<PAGE>
As filed with the Securities and Exchange Commission on June 12, 2000.
Registration No. 333-_____
Registration No. 333-29419
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------
MICHAELS STORES, INC.
(Exact name of registrant as specified in its charter)
Delaware 75-1943604
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
8000 Bent Branch Drive
Irving, Texas 75063
P.O. Box 619566
DFW, Texas 75261-9566
(972) 409-1300
(Address, including zip code, and telephone number,
including area code, of registrant's
principal executive offices)
------
R. Michael Rouleau
Chief Executive Officer
Michaels Stores, Inc.
8000 Bent Branch Drive
Irving, Texas 75063
(972) 409-1300
(Name, address, including zip code, and
telephone number, including area code,
of agent for service)
------
WITH COPIES TO:
Mark V. Beasley, Esq. Robert L. Estep, Esq.
Michaels Stores, Inc. Jones, Day, Reavis & Pogue
8000 Bent Branch Drive 2727 North Harwood
Irving, Texas 75063 Dallas, Texas 75201
(972) 409-1300 (214) 220-3939
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. / /
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, 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. / /
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
======================================================================================================
Proposed Proposed
Maximum Maximum
Title of Amount Offering Aggregate Amount of
Securities to to be Price per Offering Registration
be Registered Registered (1) Share (2) Price (2) Fee (2)
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $0.10
per share............................ 1,266,874 $43.53125 $55,148,609 $14,560
======================================================================================================
</TABLE>
1. Represents shares issuable in connection with the exercise of options
available for grant under the Michaels Stores, Inc. 1997 Stock Option
Plan. Pursuant to Rule 416, there are also registered on this Form an
indeterminate number of additional shares as may become subject to
awards under the Plan as a result of the antidilution provisions
contained therein. 6,800,000 shares previously registered under
Registration Statement No. 333-29419 are being carried forward.
2. The registration fee with respect to these shares has been computed in
accordance with paragraphs (c) and (h) of Rule 457, based upon the
average of the reported high and low sale prices of shares of the Common
Stock on The Nasdaq National Market System on June 9, 2000. A
registration fee in the amount of $42,758 was previously paid by the
Registrant in relation to the 6,800,000 shares covered by Registration
Statement No. 333-29419.
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 SECTION 8(a), MAY
DETERMINE.
IN ACCORDANCE WITH RULE 429 UNDER THE SECURITIES ACT OF 1933, THE
PROSPECTUS CONTAINED IN THIS FORM ALSO RELATES TO 6,800,000 SHARES OF THE
REGISTRANT'S COMMON STOCK COVERED BY REGISTRATION STATEMENT NO. 333-29419.
===============================================================================
<PAGE>
The information in this prospectus is not complete and may change. We may not
sell these securities until the registration statement filed with the Securities
and Exchange Commission is effective. This prospectus is not an offer to sell
and it is not soliciting an offer to buy these securities in any state where the
offer or sale is not permitted.
Subject to Completion, Dated June 12, 2000
PROSPECTUS
8,066,874 SHARES OF COMMON STOCK
MICHAELS STORES, INC.
Common Stock
Under the Michaels Stores, Inc. 1997 Stock Option Plan, we have
granted, and may in the future grant, options to plan participants to
purchase shares of our common stock.
Plan participants who are directors and executive officers may use
this prospectus in sales of shares of common stock acquired upon the exercise
of options. The price and other terms of these sales will be established at
the time they occur. The sales prices may be equal to or based upon the
then-current market prices or determined through negotiation.
Michaels will receive the proceeds of the issuance of shares of
common stock upon the exercise of options granted under the plan. Michaels
will not receive any proceeds from sales of shares by plan participants and
permitted transferees.
Michaels will pay all expenses in connection with this offering,
which are estimated to be approximately $40,000. The selling stockholders are
offering 2,198,542 shares.
The common stock is quoted on The Nasdaq National Market System
under the symbol "MIKE." On June 9, 2000, the closing price of the common
stock on The Nasdaq National Market System was $43.25.
Michaels' principal executive offices are located at 8000 Bent
Branch Drive, Irving, Texas 75063 (telephone: 972-409-1300).
-------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
-------------
The date of this Prospectus is June __, 2000.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
Forward-Looking Information..............................................2
Michaels ................................................................3
Use of Proceeds..........................................................3
Resale of Shares; Selling Stockholders...................................3
1997 Stock Option Plan...................................................7
Plan of Distribution....................................................11
Legal Matters...........................................................11
Experts ...............................................................12
Available Information...................................................12
Incorporation of Certain Documents by Reference.........................12
</TABLE>
FORWARD-LOOKING INFORMATION
This prospectus may contain or incorporate by reference certain
statements which are not historical facts and are therefore forward-looking
statements. Such statements are based upon the beliefs and assumptions of,
and on information available to, the management of Michaels. Such statements
involve risks and uncertainties, including:
- customer demand and trends in the arts and crafts
industry;
- inventory risks due to shifts in customer demand;
- the effect of economic conditions;
- the impact of competitors' locations and pricing;
- the availability of acceptable real estate locations
for new stores;
- difficulties with respect to new information system
technologies;
- supply constraints or difficulties;
- the results of financing efforts;
- the effectiveness of our advertising strategies; and
- other risks detailed in this prospectus (including the
documents incorporated in this prospectus by
reference).
Except for the information contained in this prospectus, Michaels
has not authorized any person to give any information or to make any
representation in connection with the offering or sale of these securities.
This prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any securities in any circumstances in which such offer or
solicitation would be unlawful. Neither the delivery of this prospectus nor
any sale made under this prospectus will, under any circumstances, imply that
the information contained herein is correct as of any date subsequent to the
date hereof.
2
<PAGE>
MICHAELS
Michaels is the world's largest (as measured by sales) and only
national retailer dedicated to serving the arts, crafts, framing, floral and
decorative items marketplace. Michaels stores offer a wide selection of
competitively priced items, including picture framing materials and services,
silk and dried flowers, art and hobby supplies, creative crafts, and seasonal
and holiday merchandise for the hobbyist and do-it-yourself home decorator.
Since March 1995, when Michaels acquired Aaron Brothers Holdings, Inc.,
Michaels has also operated the Aaron Brothers specialty framing and art
supply stores operating primarily on the West Coast. Michaels' principal
executive offices are located at 8000 Bent Branch Drive, Irving, Texas 75063,
and its telephone number at that address is (972) 409-1300.
USE OF PROCEEDS
The proceeds from the issuance of the shares upon exercise of options
under the plan will be added to Michaels' funds and used for general corporate
purposes. Michaels will not receive any of the proceeds from the sale of shares
by the selling stockholders following the exercise of their options.
RESALE OF SHARES; SELLING STOCKHOLDERS
The persons listed in the following table are eligible to offer and
sell shares acquired by them upon the exercise of options pursuant to the
registration statements and this prospectus. The inclusion of any person in
the following table is not an indication or admission that such person is an
affiliate of Michaels. The ownership information set forth in the following
table is presented as of May 31, 2000. 33,107,229 shares of common stock
were issued and outstanding as of such date.
Michaels is unaware whether the selling stockholders listed below
intend to exercise the options or to sell the shares they may acquire upon
exercise of options.
Michaels in the future may grant additional options to the persons
listed below and may allow persons other than those listed below to offer and
sell shares acquired upon exercise of options pursuant to registration
statements and this prospectus. Michaels will supplement this prospectus to
reflect such changes as and when required by law.
<TABLE>
<CAPTION>
COMMON STOCK COMMON STOCK
OWNERSHIP NUMBER OF OWNERSHIP
PRIOR TO OFFERING (1)(2) SHARES OF AFTER OFFERING (2)
------------------------- COMMON STOCK --------------------------
NAME AND POSITION NUMBER PERCENTAGE OFFERED HEREBY NUMBER PERCENTAGE
----------------------------------------------- ------------------------- -------------- --------------------------
<S> <C> <C> <C> <C> <C>
Sam Wyly (3) 1,375,462 4.1% 572,500 802,962 2.4%
Chairman of the Board of Directors
Stargate, Ltd. (4) 280,000 * 200,000 80,000 *
Richard E. Hanlon (5) 82,600 * 80,000 2,600 *
Director
Donald R. Miller, Jr. (6) 66,044 * 50,000 16,044 *
Director
Marmalade, Ltd. (7) 75,875 * 50,000 25,875 *
R. Michael Rouleau (8) 394,057 1.2% 200,000 194,057 *
Chief Executive Officer
3
<PAGE>
COMMON STOCK COMMON STOCK
OWNERSHIP NUMBER OF OWNERSHIP
PRIOR TO OFFERING (1)(2) SHARES OF AFTER OFFERING (2)
------------------------- COMMON STOCK --------------------------
NAME AND POSITION NUMBER PERCENTAGE OFFERED HEREBY NUMBER PERCENTAGE
----------------------------------------------- ------------------------- -------------- --------------------------
<S> <C> <C> <C> <C> <C>
Bryan M. DeCordova (9) 50,000 * 50,000 0 *
Executive Vice President -
Chief Financial Officer
Lawrence H. Fine (10) 50,801 * 50,000 801 *
Executive Vice President -
General Merchandise Manager
Duane Hiemenz (11) 45,065 * 41,667 3,398 *
Senior Vice President -
New Business Development
James Tucker (12) 52,829 * 50,000 2,829 *
Executive Vice President -
Chief Information Officer
Kelly Elliott (13) 50,238 * 50,000 238 *
Director
James C. Neustadt (14) 61,875 * 61,875 0 *
Senior Vice President -
Advertising & Marketing
Douglas B. Sullivan (15) 83,875 * 50,000 33,875 *
Executive Vice President - Development
John Martin (16) 450,000 1.3% 450,000 0 *
President and Chief Operating Officer
Richard C. Marcus (17) 50,000 * 50,000 0 *
Director
Elizabeth A. VanStory (18) 50,000 * 50,000 0 *
Director
Tony D'Onofrio (19) 17,935 * 17,500 435 *
Senior Vice President -
Logistics and Distribution
Edward F. Sadler (20) 50,000 * 50,000 0 *
Executive Vice President -
Store Operations
Stephen W. Davis (21) 75,000 * 75,000 0 *
Executive Vice President -
Michaels Online
</TABLE>
---------------
* Less than 1% of class.
(1) Based on ownership as of May 31, 2000. Persons holding shares of common
stock pursuant to the Michaels Employees 401(k) Plan generally have sole
voting and investment power with respect to such shares.
(2) Based on 33,107,229 shares of common stock issued and outstanding as of
May 31, 2000.
(3) Includes 572,500 shares to be acquired upon exercise of options granted
under the plan, all of which are presently exercisable.
4
<PAGE>
(4) Includes 200,000 shares to be acquired upon exercise of options granted
under the plan, all of which are presently exercisable. Mr. Charles J.
Wyly, Jr., a director of Michaels, is a general partner and limited
partner of Stargate, Ltd., a limited partnership.
(5) Includes 80,000 shares to be acquired upon exercise of options granted
under the plan, all of which are presently exercisable.
(6) Includes 50,000 shares to be acquired upon exercise of options granted
under the plan, all of which are presently exercisable. Also includes
12,044 shares of common stock held pursuant to the 401(k) Plan.
(7) Includes 50,000 shares to be acquired upon exercise of options granted
under the plan, all of which are presently exercisable. Mr. Evan A. Wyly,
a director of Michaels, is a general partner of Marmalade, Ltd., a
limited partnership.
(8) Includes 200,000 shares to be acquired upon exercise of options granted
under the plan, 33,333 of which are presently exercisable, and 33,333
of which become exercisable on August 5, 2000 and each of July 30,
2000 and 2001 and 33,334 of which become exercisable on each of August
5, 2001 and July 30, 2002. Also includes 162,463 shares of common
stock to be acquired upon exercise of options granted under other
stock option plans of Michaels and 2,774 shares of common stock held
pursuant to the 401(k) Plan.
(9) Includes 50,000 shares to be acquired upon exercise of options granted
under the plan, 8,333 of which are presently exercisable, and 8,333 of
which become exercisable on August 5, 2000 and each of July 30, 2000 and
2001 and 8,334 of which become exercisable on each of August 5, 2001 and
July 30, 2002.
(10) Includes 50,000 shares to be acquired upon exercise of options granted
under the plan, 8,333 of which are presently exercisable, and 8,333 of
which become exercisable on August 5, 2000 and each of July 30, 2000 and
2001 and 8,334 of which become exercisable on each of August 5, 2001 and
July 30, 2002.
(11) Includes 41,667 shares to be acquired upon exercise of options granted
under the plan, 8,333 of which become exercisable on August 5, 2000 and
each of July 30, 2000 and 2001 and 8,334 of which become exercisable on
each of August 5, 2001 and July 30, 2002.
(12) Includes 50,000 shares to be acquired upon exercise of options granted
under the plan, 8,333 of which are presently exercisable, and 8,333 of
which become exercisable on August 5, 2000 and each of July 30, 2000
and 2001 and 8,334 of which become exercisable on each of August 5,
2001 and July 30, 2002. Also includes 829 shares of common stock held
pursuant to the 401(k) Plan.
(13) Includes 50,000 shares to be acquired upon exercise of options granted
under the plan, all of which are presently exercisable. Also includes
238 shares of common stock held pursuant to the 401(k) Plan.
(14) Includes 61,875 shares to be acquired upon exercise of options granted
under the plan, 28,124 of which are presently exercisable, 13,334 of
which become exercisable on May 29, 2000, 1,458 of which become
exercisable on August 5, 2000, 1,459 of which become exercisable on
August 5, 2001, 5,833 of which become exercisable on each of
July 30, 2000 and 2001 and 5,834 of which become exercisable on
July 30, 2002.
(15) Includes 50,000 shares to be acquired upon exercise of options granted
under the plan, 8,333 of which are presently exercisable, and 8,333 of
which become exercisable on August 5, 2000 and each of July 30, 2000 and
2001 and 8,334 of which become exercisable on each of August 5, 2001 and
July 30, 2002.
(16) Includes 450,000 shares to be acquired upon exercise of options granted
under the plan, 150,000 of which are presently exercisable and 150,000 of
which become exercisable on each of May 2, 2001 and 2002.
(17) Includes 50,000 shares to be acquired upon exercise of options granted
under the plan, all of which are presently exercisable.
5
<PAGE>
(18) Includes 50,000 shares to be acquired upon exercise of options granted
under the plan, all of which are presently exercisable.
(19) Includes 17,500 shares to be acquired upon exercise of options granted
under the plan, 5,833 of which become exercisable on each of August 31,
2000 and 2001 and 5,834 of which become exercisable on August 31, 2002.
(20) Includes 50,000 shares to be acquired upon exercise of options granted
under the plan, 16,667 of which become exercisable on each of October 29,
2000 and 2001 and 16,666 of which become exercisable on October 29, 2002.
(21) Includes 75,000 shares to be acquired upon exercise of options granted
under the plan, 25,000 of which become exercisable on each of December
31, 2000, 2001 and 2002.
6
<PAGE>
1997 STOCK OPTION PLAN
AVAILABLE INFORMATION REGARDING THE PLAN
A copy of the plan has been filed as an exhibit to Michaels'
registration statement on Form S-3 (Commission File No. 333- 29419). Any
amendment that may be made to the plan after the date of this prospectus will
be filed with the Commission in accordance with the informational
requirements of the Securities Exchange Act of 1934. See "Available
Information" and "Incorporation of Certain Documents by Reference."
The following summaries of certain provisions of the plan are not
complete and are subject to, and are qualified in their entirety by reference
to, all of the provisions of the plan. Copies of the plan and additional
information regarding the plan and the plan's administrators may be obtained
by contacting Michaels. See "Incorporation of Certain Documents by
Reference."
PURPOSE AND ADOPTION OF THE PLAN
The plan is intended to provide incentive compensation to certain of
Michaels' executive officers, key employees, directors, advisors and
consultants. The plan is also intended to aid in attracting persons of
outstanding ability to serve, and remain in the service of, Michaels. The
board of directors of Michaels adopted the plan effective as of June 6, 1997.
The shareholders approved the adoption of the plan at the annual meeting of
shareholders held on June 6, 1997.
SHARES AVAILABLE UNDER THE PLAN
As of June 9, 2000, the total number of shares of common stock
available for issuance under the plan was 8,066,874 and options exercisable
for 6,151,170 of such shares had been granted, resulting in options for
1,915,704 shares being available for grant as of that date. Under the terms
of the plan, the number of shares of common stock available for issuance
under the plan is automatically increased, if necessary, after the end of
each fiscal quarter so that the sum of the number of shares of common stock
previously issued upon the exercise of options, the number of shares of
common stock then subject to outstanding options, and the number of shares of
common stock then remaining available under the plan for future grants of
options, is equal to 20% of the total number of shares of common stock then
outstanding, computed on a fully diluted basis. Shares of common stock issued
under the plan may be authorized but unissued shares, shares held in treasury
or a combination of both.
DESCRIPTION OF OPTIONS AVAILABLE UNDER THE PLAN
The plan authorizes the grant of options to purchase shares of common
stock that are not intended to qualify as incentive stock options under
Section 422 of the Internal Revenue Code of 1986, and which permit a
participant to benefit from increases in the value of shares of common stock
above a predetermined purchase price per share.
The plan does not specify a maximum term for options granted under the
plan. The exercise price of the options may not be less than the fair market
value per share of the common stock on the grant date. No more than 1,500,000
shares of common stock pursuant to options may be granted to any plan
participant during any single calendar year. A grant of options may allow the
holder to pay the exercise price of the options on a deferred basis from the
proceeds of sales on the option exercise date of the shares of common stock
acquired upon the exercise of options. Payment for common stock purchased
upon the exercise of an option may be made in cash or by check acceptable to
Michaels, by the actual or constructive transfer to Michaels of shares of
common stock already owned by the plan participant having a value at the
exercise time equal to the total exercise price, by any other legal
consideration, or a combination of any of the foregoing.
The plan does not require that a participant hold the shares received
on the exercise of options for a specified period. The plan permits immediate
sequential exercises of options with the exercise price being paid in shares
of common stock, including shares acquired as a result of prior exercises of
options.
7
<PAGE>
The administrators of the plan may, without the consent of the holder
of an option, amend any option agreement in various respects, including
acceleration of the time at which the option may be exercised, extension of
the expiration date, reduction of the purchase price and waiver of other
conditions or restrictions.
PLAN ADMINISTRATION
The plan is administered by the 1997 Stock Option Committee and the
board of directors which have the authority to decide which individuals will
receive option grant(s), the number of shares to be covered by each option,
and the time or times at which options will be exercisable. However, the 1997
Stock Option Committee has exclusive authority with respect to options
intended to comply with Section 162(m) of the Internal Revenue Code. All of
the members of the 1997 Stock Option Committee, which must comprise at least
two members, are intended to qualify as "outside directors" within the
meaning of Section 162(m) of the Internal Revenue Code and as "Non-Employee
Directors" within the meaning of Rule 16b-3 under the Exchange Act.
The 1997 Stock Option Committee and the board of directors have the
full authority and discretion to administer the plan. Any determination by
the 1997 Stock Option Committee or the board of directors will be final and
conclusive. However, if the 1997 Stock Option Committee disagrees with the
board of directors, the determination of the board of directors will be the
final and conclusive determination.
PERSONS ELIGIBLE TO RECEIVE OPTIONS
Executive officers, key employees, directors, advisors and consultants
of Michaels and its subsidiaries are eligible to receive grants of options.
TRANSFERABILITY OF OPTIONS
Options granted under the plan will be subject only to any transfer
restrictions that the 1997 Stock Option Committee or the board of directors
may impose in granting the options.
ADJUSTMENTS TO SHARES AVAILABLE UNDER THE PLAN
The 1997 Stock Option Committee or the board of directors may make or
provide for adjustments in the maximum number of shares available under the
plan, the number of shares of common stock covered by outstanding options,
the purchase price per share of common stock covered by options, and/or the
kind of shares covered (including shares of another issuer), as they may
determine is equitably required to prevent dilution or enlargement of the
rights of plan participants. Such circumstances include any stock dividend,
stock split, combination of shares, recapitalization or other change in the
capital structure of Michaels, merger, consolidation, spin-off,
reorganization, partial or complete liquidation, issuance of rights or
warrants to purchase securities or any other corporate transaction or event
having an effect similar to any of the foregoing.
VESTING OF CERTAIN OPTIONS UPON A CHANGE IN CONTROL
The stock option agreement evidencing any option may provide for the
earlier exercise of such option in the event of a change in control of
Michaels (as defined in such stock option agreement or in any agreement
referenced in such stock option agreement) or in the event of any other
similar transaction or event.
NONQUALIFIED AND UNFUNDED STATUS OF THE PLAN
The plan is unfunded and does not give participants any rights that
are superior to those of Michaels' general creditors. The plan is not subject
to the provisions of ERISA and is not qualified under Section 401(a) of the
Internal Revenue Code.
8
<PAGE>
NO RIGHTS TO CONTINUED EMPLOYMENT
The plan does not confer upon any plan participant any right to
continued employment or other service with Michaels or any of its
subsidiaries and does not interfere in any way with any right that Michaels
or any of its subsidiaries would otherwise have to terminate a plan
participant's employment or other service at any time.
TERMINATION AND AMENDMENT OF THE PLAN
The plan may be terminated at any time by action of the board of
directors. The termination of the plan will not adversely affect the terms of
any outstanding options. The plan may be amended by the board of directors or
any duly authorized committee of the board of directors. Such amendments may
include changes required or permitted by the Internal Revenue Service, the
Commission, the National Association of Securities Dealers, Inc., any stock
exchange upon which the common stock is listed for trading, or any other
governmental or quasi-governmental agency having jurisdiction over Michaels.
Any amendment to the plan which removes or lessens any restrictions on
options will apply to all options then outstanding.
FEDERAL INCOME TAX CONSEQUENCES
GENERAL. Certain U.S. federal income tax consequences of the grant,
exercise or transfer of options, and the subsequent sale of shares acquired
upon the exercise of options, are summarized below. This summary is based on
the Internal Revenue Code, as amended to date, applicable proposed and final
Treasury Regulations, judicial authority and current administrative rulings
and practice, all of which are subject to change. This summary does not
attempt to describe all of the possible tax consequences that could result
from the acquisition, holding, exercise or disposition of an option or the
shares of common stock purchased upon the exercise of an option.
RECOGNITION OF INCOME; TAX WITHHOLDING. Options granted under the plan
are intended to be nonqualified stock options. Nonqualified stock options
generally will not result in any taxable income to the plan participant at
the time of the grant, but the participant will realize ordinary income at
the time of exercise of the options if the shares are not subject to any
substantial risk of forfeiture (as defined in Section 83 of the Internal
Revenue Code). Under such circumstances, the amount of ordinary income is
measured by the excess of the fair market value of the optioned shares at the
time of exercise over the exercise price. Such income is subject to payment
and withholding of income, FICA and Medicare taxes and other applicable
employment taxes.
TAX BASIS IN SHARES ACQUIRED; GAIN OR LOSS ON DISPOSITION. A plan
participant's tax basis in shares acquired upon the exercise of nonqualified
stock options is generally equal to the exercise price plus any amount
treated as ordinary income. If shares acquired upon exercise of an option are
later sold or exchanged, the difference between the sales price and the plan
participant's tax basis in the shares will generally be taxable as a capital
gain or loss (if the stock is a capital asset of the plan participant). For
individuals, the rate of taxation of capital gains will depend on (a) the
individual's holding period for the shares at the time of the sale or other
taxable disposition (with the lowest rate available for shares held more than
12 months) and (b) the individual's marginal tax rate for ordinary income.
The deductibility of capital losses is subject to certain limitations which
are not addressed herein.
PAYMENT OF EXERCISE PRICE WITH SHARES. If the exercise price of a
nonqualified stock option is paid for, in whole or in part, by the delivery
of shares of common stock previously owned by the plan participant, no gain
or loss will be recognized on the exchange of the previously owned shares of
common stock for a like number of shares of common stock. The plan
participant's basis in the number of shares received equal to the number of
previously owned shares of common stock surrendered would be the same as the
plan participant's basis in the previously owned shares of common stock.
However, the plan participant would be treated as receiving ordinary income
equal to the fair market value (at the time of exercise) of the number of
shares of common stock received in excess of the number of previously owned
shares of common stock surrendered, and the plan participant's basis in such
excess shares would be equal to their fair market value at the time of
exercise.
FEDERAL TAX CONSEQUENCES FOR TRANSFERORS. A plan participant who
transfers a transferable option by way of gift will not recognize income at the
time of the transfer. Instead, at the time the transferee exercises the
transferable option, the transferor of such transferable option will generally
recognize ordinary compensation
9
<PAGE>
income in an amount equal to the excess of the fair market value of the
shares purchased by the transferee over the exercise price of the related
option, in the same manner as if the transferor had retained and exercised
the option. If a transfer constitutes a completed gift for gift tax purposes
(which determination will depend on a variety of factors including, without
limitation, whether the nonqualified stock option or a portion thereof has
vested), then such transfer will be subject to federal gift tax except,
generally, to the extent protected by the individual's $10,000 per donee
annual exclusion, by his or her lifetime unified credit or by the marital
deduction. The amount of the gift is the value of the option at the time of
the gift. If the transfer of the option constitutes a completed gift and the
transferor retains no interest in or power over the option after the
transfer, the option generally will not be included in his or her gross
estate for federal estate tax purposes. Prior to making a transfer of a
transferable option, a plan participant should consult with his or her
personal tax advisor concerning the possible federal and state gift, estate,
inheritance, and generation skipping tax consequences of such a transfer, as
well as state and local income tax consequences which are not addressed
herein.
FEDERAL TAX CONSEQUENCES FOR TRANSFEREES. A transferee of a
transferable option will not recognize income at the time of a transfer of a
transferable option. As described in the preceding paragraph, the transferor
of such transferable option and not the transferee will generally recognize
ordinary compensation income at the time the transferee exercises the option.
If the transferee exercises the option after the death of the transferor, it
is uncertain whether the transferor's estate or the transferee will recognize
ordinary income for federal income tax purposes. A transferee who chooses to
exercise a transferable option in whole or in part by delivery of other
shares of common stock already owned by the transferee should consult with
his or her own tax advisor concerning the tax consequences of such a
transaction. If shares acquired upon exercise of a transferable option are
later sold or exchanged, the difference between the sales price and the
transferee's tax basis in the shares will generally be taxable as long-term
or short-term capital gain or loss (if the stock is a capital asset of the
transferee). The tax basis for the shares in the hands of the transferee
would be the exercise price of the transferable option plus the amount of the
income recognized by the transferor at the time of exercise.
SPECIAL RULES APPLICABLE TO INSIDERS. In limited circumstances where
the sale of shares of common stock that are received as the result of the
exercise of an option could subject an officer or director to suit under
Section 16(b) of the Exchange Act, the tax consequences to the officer or
director may differ from the tax consequences described above. In these
circumstances, unless a special election has been made, the principal
difference usually will be to postpone valuation and taxation of the stock
received so long as the sale of the shares received could subject the officer
or director to suit under Section 16(b) of the Exchange Act, but not longer
than six months.
GENERAL MATTERS APPLICABLE TO MICHAELS. To the extent that a plan
participant recognizes ordinary income in the circumstances described above,
Michaels or a subsidiary would be entitled to a corresponding federal income
tax deduction, provided in general that (a) the amount is an ordinary and
necessary business expense and such income meets the test of reasonableness,
(b) the deduction is not disallowed pursuant to the annual compensation limit
set forth in Section 162(m) of the Internal Revenue Code, and (c) certain
statutory provisions relating to so-called "excess parachute payments" do not
apply. Awards granted under the plan may be subject to acceleration in the
event of a change in control of Michaels. Therefore, it is possible that
these change-in-control features may affect whether amounts realized upon the
receipt or exercise of options will be deductible by Michaels under the
"excess parachute payments" provisions of the Internal Revenue Code.
Because the tax consequences to a plan participant may vary depending
on his or her individual circumstances, each plan participant should consult
his or her personal tax advisor regarding the federal and any state, local or
foreign tax consequences to him or her.
10
<PAGE>
PLAN OF DISTRIBUTION
Upon the exercise of options Michaels will issue shares directly to or
for the benefit of plan participants (or their permitted transferees)
exercising such options. The shares acquired upon the exercise of options may
be sold or otherwise disposed of from time to time in one or more
transactions through any one or more of the following:
- to purchasers directly;
- in ordinary brokerage transactions and transactions in
which the broker solicits purchasers;
- through underwriters or dealers who may receive compensation in
the form of underwriting discounts, concessions or commissions
from the persons eligible to offer and sell shares pursuant to the
registration statements and this prospectus or from the purchasers
of the shares for whom they may act as agent;
- the pledge of the shares as security for any loan or obligation,
including pledges to brokers or dealers who may, from time to
time, themselves effect distributions of the shares or interests
therein;
- purchases by a broker or dealer as principal and resale
by such broker or dealer for its own account pursuant to
this prospectus;
- a block trade in which the broker or dealer so engaged will
attempt to sell the shares as agent but may position and resell a
portion of the block as principal to facilitate the transaction;
and
- an exchange distribution in accordance with the rules of such
exchange, or in transactions in the over the counter market
including, without limitation, The Nasdaq National Market System.
Such sales may be made at then-current prices, at prices related to
the then current market prices or at negotiated prices. In effecting sales,
brokers or dealers may arrange for other brokers or dealers to participate.
The persons eligible to offer and sell shares pursuant to the registration
statements and this prospectus or their successors in interest, and any
underwriters, brokers, dealers or agents that participate in the distribution
of the shares, may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, and any profit on the sale of the shares by them and
any discounts, commissions or concessions received by any such underwriters,
brokers, dealers or agents may be deemed to be underwriting commissions or
discounts under the Securities Act. In addition, any of the shares covered by
this prospectus which qualify for sale pursuant to Rule 144 may be sold under
Rule 144 rather than pursuant to this prospectus.
Michaels will pay all of the expenses in connection with the offering
contemplated by this prospectus other than underwriting discounts or
commissions, brokers' fees and the fees and expenses of any legal counsel to
the persons eligible to offer and sell shares pursuant to the registration
statements and this prospectus.
LEGAL MATTERS
Certain legal matters in connection with the validity of the common
stock offered hereby have been passed upon for Michaels by Jones, Day, Reavis
& Pogue, Dallas, Texas. Michael C. French, a consultant to Jones, Day, Reavis
& Pogue, is a director of Michaels.
11
<PAGE>
EXPERTS
The consolidated financial statements of Michaels Stores, Inc.
included in Michaels' Annual Report (Form 10-K) for the year ended January
29, 2000, have been audited by Ernst & Young LLP, independent auditors, as
set forth in their report included therein and incorporated by reference
herein. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.
AVAILABLE INFORMATION
Michaels files reports, proxy statements and other information with
the Securities and Exchange Commission in accordance with the requirements of
the Securities Exchange Act of 1934. You may read and copy such reports,
proxy statements and other information at the Commission's Public Reference
Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may also obtain
information on the operation of the Public Reference Room by calling the
Commission at 1-800-SEC-0330.
The Commission maintains an Internet site that contains reports, proxy
and information statements, and other information regarding registrants that
file electronically with the Commission and that is located at
http://www.sec.gov. Michaels maintains an Internet site at
http://www.michaels.com. Michaels' common stock is quoted on The Nasdaq
National Market. You may also read copies of reports, proxy statements and
other documents at the offices of The Nasdaq National Market at 1735 K
Street, N.W., Washington, D.C. 20006.
This prospectus constitutes a part of registration statements filed by
Michaels with the Commission under the Securities Act of 1933 relating to
8,066,874 shares of common stock of Michaels issued or issuable under the
Michaels Stores, Inc. 1997 Stock Option Plan and offered by this prospectus.
This prospectus and the registration statements also relate to any additional
shares of common stock that any person may acquire as a result of the
antidilution provisions of the plan.
Additional information regarding Michaels and the shares offered by
this prospectus is contained in the registration statements and their
exhibits. Any statements contained in this prospectus regarding the
provisions of any other document are not necessarily complete. Accordingly,
each such statement is qualified in its entirety by reference to the copy of
such document filed as an exhibit to the registration statements or otherwise
filed with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
As specified below, certain documents filed or to be filed by Michaels
with the Commission are incorporated by reference into this prospectus. The
information contained in such documents is considered to be part of this
prospectus, except that the information contained in later-dated documents
will supplement, modify or supersede the information contained in
earlier-dated documents.
Michaels incorporates by reference into this prospectus the documents
listed below and all documents subsequently filed with the Commission under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act prior to
the termination of this offering:
- Michaels' Annual Report on Form 10-K for the fiscal year
ended January 29, 2000,
- the description of Michaels' common stock contained in Michaels'
Registration Statement on Form 8-A/A (Commission File No.
000-11822), filed March 24, 2000, and
- Michaels' Current Report on Form 8-K dated June 9, 2000.
You may obtain, at no cost, a copy of any of the information that has
been incorporated by reference in this prospectus, but not delivered with
this prospectus. You may make such a request in writing or orally to the
General Counsel of Michaels at 8000 Bent Branch Drive, Irving, Texas 75063
(telephone: 972-409-1300).
12
<PAGE>
8,066,874 SHARES
MICHAELS STORES, INC.
COMMON STOCK
-----------
PROSPECTUS
-----------
JUNE __, 2000
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses in connection with the issuance and
distribution of the common stock covered by this registration statement, all
of which will be paid by Michaels, are as follows:
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission registration fee............... $ 14,560
Printing expenses................................................. 5,000
Accounting fees and expenses...................................... 5,000
Legal fees and expenses........................................... 15,000
Miscellaneous expenses............................................ 440
--------
Total............................................................. $ 40,000
========
</TABLE>
The expenses to be borne by the selling stockholders in connection
with the issuance and distribution of the securities being registered (other
than any underwriting discounts and commissions, which will be described in
an applicable prospectus supplement to the extent required) are expected to
consist solely of the fees and expenses of their respective legal counsel and
other incidental expenses which Michaels is unable to estimate.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Michaels' certificate of incorporation limits the liability of
Michaels' directors to the maximum extent permitted by Delaware law. Delaware
law provides that a director of a corporation will not be personally liable
for monetary damages for breach of that individual's fiduciary duties as a
director except for liability for (1) a breach of the director's duty of
loyalty to the corporation or its stockholders, (2) any act or omission not
in good faith or that involves intentional misconduct or a knowing violation
of the law, (3) unlawful payments of dividends or unlawful stock repurchases
or redemptions, or (4) any transaction from which the director derived an
improper personal benefit.
This limitation of liability does not apply to liabilities arising
under federal securities laws and does not affect the availability of
equitable remedies such as injunctive relief or recission.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify directors and officers, as well as other employees
and individuals, against attorneys' fees and other expenses, judgments, fines
and amounts paid in settlement actually and reasonably incurred by such
person in connection with any threatened, pending or completed actions, suits
or proceedings in which such person was or is a party or is threatened to be
made a party by reason of such person being or having been a director,
officer, employee or agent of the corporation. The Delaware General
Corporation Law provides that Section 145 is not exclusive of other rights to
which those seeking indemnification may be entitled under any bylaw,
agreement, vote of stockholders or disinterested directors, or otherwise.
Michaels' certificate of incorporation requires that Michaels
indemnify its directors and officers, and any other person who is or was
serving at the request of Michaels as a director, officer, employee or agent
of another corporation or of a partnership, joint venture, trust or other
enterprise, to the fullest extent permitted by Delaware law. Michaels'
certificate of incorporation also requires that Michaels advance expenses
incurred by such a person in connection with the defense of any action or
proceeding arising out of that person's status or service to Michaels. The
bylaws of Michaels require that it indemnify its directors to the fullest
extent permitted by Delaware law and may, if and to the extent authorized by
Michaels' board of directors, so indemnify its officers and any other person
whom it has the power to indemnify against any liability, expense or other
matter whatsoever.
II-1
<PAGE>
As authorized by its certificate of incorporation, Michaels has
procured insurance that purports (a) to insure it against certain costs of
indemnification that may be incurred by it pursuant to the provisions
referred to above or otherwise and (b) to insure the directors and officers
of Michaels against certain liabilities incurred by them in the discharge of
their functions as directors and officers except for liabilities arising from
their own malfeasance.
ITEM 16. EXHIBITS
The following is a list of all exhibits filed as a part of this
registration statement on Form S-3, including those incorporated by reference.
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------ ----------------------
<S> <C>
4.1 Restated Certificate of Incorporation of Michaels
(previously filed as Exhibit 2 to Michaels'
Registration Statement on Form 8-A/A, Commission File
No. 000-11822, filed March 24, 2000, and incorporated
herein by reference)
4.2 Certificate of Amendment to Restated Certificate of
Incorporation of Michaels (previously filed as
Exhibit 3 to Michaels' Registration Statement on Form
8-A/A, Commission File No. 000-11822, filed March 24,
2000, and incorporated herein by reference)
4.3 Bylaws of Michaels, as amended and restated
(previously filed as Exhibit 3.1 to Michaels' Annual
Report on Form 10-K for the year ended January 30,
1994, Commission File No. 000-11822, filed April 29,
1994, and incorporated herein by reference)
4.4 Form of Common Stock Certificate (previously filed as
Exhibit 4.1 to Michaels' Annual Report on Form 10-K
for the year ended January 30, 1994, Commission File
No. 000-11822, filed April 29, 1994, and incorporated
herein by reference)
5.1 Opinion of Jones, Day, Reavis & Pogue
23.1 Consent of Ernst & Young LLP
23.2 Consent of Jones, Day, Reavis & Pogue (included in
Exhibit 5.1)
24.1 Power of attorney (included on signature pages)
99.1 Michaels Stores, Inc. 1997 Stock Option Plan
(previously filed as Exhibit 99.1 to Michaels'
Registration Statement on Form S-3 (No. 333-29419)
and incorporated herein by reference)
</TABLE>
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 of 1933;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which
individually or in the aggregate represent a fundamental
change in the information set forth in 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) if, in the aggregate, the changes in volume and price
represent no more than a 20%
II-2
<PAGE>
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 this registration statement or any material change to such
information in this registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the Registrant pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in this Registration Statement.
(2) that, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial BONA FIDE offering thereof; and
(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 under Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in this 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 foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
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 a 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 of 1933 and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Irving, State of Texas on June 12,
2000.
MICHAELS STORES, INC.
By: /s/ BRYAN M. DECORDOVA
--------------------------
Bryan M. DeCordova
Executive Vice President-
Chief Financial Officer
Each individual whose signature appears below hereby appoints R.
Michael Rouleau, Bryan M. DeCordova and Mark V. Beasley, and each of them, as
attorneys-in-fact and agents for each of them (with full power of
substitution and resubstitution), for and in the name, place and stead of
such individual, to sign and file with the Securities and Exchange Commission
any and all amendments, supplements and exhibits to, and documents in
connection with, this registration statement, including post-effective
amendments, hereby granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and
thing necessary, appropriate or desirable to be done in order to effectuate
the same as fully and to all intents and purposes as each of the undersigned
might or could do if personally present, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, or any of their
substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title
---------- -----
<S> <C> <C>
/s/ SAM WYLY Chairman of the June 12, 2000
--------------------------- Board of Directors
Sam Wyly
/s/ CHARLES J. WYLY, JR. Vice Chairman of the June 12, 2000
--------------------------- Board of Directors
Charles J. Wyly, Jr.
/s/ R. MICHAEL ROULEAU Chief Executive Officer June 12, 2000
--------------------------- (Principal Executive Officer)
R. Michael Rouleau
/s/ BRYAN M. DECORDOVA Executive Vice President- June 12, 2000
--------------------------- Chief Financial Officer
Bryan M. DeCordova (Principal Financial and Accounting Officer)
Director and
--------------------------- Vice President-Market Development
Donald R. Miller, Jr.
Director
---------------------------
Kelly Elliott
/s/ MICHAEL C. FRENCH Director June 12, 2000
---------------------------
Michael C. French
/s/ RICHARD E. HANLON Director June 12, 2000
---------------------------
Richard E. Hanlon
/s/ RICHARD MARCUS Director June 12, 2000
---------------------------
Richard Marcus
II-4
<PAGE>
<S> <C> <C>
/s/ F. JAY TAYLOR Director June 12, 2000
---------------------------
F. Jay Taylor
/s/ ELIZABETH A. VANSTORY Director June 12, 2000
---------------------------
Elizabeth A. VanStory
/s/ EVAN A. WYLY Director June 12, 2000
---------------------------
Evan A. Wyly
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------ ----------------------
<S> <C>
4.1 Restated Certificate of Incorporation of Michaels
(previously filed as Exhibit 2 to Michaels'
Registration Statement on Form 8-A/A, Commission File
No. 000-11822, filed March 24, 2000, and incorporated
herein by reference)
4.2 Certificate of Amendment to Restated Certificate of
Incorporation of Michaels (previously filed as
Exhibit 3 to Michaels' Registration Statement on Form
8-A/A, Commission File No. 000-11822, filed March 24,
2000, and incorporated herein by reference)
4.3 Bylaws of Michaels, as amended and restated
(previously filed as Exhibit 3.1 to Michaels' Annual
Report on Form 10-K for the year ended January 30,
1994, Commission File No. 000-11822, filed April 29,
1994, and incorporated herein by reference)
4.4 Form of Common Stock Certificate (previously filed as
Exhibit 4.1 to Michaels' Annual Report on Form 10-K
for the year ended January 30, 1994, Commission File
No. 000-11822, filed April 29, 1994, and incorporated
herein by reference)
5.1 Opinion of Jones, Day, Reavis & Pogue
23.1 Consent of Ernst & Young LLP
23.2 Consent of Jones, Day, Reavis & Pogue (included in
Exhibit 5.1)
24.1 Power of attorney (included on signature pages)
99.1 Michaels Stores, Inc. 1997 Stock Option Plan
(previously filed as Exhibit 99.1 to Michaels'
Registration Statement on Form S-3 (No. 333-29419)
and incorporated herein by reference)
</TABLE>
