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Filed Pursuant to Rule 424(b)(1)
Registration No. 333-32432
PROSPECTUS
THE GOOD GUYS, INC.
281,200 Shares of Common Stock
This prospectus covers 281,200 shares of The Good Guys, Inc. common stock,
par value $.001 per share, which may be offered for sale by the Selling
Shareholders who have acquired or will acquire such shares in transactions not
involving a public offering, including 200,400 shares which may be offered for
sale by the Selling Shareholders who may acquire such shares pursuant to the
exercise of 200,400 warrants granted to them. One of the Selling Shareholders,
Morgan Keegan & Company, Inc., received its warrants covering 160,000 shares in
connection with services rendered to us in a private placement of our shares
completed in August 1999. The other Selling Shareholder, Citron Haligman
Bedecarre, received 80,800 shares and warrants covering 40,400 shares in
connection with advertising services rendered to us. The warrants provide for
appropriate anti-dilutive adjustments in the number of shares of common stock
issuable upon their exercise, and any additional shares of common stock issued
pursuant to such adjustments will also be shares whose resale is covered by this
prospectus. We are registering the shares, including the shares underlying the
warrants, under the Securities Act of 1933, as amended, on behalf of the Selling
Shareholders in order to permit the public sale or other distribution of the
shares.
The shares may be offered and sold from time to time by the Selling
Shareholders through ordinary brokerage transactions, in negotiated transactions
or otherwise, at market prices prevailing at the time of sale or at negotiated
prices. We will not realize any proceeds from the sale of the shares by the
Selling Shareholders.
Our common stock trades on the Nasdaq National Market under the
symbol "GGUY." On March 23, 2000, the last reported sale price of the common
stock was $4.625.
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SEE NOTE REGARDING FORWARD-LOOKING STATEMENTS AND RISK FACTORS ON PAGE 5 FOR A
DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN
INVESTMENT IN THE SECURITIES OFFERED HEREBY.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE SECURITIES TO BE ISSUED UNDER THIS
PROSPECTUS OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR ADEQUATE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS MARCH 24, 2000.
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY US OR ANY SELLING SHAREHOLDER. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN
OUR AFFAIRS SINCE SUCH DATE.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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Where You Can Find More Information...................................................4
Note Regarding Forward-Looking Statements And Risk Factors............................5
The Company...........................................................................8
Use Of Proceeds.......................................................................8
Selling Shareholders..................................................................9
Plan Of Distribution..................................................................9
Legal Matters........................................................................12
Experts..............................................................................12
</TABLE>
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities Exchange Commission. You may read and copy any
document we file at the SEC's public reference rooms in Washington, D.C., New
York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0300 for
further information on the public reference rooms. Our SEC filings are also
available to the public at the SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus, and later information filed with the SEC will
update and supersede this information. We incorporate by reference our Annual
Report on Form 10-K for the year ended September 30, 1999, and our Report on
Form 10-Q for the quarter ended December 31, 1999.
All documents filed by us pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 after the date of this prospectus and prior to
the termination of the offering of the common stock offered hereby shall be
deemed to be incorporated by reference in this prospectus on the date of filing
such documents. Any statement contained in a document or information
incorporated or deemed to be incorporated herein by reference shall be deemed to
be modified or superseded for purposes of this prospectus to the extent that a
statement contained in this prospectus or in any subsequently filed document
that also is, or is deemed to be, incorporated by reference, modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
prospectus.
The making of a modifying or superseding statement shall not be deemed an
admission that the modified or superseded statement, when made, constituted a
misrepresentation, an untrue statement of a material fact or an omission to
state a material fact that is required to be stated or that is necessary to make
a statement not misleading in light of the circumstances in which it was made.
We will furnish without charge to each person to whom this prospectus is
delivered, on the written or oral request of such person, a copy of any or all
of the documents incorporated herein by reference, except for the exhibits to
such documents. Request should be made to:
Vance R. Schram
Vice President, Finance, Controller
and Secretary
The Good Guys, Inc.
7000 Marina Boulevard
Brisbane, California 94005-1030
(650) 615-5000
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NOTE REGARDING FORWARD-LOOKING STATEMENTS AND
RISK FACTORS.
This prospectus and the documents incorporated in this prospectus by reference
may contain "forward-looking statements" within the meaning of Section 27A of
the Securities Act, and Section 21E of the Exchange Act. Forward-looking
statements are identified by words such as "believe," "anticipate," "expect,"
"intend," "plan," "will," "may" and other similar expressions. In addition, any
statements that refer to expectations, projections or other characterizations of
future events or circumstances are forward-looking statements. These
forward-looking statements reflect our current expectations and are based upon
currently available data. There are a variety of factors and risks that could
cause actual results experienced to differ materially from the anticipated
results or other expectations expressed in the forward-looking statements or
affect the decision to invest in our securities, including, but not limited to
those set forth in our Form 10-K Annual Report for the fiscal year ended
September 30, 1999 and the following:
FAILURE TO RETURN TO PROFITABILITY COULD MATERIALLY AFFECT OUR VENDER AND LENDER
RELATIONSHIPS.
We have experienced operating losses for the fiscal years ended September 30,
1998 and 1999 aggregating approximately $8.9 million and $39.3 million,
respectively. Operating results for fiscal 1999 include a one-time charge of
$9.3 million related to personnel reduction and inventory and accounts
receivable write-offs. Although we believe we will be able to return to
profitability in fiscal 2000 if we are able to successfully implement the
turn-around strategy discussed later in this prospectus, there can be no
assurance that we will be able to do so. Failure to return to profitability
could have a material adverse effect on our relationships with our vendors and
lenders.
LOSS OF KEY PERSONNEL COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.
Our success depends upon the active involvement of senior management personnel,
particularly Ronald Unkefer, our Chairman and Chief Executive Officer. The loss
of the full-time services of Ronald Unkefer or other members of our senior
management team could have a material adverse effect on our results of
operations and financial condition. Except for an employment contract with
Ronald Unkefer and severance agreements with our officers, we do not have
employment agreements with any members of our senior management team.
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COMPETITIVE FACTORS COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.
The retail consumer electronics industry is highly competitive. We currently
compete against a diverse group of retailers, including several national and
regional large format merchandisers and superstores, such as Circuit City and
Best Buy. Those competitors sell, among other products, audio and video consumer
electronics products similar and often identical to those we sell. Certain of
these competitors have substantially greater financial resources than we have. A
number of different competitive factors could have a material adverse effect on
our results of operations and financial condition, including, but not limited
to:
- Increased operational efficiencies of competitors;
- Competitive pricing strategies;
- Expansion by existing competitors;
- Entry by new competitors into markets in which The Good Guys
- Adoption by existing competitors of innovative store formats or
retail sales methods.
OUR SALES FLUCTUATE SEASONALLY AND QUARTERLY.
Like many retailers, our business is affected by seasonal shopping patterns. The
fourth calendar quarter, which is our first fiscal quarter and which includes
the December holiday shopping period, has historically contributed, and is
expected to continue to represent, a substantial portion of our operating
results for the entire fiscal year. As a result, any factors negatively
affecting us during results calendar quarter of any year, could have a material
adverse effect on our results of operations for the entire year. More generally,
our quarterly results of operations also may fluctuate based upon such factors
as:
- Competition;
- General regional and national economic conditions;
- Consumer trends;
- Changes in our product mix;
- Timing of promotional events;
- New product introductions; and
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- Our ability to execute our business strategy effectively.
CHANGES IN CONSUMER DEMAND MAY LOWER OUR SALES OR PROFITS.
Our success depends on our ability to anticipate and respond in a timely manner
to consumer demand and preferences regarding audio and video consumer products
and changes in such demand and preferences. Consumer spending patterns,
particularly discretionary spending for products such as those we offer, are
affected by, among other things, prevailing economic conditions. In addition,
the periodic introduction and availability of new products and technologies at
price levels which generate wide consumer interest stimulate the demand for
audio and video consumer electronics products. It is possible that these
products or other new products will never achieve widespread consumer
acceptance. Furthermore, the introduction or expected introduction of new
products or technologies may depress sales of existing products and
technologies. Significant deviations from the projected demand for products we
sell would have a materially adverse effect on our results of operations and
financial condition, either from lost sales or lower margins due to the need to
mark down excess inventory.
LOSS OF KEY SUPPLIERS COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.
The success of our business and growth strategy depends to a significant degree
upon our maintaining a good relationship with our suppliers, particularly
brand-name suppliers of stereo and video equipment such as Sony, Mitsubishi,
JVC, and Panasonic. The loss of any of these key vendors or our failure to
establish and maintain relationships with these or other vendors could have a
material adverse effect on our results of operations and financial condition.
WE DEPEND UPON FOREIGN VENDORS.
We purchase a significant portion of our inventory from overseas vendors,
particularly vendors headquartered in Japan. Changes in trade regulations,
currency fluctuations or other factors may increase the cost of items we
purchase from foreign vendors or create shortages of such items, which could in
turn have a material adverse effect on our results of operations and financial
condition. Conversely, significant reductions in the cost of such items in U.S.
dollars may cause a significant reduction in retail price levels of those
products and may limit or eliminate our ability to successfully differentiate
The Good Guys, Inc. from other competitors, thereby resulting in an adverse
effect on our sales, margin or competitive position.
SALE OF SHARES ELIGIBLE FOR FUTURE SALE UNDER OPTIONS OR WARRANTS MAY ADVERSELY
AFFECT STOCK PRICE.
As of the date of this prospectus, we have outstanding stock options and
warrants to purchase an aggregate of 4,649,897 shares of common stock at
exercise prices ranging from $3.00 to $20.38 of which options and warrants to
purchase 2,373,923 shares are exercisable now. The sale of shares covered by
such options or warrants by the holders thereof, pursuant to existing
registration statements or registrations statements filed upon exercise of
registration rights given them or pursuant to exemptions from registration could
have an adverse effect on the market price for our common stock.
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THE COMPANY
We were incorporated in California in 1976. On March 4, 1992, we changed our
state of incorporation from California to Delaware by merging into a wholly
owned Delaware subsidiary formed for that purpose. On September 1995, we
transferred substantially all of our assets and liabilities to The Good Guys -
California, Inc., our wholly-owned operating subsidiary.
We are a leading specialty retailer of consumer electronics products and
currently operate 79 stores, 3/4 of which are located in California, with the
balance in Washington, Oregon and Nevada.
On July 1, 1999, our Founder, former Chairman and Chief Executive Officer,
Ronald A. Unkefer, rejoined us as our Chairman and Chief Executive Officer after
purchasing for $4.7 million in cash 1,450,000 restricted shares of our common
stock and acquiring warrants for an additional 1,435,000 shares of our common
stock, exercisable at a price of $3.39612 per share.
In July, 1999, we announced our profitability strategy that included the
following key elements:
- Elimination of the sale of computers and home office products from
our overall product mix;
- Implementation of cost reductions with respect to general and
administrative costs, as well as in store and other operating costs;
- Adoption of a new integrated branding and marketing campaign; and
- A focus on providing early adopters, product-savvy consumers and
middle and upper-income customers with a distinctive selection of
electronics products and services.
USE OF PROCEEDS
We will not receive any proceeds from the sale of any shares of common stock,
including the shares underlying warrants by the Selling Shareholders, but will
pay all expenses related to the registration of the shares, including the shares
underlying warrants. We could receive up to $1,229,975 from the exercise of the
warrants covered by this prospectus.
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SELLING SHAREHOLDERS
The following table sets forth information concerning the beneficial ownership
of our common stock and warrants by the Selling Shareholders as of the date of
this prospectus, the number of shares, including the shares underlying warrants,
included for sale in the offering and the beneficial ownership of common stock
by such Selling Shareholders after the offering (assuming sale of all of the
shares offered by all of the Shareholders). Such information was furnished to us
by the Selling Shareholders. Morgan Keegan & Company, Inc., which has acted as a
market maker in the Company's shares, received warrants covering 160,000 shares,
in connection with services rendered to us in a private placement of our shares
completed in August 1999 and the underlying shares are being registered herein.
Citron Haligman Bedecarre received 80,800 shares and warrants covering 40,400
shares in connection with advertising services rendered to us and such shares
including the shares underlying the warrants are being registered herein. Except
as just described, to our knowledge, none of the Selling Shareholders has had,
within the past three years any material relationship with us.
<TABLE>
<CAPTION>
Percentage Of
Shares Owned Shares To Be Shares To Be Shares To Be
Prior To The Sold In The Owned After Owned After The
Name Offering (1) Offering (1) the Offering Offering
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<S> <C> <C> <C> <C>
Citron Haligman 121,200 121,200 -0- -0-
Bedecarre
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Morgan Keegan & 160,000 160,000 -0- -0-
Company, Inc.
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</TABLE>
(1) Includes the shares of common stock issuable upon exercise of
warrants.
PLAN OF DISTRIBUTION
We are registering the shares, including shares underlying
warrants, on behalf of the Selling Shareholders. As used herein, "Selling
Shareholders" includes donees and pledgees, transferees or other
successors-in-interest selling shares and warrants received from a Selling
Shareholder as a gift, pledge, partnership distribution or other non-sale
related transfer after the date of this prospectus. All costs, expenses and fees
in connection with the registration of the shares, including the shares
underlying warrants, offered hereby will be borne by us. Brokerage commissions
and similar selling expenses, if any, attributable to the sale of shares,
including the shares underlying warrants, will be borne by the Selling
Shareholders. Sales of shares and warrants may be effected by Selling
Shareholders from time to time in one or more types of transactions (which may
include block transactions) on the Nasdaq National Market, in the
over-the-counter market, in negotiated private transactions not effected on any
exchange, through put or call options transactions relating to the shares,
including the shares underlying warrants, through short sales or a combination
of such methods of sale, at market prices
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prevailing at the time of sale, or at negotiated prices. Such transactions may
or may not involve brokers or dealers. The Selling Shareholders have advised us
that they have not entered into any agreements, understandings or arrangements
with any underwriter or coordinating broker acting in connection with the
proposed sale of shares by Selling Shareholders.
The Selling Shareholders may effect such transactions by selling
directly to purchasers or to or through broker-dealers, which may act as agents
or principals. Such broker-dealers may receive compensation in the form of
discounts, concessions, or commissions from the Selling Shareholders and/or the
purchasers of shares and warrants for whom such broker-dealers may act as agents
or to whom they sell as principal, or both (which compensation as to a
particular broker-dealer might be in excess of customary commissions).
The Selling Shareholders and any broker-dealers that act in
connection with the sale of shares, including the shares underlying warrants,
might be deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act, and any commissions received by such broker-dealers and any
profit on the resale of the shares, including the shares and underlying
warrants, sold by them while acting as principals might be deemed to be
underwriting discounts or commissions under the Securities Act. The Selling
Shareholders may agree to indemnify any agent, dealer or broker-dealer that
participates in transactions involving sales of the shares, including the shares
underlying warrants, against certain liabilities, including liabilities arising
under the Securities Act.
Because Selling Shareholders may be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act, the Selling
Shareholders will be subject to the prospectus delivery requirements of the
Securities Act. We have informed the Selling Shareholders that the
anti-manipulative provisions of Regulation M promulgated under the Exchange Act
may apply to their sales in the market.
Selling Shareholders also may resell all or a portion of the
shares, including shares underlying warrants, in open market transactions in
reliance upon Rule 144 under the Securities Act, provided they meet its criteria
and conform to its requirements.
Upon our notification by a Selling Shareholder that any material
arrangement has been entered into with a broker-dealer for a sale through a
block trade, special offering, exchange distribution or secondary distribution
or a purchase by a broker or dealer, a supplement to this prospectus will be
filed, if required, pursuant to Rule 424(b) under the Securities Act,
disclosing:
- the name of each such selling shareholder and of the participating
broker-dealer(s);
- the number of shares involved;
- the price at which such shares were sold;
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- the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable;
- that such broker-dealer(s) did not conduct any investigation to
verify the information set out or incorporated by reference in this
prospectus; and
- other facts material to the transaction.
In addition, upon our notification by a Selling Shareholder that a donee,
pledgee, transferee or other successor-in-interest intends to sell more than 500
shares, a supplement to this prospectus will be filed.
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DESCRIPTION OF CAPITAL STOCK
Common Stock. All of our outstanding shares of common stock are
fully paid and non-assessable. Subject to the prior rights to the holders of
preferred stock which may be issued in the future, the holders of common stock
are entitled to received dividends if and when declared by the Board of
Directors out of funds legally available therefor and in the event of our
dissolution, to share ratably in all assets remaining after payment of
liabilities and satisfaction of the liquidation preferences of the holders of
such preferred stock. Each holder of common stock is entitled to one vote for
each share held of record on all matters presented to a vote at a shareholders
meeting, including the election of directors. Holders of common stock have no
cumulative voting rights or preemptive rights to purchase or subscribe for any
stock or other securities and there are no conversion rights or redemption or
sinking fund provisions with respect to such stock. Additional shares of
authorized common stock may be issued without shareholder approval.
Our Transfer Agent and Registrar is Chase Mellon Shareholder
Services, 235 Montgomery Street, 23rd Floor, San Francisco, CA 94104.
Preferred Stock. We have authorized in our Certificate of
Incorporation 2,000,000 shares of preferred stock, $.001 par value per share,
none of which has been issued. Authorized but unissued preferred stock is
available for issuance from time to time at the discretion of our board of
directors without shareholder approval. Our board of directors has the authority
to prescribe for each series of preferred stock that it establishes the number,
designation, preferences, limitations and relative rights of the shares of such
series, subject to applicable law and provisions of any outstanding series of
preferred stock. The terms of any series of preferred stock, including, but not
limited to, dividend rate, redemption price, liquidation rights, sinking fund
provisions, conversion rights and voting rights, and any corresponding effect on
other shareholders, will be dependent largely on factors existing at the time of
issuance. Such terms and effects could include restrictions on dividends on the
common stock if dividends on the preferred stock are in arrears, dilution of the
voting power of other shareholders to the extent a series of the preferred stock
has voting rights and reduction of amounts available on liquidation as a result
of any liquidation preference granted to any series of preferred stock.
LEGAL MATTERS
The legality of the common stock and warrants offered hereby will be
passed upon for us by Howard, Rice, Nemerovski, Canady, Falk & Rabkin, A
Professional Corporation.
EXPERTS
The financial statements incorporated in this registration statement
by reference from the Company's Annual Report on Form 10-K for the year ended
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September 30, 1999 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.
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