ii) is contained in periodic reports filed with or
furnished to the Commission by the Registrant pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of the registrant pursuant to the provisions described in Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against liabilities (other than
the payment of the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining liability under the Securities Act of
l933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determming liability under the Securities Act of
l933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of July 15, 1998.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on July 15, 1998.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
*
--------------------------- Chairman
Marsden S. Cason
/s/ Christopher F. Crawford
--------------------------- Chief Financial Officer and Secretary
Christopher F. Crawford
*
--------------------------- President, Chief Executive Officer and Director
James Fifield
*
--------------------------- Director
Michael F. Doyle
*
--------------------------- Director
Robert P. Bunje
*
--------------------------- Vice Chairman
William N. Simon
*By: /s/ Christopher F. Crawford
---------------------------
Christopher F. Crawford
as Attorney-in-Fact
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ---------------------
<S> <C>
2.1* Stock Purchase Agreement by and among The North Face, Inc., a Delaware
corporation, La Sportiva USA, Inc., a Colorado corporation, Mr. Colin
Lantz, Mr. C. Edward Sampson and Mr. Heinz Mariacher, dated July 1,
1998.
2.2* Registration Rights Agreement by and between The North Face, Inc.,
a Delaware corporation, and the stockholders of La Sportiva USA, Inc.,
a Colorado corporation, dated July 1, 1998.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation.
10.1* Employment Agreement by and between The North Face, Inc., a
Delaware corporation, and James Fifield, dated May 13, 1998.
23.1 Consent of Wilson Sonsini Goodrich & Rosati, Professional
Corporation (included in Exhibit 5.1).
23.2 Consent of Deloitte & Touche LLP.
24.1* Power of Attorney (included on pg. II-4 of this Registration
Statement under the caption "Signatures").
</TABLE>
* Previously filed.
<PAGE>
Exhibit 5.1
July 15, 1998
The North Face, Inc.
2013 Farallon Drive
San Leandro, CA 94577
RE: REGISTRATION STATEMENT ON FORM S-3/A
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3/A to be filed by
you with the Securities and Exchange Commission on or about July 15, 1998
(the "Registration Statement"), in connection with the registration under the
Securities Act of 1933, as amended, of a total of 1,698,395 shares of your
Common Stock (the "Shares"). We understand that the Shares are to be sold
from time to time on the NASDAQ National Market at prevailing prices or as
otherwise described in the Registration Statement. As legal counsel for The
North Face, Inc., we have examined the proceedings taken by you in connection
with the sale of the Shares.
It is our opinion that the Shares are legally and validly issued, fully
paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever appearing in
the Registration Statement and any amendments to it.
Very truly yours,
/s/ Wilson Sonsini Goodrich & Rosati, P.C.
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
<PAGE>
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of The North Face, Inc. on Form S-3 of our report dated February 6, 1998,
appearing in the Annual Report on Form 10-K of The North Face, Inc. for the
year ended December 31, 1997 and to the reference to us under the heading
"Experts" in the Prospectus, which is a part of the Registration Statement.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
San Francisco, California
July 15, 1998
