<PAGE>
As filed with the Securities and Exchange Commission on July 15, 1996
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
______________________________
THE RIGHT START, INC.
-------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-3971414
---------- ----------
(State or other jurisdiction of incorporation or (I.R.S. Employer
organization) Identification No.)
5334 Sterling Center Drive, Westlake Village, California 91361
-------------------------------------------------------- -----
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code
(818) 707-7100
--------------
JERRY R. WELCH
5334 Sterling Center Drive
Westlake Village, California 91361
(818) 707-7100
--------------
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copy to:
ERIC H. SCHUNK
Milbank, Tweed, Hadley & McCloy
601 South Figueroa Street, 30th Floor
Los Angeles, California 90017
(213) 892-4000
______________________________
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on the Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any 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. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
TITLE OF EACH CLASS AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES TO BE TO BE OFFERING PRICE AGGREGATE REGISTRA-
REGISTERED REGISTERED PER UNIT (1) OFFERING PRICE(1) TION FEE
- ---------- ---------- ------------ ----------------- --------
<S> <C> <C> <C> <C>
Common Stock 4,965,076 shares $5.00 $24,825,380 $8,561
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
Pursuant to Rule 457(c), the offering price and registration fee are
computed on the basis of the average of the high and low prices of the
Common Stock as reported by The Nasdaq National Market on July 11, 1996.
Total number of pages in this report: ___
(Exhibit index located on page ___)
<PAGE>
SUBJECT TO COMPLETION DATED JULY 15, 1996
PROSPECTUS
4,965,076 SHARES
THE RIGHT START, INC.
COMMON STOCK
All of the 4,965,076 shares of Common Stock, no par value per share (the
"Shares"), offered hereby are being offered for the account of certain
shareholders (the "Selling Shareholders") of The Right Start, Inc. (the
"Company"). See "Selling Shareholders."
This Prospectus has been prepared by the Company pursuant to a
Registration Rights Agreement (the "Registration Rights Agreement") between
each of the Selling Shareholders and the Company. The Company will receive
none of the proceeds from the sale of Shares hereby, but has agreed to bear all
fees and expenses incident to the registration, offering and sale of the
Shares, excluding any underwriting discounts and commissions. See "Use of
Proceeds," "Selling Shareholders" and "Plan of Distribution."
The Common Stock is quoted on The Nasdaq National Market under the symbol
"RTST." On July 12, 1996, the last sale price of the Common Stock as reported
on Nasdaq National Market was $5 per share.
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
offers 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.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS IN THE SECURITIES OFFERED
HEREBY.
THESE SHARES 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 REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is __________, 1996
-1-
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS 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, ANY SELLING SHAREHOLDER OR ANY OTHER PERSON. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES OR ANY OFFER TO
SELL OR SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN
WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO ITS DATE.
THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND SECTION 21E OF THE EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT").
DISCUSSIONS CONTAINING SUCH FORWARD-LOOKING STATEMENTS MAY BE FOUND IN THE
MATERIAL SET FORTH BELOW UNDER "RISK FACTORS," AS WELL AS WITHIN THIS PROSPECTUS
GENERALLY (INCLUDING THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN). ALSO,
DOCUMENTS SUBSEQUENTLY FILED BY THE COMPANY WITH THE SECURITIES AND EXCHANGE
COMMISSION (THE "COMMISSION") MAY CONTAIN FORWARD-LOOKING STATEMENTS. ACTUAL
RESULTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED IN THE FORWARD-LOOKING
STATEMENTS AS A RESULT OF THE RISK FACTORS SET FORTH BELOW AND THE MATTERS SET
FORTH OR INCORPORATED BY REFERENCE IN THE PROSPECTUS. THE COMPANY CAUTIONS THE
READER, HOWEVER, THAT THIS LIST OF FACTORS MAY NOT BE EXHAUSTIVE, PARTICULARLY
WITH RESPECT TO FUTURE FILINGS.
TABLE OF CONTENTS
PAGE
----
<TABLE>
<CAPTION>
<S> <C>
Prospectus Summary ..................................................... 3
Risk Factors ........................................................... 4
The Company ............................................................ 7
Use of Proceeds ........................................................ 7
Price Range of Common Stock ............................................ 7
Dividend Policy ........................................................ 7
Selling Shareholders ................................................... 8
Plan of Distribution ................................................... 9
Experts ................................................................ 10
Legal Matters .......................................................... 10
Available Information .................................................. 10
Incorporation by Reference ............................................. 11
</TABLE>
<PAGE>
PROSPECTUS SUMMARY
The following material is qualified in its entirety by the information and
the consolidated financial statements and notes thereto appearing elsewhere in
or incorporated by reference into this Prospectus.
THE COMPANY
The Right Start, Inc., a California corporation (the "Company"), is a
leading merchant offering unique, high-quality products for infants and young
children. The Company markets its products through its 22 retail stores,
primarily located in major regional malls across the nation, and through The
Right Start Catalog. The Company's principal executive offices are located at
5334 Sterling Center Drive, Westlake Village, California and its telephone
number is (818) 707-7100.
SUMMARY FINANCIAL DATA
<TABLE>
<CAPTION>
Fiscal Year Ended 39 Weeks Ended
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
5/31 5/25 5/26 5/27 5/29 3/2 2/22
1995 1994 1993 1992 1991 1996 1995
------------------------------------------------------------------------------------------
(Dollars in thousands, except per share data)
EARNINGS DATA:
Revenues:
Net Sales $ 44,573 $ 49,204 $ 37,261 $ 23,896 $ 19,091 $ 29,200 $ 34,602
Other Revenues 1,168 1,311 992 868 476 1,256 856
---------- ---------- ---------- ---------- ---------- ---------- ----------
45,741 50,515 38,253 24,764 19,567 30,456 35,458
Net Income (loss) (2,106) 176 1032 820 1,250 (1,467) (2,014)
Earnings (loss) per (.33) .03 .16 .14 .26 (.23) (.32)
share
SHARE DATA:
Weighted average
Shares Outstanding 6,300,000 6,637,142 6,494,133 5,739,670 4,804,000 6,315,500 6,300,000
BALANCE SHEET DATA:
Current Assets $ 9,660 $ 12,002 $ 13,306 $ 12,975 $ 5,001 $ 9,751 $ 10,166
Total Assets 14,632 18,221 18,274 14,004 5,452 16,834 14,381
Current Liabilities 3,690 4,979 5,650 2,412 3,746 5,026 3,423
Long-Term Debt - - - - - 1,996 -
Shareholders'
Equity 10,694 12,800 12,624 11,592 1,706 9,293 10,786
</TABLE>
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<PAGE>
RISK FACTORS
Before making a decision to purchase any of the securities described
herein, prospective investors should carefully consider the risks set forth
below, as well as other information set forth in this Prospectus.
HISTORY OF OPERATING LOSSES; CHANGES IN OPERATIONS
The Company reported losses from operations (before interest and other
income, loss on the sale of Children's Wear Digest and provision for income
taxes) for the fiscal year ended May 31, 1995 of $1,659,000 and for the thirteen
and thirty-nine week periods ended March 2, 1996 of $1,376,000 and $2,374,000,
respectively. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" contained in the Company's Annual Report on Form 10-K
for the fiscal year ended May 31, 1995 and its Quarterly Report on Form 10-Q for
the thirteen and thirty-nine week periods ended March 2, 1996 incorporated by
reference herein.
Since fiscal 1994, the Company's operating strategy has focused on opening
and operating new retail stores, while reducing less profitable circulation of
its catalog business. There can be no assurance that the Company's operating
strategy will be successful or that the Company will not continue to incur
losses in subsequent periods. The Company reported a significant loss for the
Company's third fiscal quarter ended March 2, 1996 due to operating losses for
The Right Start Catalog and severance costs related to the resignation of the
Company's former Chief Executive Officer. The Company will incur losses through
at least the fiscal year ending June 1, 1996. Losses could negatively affect
working capital and the extension of credit by the Company's suppliers and
impact the Company's ability to implement its retail expansion strategy.
RETAIL EXPANSION STRATEGY
The Company opened eight new stores in fiscal 1995, 11 new stores in fiscal
1996, and currently plans to open up to 18 additional new stores in fiscal 1997.
The Company expects to expend approximately $400,000 for each new store it
opens. The Company's ability to open and operate new stores profitably is
dependent on the identification and availability of suitable locations, the
negotiation of acceptable lease terms, the Company's financial resources, the
successful hiring and training of store managers and the Company's ability to
control the operational aspects of growth. The Company intends to locate its
stores primarily in high traffic regional malls. Store sites in many of these
areas may be difficult to obtain on acceptable terms. There can be no assurance
that the Company will be able to open and operate new stores on a timely and
profitable basis or that same store sales will increase in the future. The
Company expects to fund store openings from the remaining proceeds from its
rights offering completed in late fiscal 1996, cash flow from operations and
borrowings under its bank facility.
TARGETED CATALOG MAILING STRATEGY
Based on a decline in the Right Start Catalog response rates, the Company
made circulation cuts of up to 40% for fiscal 1996 catalog mailings in an effort
to exclude less profitable mailing lists from the mailing of the Right Start
Catalog. These cuts have resulted in a significant decline in the Company's
revenues from catalog sales, and there can be no assurance that the
profitability of the overall catalog will increase or that the Company will not
continue to experience declining response rates.
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<PAGE>
COMPETITION
The specialty catalog and retail infants' and children's markets are highly
competitive. The Company's specialty mail order catalogs, retail stores and
products compete with other retail stores, including specialty stores, mass
merchants, discount chains, and department stores, and with a growing number of
other mail order catalogs. Some of the Company's competitors have substantially
greater financial, distribution and marketing resources than the Company. The
substantial sales growth in the mail order catalog industry has encouraged the
entry of many new competitors and continues to foster an increase in competition
from established companies. The catalog and retail businesses could become even
more competitive in the future.
MERCHANDISING
The Company's success depends to a large degree on its ability to introduce
in a timely manner new or updated products which are affordable, functional in
purpose, distinctive in quality and design and not widely available from other
retailers. Misjudgments as to customer interest in new or updated products could
lead to excess inventories and higher markdowns and could have a material
adverse effect on the Company's financial condition and results of operations.
CHANGE OF CHIEF EXECUTIVE OFFICER
Effective as of March 8, 1996, Lenny M. Targon resigned as Chief Executive
Officer of the Company, and the Board of Directors named Jerry R. Welch
(Chairman of the Board of Directors) as Chief Executive Officer. Mr. Welch also
serves as Senior Vice President of Kayne Anderson, the general partner of funds
(each of which is a Selling Shareholder in this Offering) owning approximately
39% of the Company's Common Stock, and Chairman of the Board and Chief Executive
Officer of Glacier Water Services, Inc. The Company does not have any plans to
replace Mr. Welch as its Chief Executive Officer. Mr. Welch does not intend to
devote all of his time to the Company, but will allocate his time appropriately
between the Company and his various other responsibilities.
INCREASES IN COSTS OF MAILING AND DISTRIBUTION
The Company experienced a significant increase in postage costs in fiscal
1996. Increases in the costs of printing and mailing catalogs could adversely
affect the Company's mail order business, especially if such increases occur
sooner than anticipated or in amounts larger than anticipated.
Approximately 35% of the items in the catalog of the Company's merchandise
is obtained directly or indirectly from foreign sources, currently concentrated
in the Far East, for which deliveries take longer than domestic sources.
Accordingly, the Company's operations are subject to the customary risks of
doing business abroad, including fluctuations in the value of currencies, export
duties, quotas, delays in deliveries, work stoppages and, in certain parts of
the world, political instability. In such case, obtaining substitute domestic
goods could be more expensive and less profitable to the Company.
Various states are increasingly seeking to impose sales or use taxes on
interstate mail order sales and are aggressively auditing sales tax returns of
most mail order business. Complex legal issues arise in these areas, relating,
among other things, to the required nexus of a business with a particular state,
which may permit the state to require a business to collect such taxes. Although
the Company believes it has adequately provided for sales taxes on its mail
order sales, there can be no assurance as to the future effect of actions taken
by state tax authorities on the Company's financial condition or results of
operations. In addition, the imposition of sales taxes on mail order sales often
has a negative effect on mail order sales volumes and revenues.
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<PAGE>
TELECOMMUNICATIONS AND COMPUTERS
The Company's catalog business and revenues are highly dependent upon
sophisticated, third party telecommunications and its own computerized systems
for order-entry and order fulfillment. In case of major communications or
computer system failures, any extended breakdown could have materially adverse
effects on the Company's catalog business revenues, since it would interrupt the
flow of orders and shipments. There is no totally adequate alternative should
the AT&T phone systems or the Company's computers fail. Management has
contingency plans for such cases, and carries business interruption and casualty
insurance against such risks. As part of the Company's contingency plan, all
calls can automatically be rerouted to answering services or through the AT&T
Network voice mail. In addition, AT&T guarantees quick rerouting of all "megacom
800" service on a very high priority basis. The Company is considering selling
certain assets associated with its telemarketing services business. In the event
of such a sale, the Company intends to contract with the purchaser for the
provision of telemarketing services to the Company, including the receipt of
incoming calls.
CHANGING ECONOMIC CONDITIONS
The infants' and children's products business of the Company is heavily
dependent upon well-to-do young parents and grandparents whose employment and
income can be adversely affected by changing national economic conditions. There
can be no assurance that a prolonged economic downturn throughout the United
States would not have a material adverse effect on the financial condition and
results of operations of the Company.
POSSIBLE VOLATILITY OF STOCK PRICE
The Company's Common Stock, which is quoted on The Nasdaq National Market,
has experienced and is likely to experience in the future significant price and
volume fluctuations which could adversely affect the market price of the Common
Stock without regard to the operating performance of the Company. In addition,
the Company believes that factors such as quarterly fluctuations in the
financial results of the Company, the overall economy and the financial markets
could cause the price of the Common Stock to fluctuate substantially.
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<PAGE>
THE COMPANY
The Company is a leading merchant offering unique, high-quality products
for infants and young children. The Company markets its products through The
Right Start Catalog and retail stores, primarily located in major regional malls
across the nation. The Company's principal executive offices are located at 5334
Sterling Center Drive, Westlake Village, California and its telephone number is
(818) 707-7100.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of Shares by
any of the Selling Shareholders. See "Plan of Distribution."
PRICE RANGE OF COMMON STOCK
The principal market for the Common Stock is The Nasdaq National Market.
The following table indicates the high and low sale prices for the Common
Stock as reported by The Nasdaq National Market for the periods indicated.
<TABLE>
<CAPTION>
FISCAL YEAR HIGH LOW
- ----------- ---- ---
<S> <C> <C>
1996
Fourth quarter (through July 12, 1996)...... 6 5
Third quarter............................... 6 1/4 3 5/8
Second quarter.............................. 5 3 1/2
First quarter............................... 3 7/8 2 1/8
1995:
Fourth quarter.............................. 3 2 1/4
Third quarter............................... 4 2 1/16
Second quarter.............................. 4 1/4 3 3/16
First quarter............................... 4 3/4 3 3/4
</TABLE>
On July 12, 1996, the closing sales price per share of the Common Stock as
reported on The Nasdaq National Market was $5. The Company believes there are
approximately 1,300 beneficial holders of the Company's Common Stock.
DIVIDEND POLICY
Restrictions in the Company's bank credit facility prohibit the payment of
dividends by the Company.
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<PAGE>
SELLING SHAREHOLDERS
The following table sets forth as of July 10, 1996, the names of each
Selling Shareholder, none of whom has, or within the past three years has had;
any position, office or other material relationship with the Company, except as
noted herein or in the documents incorporated by reference herein, the number of
shares of Common Stock owned by each of the Selling Shareholders as of the date
of this Prospectus, the number of Shares that may be offered and sold by each
such Selling Shareholder hereunder, and the percentage of Common Stock to be
owned by each such Selling Shareholder upon completion of the offering if all
Shares are sold by such Selling Shareholder. Unless otherwise indicated the
address of each Selling Shareholder is 1800 Avenue of the Stars, Suite 1425, Los
Angeles, California.
<TABLE>
<CAPTION>
OWNERSHIP OF COMMON
STOCK PRIOR SHARES OFFERED
TO OFFERING FOR SELLING OWNERSHIP OF
-------------------- SHAREHOLDER'S COMMON STOCK
SELLING SHAREHOLDERS NUMBER PERCENT ACCOUNT AFTER OFFERING
--------------------- ------ ------- ------------- --------------
<S> <C> <C> <C> <C>
Arbco Associates, L.P. (1) 861,651 10.8% 861,651 0
Kayne, Anderson Non-Traditional 1,261,703 15.9% 1,261,703 0
Investments, L.P. (1)
Opportunity Associates, L.P. (1) 215,412 2.7% 215,412 0
Offense Group Associates, L.P. (1) 738,558 9.3% 738,558 0
Albert O. Nicholas 625,000 7.9% 625,000 0
Nicholas Co., Inc.
700 North Water Street
Milwaukee, WI 53202
Fred Kayne (2) 631,376 7.9% 631,376 0
Fortune Fashions
6501 Flotilla Street
Commerce, CA 90040
Primerica Life Insurance Company 631,376 7.9% 631,376 0
388 Greenwich Street
New York, NY 10013
</TABLE>
(1) Richard A. Kayne is the President and Chief Executive Officer, and Jerry R.
Welch is Senior Vice President, of Kayne, Anderson Investment Management,
Inc., the general partner of the general partner of each of Arbco
Associates, L.P., Kayne, Anderson Non-Traditional Investments, L.P.,
Opportunity Associates, L.P. and Offense Group Associates, L.P. Mr. Welch
is the Chairman of the Board of Directors and Chief Executive Officer of
the Company. Mr. Richard Kayne is also a director of the Company.
(2) Mr. Fred Kayne is a director of the Company.
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<PAGE>
PLAN OF DISTRIBUTION
The Company will not receive any proceeds from the sale of Shares offered
hereby. It is anticipated that each of the Selling Shareholders will offer the
Shares, from time to time, directly or through broker-dealers or underwriters
who may act solely as agents or may acquire Shares as principals. Such
underwriters or broker-dealers acting either as principal or as agent, may
receive compensation in the form of usual and customary or specifically
negotiated underwriting discounts, concessions or commissions from each of the
Selling Shareholders and/or the purchasers of the Shares offered hereby for whom
they may act as agent.
The distribution of the Shares may be effected in one or more transactions
that may take place (i) on the Nasdaq National Market, including block trades or
ordinary broker's transactions, or (ii) through privately negotiated
transactions or through underwritten public offerings or (iii) through a
combination of any such methods of sale, at such prices as may be obtainable.
Usual and customary or specially negotiated brokerage fees or commissions may be
paid by the Selling Shareholders in connection with such sales.
The net proceeds to each of the Selling Shareholders from the sale of the
Shares offered hereby will be the purchase price of the Shares sold less the
aggregate underwriters' discounts or agents' commissions, if any. Each of the
Selling Shareholders and any dealers or agents that participate in the
distribution of Shares may be deemed to be "underwriters" within the meaning of
the Securities Act. However, the Company and such persons disclaim that any such
person is an underwriter of the Shares.
At any time a particular offer of Shares is made, to the extent required,
the specific Shares to be sold, the names of each of the Selling Shareholders,
purchase price, public offering price, the names of any such agent, dealer or
underwriter and any applicable commission or discount with respect to a
particular offering will be set forth in an accompanying Prospectus Supplement.
Such Prospectus Supplement may, if necessary, be in the form of a post-effective
amendment to the Registration Statement of which this Prospectus is a part, and
will be filed with the Commission to reflect the disclosure of additional
information with respect to the distribution of the Shares.
Pursuant to the Registration Rights Agreement, the Company has agreed to
indemnify each of the Selling Shareholders against certain liabilities,
including liabilities under the Securities Act, or to contribute to payments the
Selling Shareholders may be required to make in respect thereof.
To comply with the securities laws of certain jurisdictions, the Shares
offered hereby will be offered or sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain jurisdictions
the Shares offered hereby may not be offered or sold unless they have been
registered or qualified for sale in such jurisdictions or an exemption from
registration or qualification is available and is complied with.
Each Seller Shareholder and any other person participating in such
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Rules 10b-
2, 10b-6 and 10b-7, which provisions may limit the timing of purchases and sales
by each Selling Shareholder and any other such person. Furthermore, under Rule
10b-6 under the Exchange Act, any person engaged in a distribution of the Shares
generally may not simultaneously engage in market making activities with respect
to such Shares for a period of two business days prior to the commencement of
such distribution. All of the foregoing may affect the marketability of the
Shares offered hereby.
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<PAGE>
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Annual Report on form 10-K for the fiscal year ended May 31, 1995, have been
so incorporated in reliance on the report of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
LEGAL MATTERS
Certain legal matters with respect to the shares of Common Stock offered
hereby will be passed upon for the Company by Milbank, Tweed, Hadley & McCloy,
Los Angeles, California.
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Exchange Act,
and, in accordance therewith, files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's Regional Offices in Chicago, Illinois
(Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661) and New York, New York (7 World Trade Center, 13th floor, New
York, New York 10017). The Common Stock is quoted on the Nasdaq National Market
and reports, proxy statements and other information concerning the Company may
be inspected at the offices of the National Association of Securities Dealers,
Inc., 1735 K Street, N.W., Washington, D.C., 20006.
The Company has filed with the Commission a registration statement on Form
S-3 (the "Registration Statement") under the Securities Act, with respect to the
Shares offered hereby. This Prospectus, which constitutes a part of that
Registration Statement, does not contain all the information set forth in that
Registration Statement and the exhibits relating thereto. For further
information with respect to the Company and the Shares, reference is hereby made
to such Registration Statement and exhibits. Statements contained herein
concerning the provisions of any documents are necessarily summaries of those
documents, and each statement is qualified in its entirety by reference to the
copy of the applicable document filed with the Commission. The Registration
Statement and any amendments thereto, including exhibits filed as a part
thereof, are available for inspection and copying as set forth above.
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<PAGE>
INCORPORATION BY REFERENCE
The following documents filed by Company with the Commission are
incorporated herein by reference:
(i) The Company's Annual Report on Form 10-K for the fiscal year ended
May 31, 1995;
(ii) The Company's Quarterly Reports on Form 10-Q for the fiscal quarters
ended August 24, 1995, November 29, 1995 and March 2, 1996;
(iii) The Company's Current Report on Form 8-K dated March 27, 1996; and
(iv) The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A dated September 18, 1991.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act, subsequent to the date of this Prospectus and prior
to the termination of this Offering, shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the respective dates
of the filing thereof. Any statement contained in a document incorporated or
deemed to be 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 is also
deemed to be incorporated by reference herein 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 Company will provide without charge to each person, including each
beneficial owner, to whom a copy of this Prospectus is delivered, on the written
or oral request of such person, a copy of any or all documents incorporated by
reference into this Prospectus that are not delivered herewith, except the
exhibits to such documents (unless such exhibits are specifically incorporated
by reference in such documents). Requests for such copies should be directed to
the Company's principal office: The Right Start, Inc., 5334 Sterling Center
Drive, Westlake Village, California 91361, Attention: Gina Shauer, (818) 707-
7100.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The table below sets forth the estimated expenses expected to be paid by
the Company in connection with the issuance and distribution of the Common Stock
covered by this Registration Statement.
<TABLE>
<S> <C>
SEC Registration Fee .................................. $ 8,989
Printing Expenses ..................................... 5,000
Legal Fees and Expenses (including Blue Sky) .......... 30,000
Accounting Fees and Expenses .......................... 5,000
Miscellaneous ......................................... 6,011
-------
Total ............................................ $55,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 317 of the California General Corporation Law makes provision for
the indemnification of officers and directors in terms sufficiently broad to
include indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act. The
Amended and Restated Articles of Incorporation of the Company authorize the
Company to provide indemnification of its officers, directors and agents for
breach of duty to the Company and its shareholders through bylaw provisions or
indemnification agreements, or both, in excess of the indemnification otherwise
permitted by California law, subject to certain limitations. The Company has
entered into indemnification agreements with all of its directors and executive
officers, which obligate the Company to indemnify such individuals to the
fullest extent permitted by applicable law. The indemnification agreements
require the company to advance costs and expenses incurred by the officer or
director in defending or investigating an action, provided that such party
undertakes to repay the amount if it ultimately is determined that he or she is
not entitled to indemnification under the indemnification agreement. The
indemnification agreements permit the officer or director to petition the court
to seek recovery of amounts due thereunder and to recover the expenses of
seeking such recovery if such party is successful. By its terms, the benefits of
the indemnification agreements are not available if or to the extent the officer
or director (i) has other indemnification or insurance coverage for the claim or
with respect to the matters giving rise to the claim, or (ii) committed an act,
transaction or omission for which he or she may not be relieved of liability
under the California General Corporations Law or federal securities laws.
In addition, as permitted by Section 204(a)(10) of the California General
Corporation Law, the Amended and Restated Articles of Incorporation of the
Company provide that a director of the Company shall not be liable to the
Company or its shareholders for monetary damages to the fullest extent
permissible under California law. However, as provided by California law, such
limitation of liability will not act to limit the liability of a director for
(i) acts or omissions that involve intentional misconduct or a knowing and
culpable violation of law, (ii) acts or omissions that a director believes to be
contrary to the best interest of the Company or its shareholders or that involve
the absence of good faith on the part of the director, (iii) any transaction
from which a director derived an improper personal benefit, (iv) acts or
omissions that show a reckless disregard for the director's duty to the Company
or its shareholders in circumstances in which the director was aware or should
have been aware, in the ordinary course of performing a director's duties, of a
risk of serious injury to the Company or its shareholders, (v) acts or omissions
that constitute an unexcused pattern of inattention that amounts to an
abdication of the director's duty to the Company or its shareholders, (vi) any
improper transactions between a director and the Company in which the director
has a material financial interest or, (vii) any unlawful distributions to the
shareholders of the Company or any unlawful loan of money or property to, or a
guarantee of the obligation of, any director or officer of the Company.
The Company currently maintains directors' and officers' liability
insurance.
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<PAGE>
ITEM 16. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------ -----------
5.1 Opinion of Milbank, Tweed, Hadley & McCloy*
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of Milbank, Tweed, Hadley & McCloy (included with Exhibit 5.1)*
24.1 Power of Attorney (included on Signature Page)
* To be filed by Amendment.
ITEM 17. UNDERTAKINGS
(a) 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) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective Registration Statement;
(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 paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
-----------------
Registration Statement is on Form S-3, Form S-8 or Form F-3 and 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 Section 15(d) of the Securities 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.
II-2
<PAGE>
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Securities
Exchange Act) 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.
(c) Insofar as indemnification for liabilities arising under the Securities
Act 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 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 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 issues.
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Stanley
M. Fridstein and Jerry R. Welch, and each of them, his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution for him and in his name, place and stead, in any and all
capacities to sign this Registration Statement and any and all amendments
thereto (including post-effective amendments), any subsequent Registration
Statements pursuant to Rule 462 of the Securities Act, and any amendments
thereto, and to file the same, with all exhibits and schedules thereto, and
other documents in connection therewith, with the Commission, and to take such
actions in, and file with the appropriate authorities in, whatever states said
attorneys-in-fact and agents, and each of them, shall determine, such
applications, statements, consents and other documents as may be necessary or
expedient to register securities of the Company for sale, granting unto said
attorneys-in-fact and agents full power and authority to do so and perform each
and every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agents or any of them, or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof and the Registrant hereby confers like
authority on its behalf.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing of 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 Westlake Village, State of California, on July 15,
1996.
THE RIGHT START, INC.
(Registrant)
By: JERRY R. WELCH
-----------------------------
Jerry R. Welch,
Chief Executive Officer
Pursuant to the requirement of the Securities Act, this registration statement
has been signed by the following persons in the capacities and on the dates
indicated.
JERRY R. WELCH July 15, 1996
---------------------------------
Jerry R. Welch, Chief Executive
Officer and Chairman of the Board
(Principal Executive Officer)
STANLEY M. FRIDSTEIN July 15, 1996
---------------------------------
Stanley M. Fridstein, President,
and Director
RICHARD A. KAYNE July 15, 1996
---------------------------------
Richard A. Kayne, Director
FRED KAYNE July 15, 1996
---------------------------------
Fred Kayne, Director
ANDREW FESHBACH July 15, 1996
---------------------------------
Andrew Feshbach, Director
ROBERT R. HOLLMAN July 15, 1996
---------------------------------
Robert R. Hollman, Director
HOWARD M. ZELIKOW July 15, 1996
---------------------------------
Howard M. Zelikow, Director
GINA M. SHAUER July 15, 1996
---------------------------------
Gina M. Shauer, Chief Financial
Officer (Principal Financial and
Accounting Officer)
II-4
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
June 22, 1995, except as to Note 13, which is as of August 4, 1995 appearing on
page F-1 of the Right Start, Inc.'s Annual Report on Form 10-K for the fiscal
year ended May 31, 1995. We also consent to the reference to us under the
heading "Experts" in such Prospectus.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Woodland Hills, California
July 15, 1996
