<PAGE>
As filed with the Securities and Exchange Commission on December 6, 1996
Registration No. 333-08157
SECURITIES AND EXCHANGE COMMISSION
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
______________________________
THE RIGHT START, INC.
-------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
California 95-3971414
--------------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
</TABLE>
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:
KENNETH J. BARONSKY
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. [_]
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, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
<PAGE>
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 December 4, 1996, the last sale price of the Common Stock as
reported on Nasdaq National Market was $5 3/4 per share.
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 December 6, 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 SECURITIES 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
<TABLE>
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PAGE
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<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>
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<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 36 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 13 Weeks Ended
---------------------------------------------------------------- -------------------------
6/1 5/31 5/25 5/26 5/27 8/31 8/30
1996 1995 1994 1993 1992 1996 1995
----------- ---------- ---------- ---------- ---------- ----------- ----------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS DATA:
Revenues:
Net Sales $ 40,368 $ 44,573 $ 49,204 $ 37,261 $ 23,896 8,893 9,541
Net Income (loss) (3,899) (2,106) 176 1,032 820 (1,568) 34
Earnings (loss) per share (0.60) (.33) .03 .16 .14 (.20) .01
SHARE DATA:
Weighted average
Shares Outstanding 6,536,813 6,300,000 6,637,142 6,494,133 5,739,670 7,948,757 6,300,292
BALANCE SHEET DATA:
Current Assets $ 8,353 $ 9,660 $ 12,002 $ 13,306 $ 12,975 9,147 10,537
Total Assets 17,475 14,632 18,221 18,274 14,004 17,988 15,787
Current Liabilities 4,649 3,690 4,979 5,650 2,412 6,661 4,767
Long-Term Debt - - - - - - -
Shareholders' Equity 11,902 10,694 12,800 12,624 11,592 10,363 10,728
</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 and benefit for income taxes) for the fiscal year ended June 1, 1996 of
$4,789,000 and for the thirteen week period ended August 31, 1996 of $
1,545,000. 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 June 1, 1996 and its Quarterly Report on Form 10-Q for the
thirteen week period ended August 31, 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. The Company anticipates that it will be profitable in the
future; however, 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. 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 11 new stores in fiscal 1996, 14 new stores to date in
fiscal 1997 and currently plans to open up to six additional new stores for the
remainder of 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 proceeds from
the sale of convertible subordinated debentures in October 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.
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.
-4-
<PAGE>
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 AND PRESIDENT
Effective as of March 8, 1996, Lenny M. Targon resigned as Chief Executive
Officer and a director of the Company, and the Board of Directors named Jerry R.
Welch (Chairman of the Board of Directors) as Chief Executive Officer.
Effective as of September 27, 1996 Stanley M. Fridstein resigned as President
and a director of the Company, and Mr. Welch assumed the position of President.
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 or
its President. 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.
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 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. In July 1996, the Company sold its phone center operations
to a telemarketing services provider and entered into an agreement with the
purchaser for the provision of telemarketing services to the Company.
-5-
<PAGE>
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.
-6-
<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>
1997
Second quarter (through December 4, 1996)... 5 7/8 4 5/8
First quarter............................... 6 7/8 4 3/8
1996
Fourth quarter.............................. 6 11/16 3 3/4
Third quarter............................... 6 1/8 4 1/4
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 December 4, 1996 the closing sales price per share of the Common Stock
as reported on The Nasdaq National Market was $5 3/4. 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 unless such dividends are approved by the lender.
-7-
<PAGE>
SELLING SHAREHOLDERS
The following table sets forth as of December 4, 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, Second Floor,
Los Angeles, California.
<TABLE>
<CAPTION>
OWNERSHIP OF
COMMON SHARES
STOCK PRIOR 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, President 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.
-8-
<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 June 1, 1996, 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). Additionally, the Commission maintains a Web site that
contains the Company's reports, proxy and information statements and other
information at http://www.sec.gov. 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
June 1, 1996;
(ii) The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended August 31, 1996; and
(iii) 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>
<CAPTION>
<S> <C>
SEC Registration Fee $ 8,989
Printing Expenses 5,000
Legal Fees and Expenses (including Blue Sky)... 35,000
Accounting Fees and Expenses 5,000
Miscellaneous.................................. 6,011
-------
Total..................................... $60,000
=======
</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.
II-1
<PAGE>
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
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**
</TABLE>
** Previously filed.
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.
(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.
II-2
<PAGE>
(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.
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 Amendment No. 1 to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Westlake Village, State of California, on
December 6, 1996.
THE RIGHT START, INC.
(Registrant)
By: JERRY R. WELCH
-------------------------------------
Jerry R. Welch,
President and Chief Executive Officer
Pursuant to the requirement of the Securities Act, this Amendment No. 1 to the
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<S> <C>
JERRY R. WELCH December 6, 1996
- ----------------------------------
Jerry R. Welch, Chairman of the
Board, President and Chief
Executive Officer
(Principal Executive Officer)
* December 6, 1996
- ----------------------------------
Richard A. Kayne, Director
* December 6, 1996
- ----------------------------------
Fred Kayne, Director
* December 6, 1996
- ----------------------------------
Andrew Feshbach, Director
* December 6, 1996
- ----------------------------------
Robert R. Hollman, Director
* December 6, 1996
- ----------------------------------
Howard M. Zelikow, Director
* December 6, 1996
- ----------------------------------
Gina M. Shauer, Chief Financial
Officer (Principal Financial and
Accounting Officer)
* By /s/ JERRY R. WELCH December 6, 1996
- ----------------------------------
Jerry R. Welch
Attorney in Fact
</TABLE>
II-4
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF MILBANK, TWEED, HADLEY & MCCLOY]
December 6, 1996
The Right Start, Inc.
5334 Sterling Center Drive
Westlake Village, California 91361
Ladies and Gentlemen:
We have acted as counsel to The Right Start, Inc., a California corporation
(the "Company"), in connection with a Registration Statement on Form S-3 filed
by the Company with the Securities and Exchange Commission on July 15, 1996
(Registration No. 333-08157), Amendment No. 1 thereto filed on July 19, 1996 and
Amendment No. 2 thereto proposed to be filed on or about December 6, 1996 (as so
amended, the "Registration Statement"), in connection with the proposed sale of
4,965,076 shares (the "Shares") of the Company's common stock, no par value per
share, of which all such Shares will be sold to the public from time to time by
the Selling Shareholders named in the Registration Statement pursuant to Rule
415 under the Securities Act of 1933, as amended, in the manner described in the
Registration Statement.
We have examined the Registration Statement and such other documents and
have reviewed such questions of law as we have considered necessary and
appropriate as a basis for the opinions herein expressed.
Based on the foregoing, it is our opinion that the Shares to be sold by the
Selling Shareholders pursuant to the Registration Statement have been duly
authorized and validly issued and are fully paid and non-assessable.
The foregoing opinion is limited to matters involving the laws of the State
of California, and we do not express any opinion as to the laws of any other
jurisdiction.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our
<PAGE>
The Right Start, Inc.
December 6, 1996
Page 2
name, whenever appearing in the Registration Statement, including the Prospectus
constituting a part thereof, and any amendments thereto. This opinion is
furnished to you in connection with the registration of the Shares, is solely
for your benefit and may not be relied upon by, nor copies delivered to, any
other person or entity without our prior written consent.
Very truly yours,
KJB/EHS
<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
July 3, 1996 appearing on page F-1 of The Right Start, Inc.'s Annual Report on
Form 10-K for the fiscal year ended June 1, 1996. We also consent to the
reference to us under the heading "Experts" in such Prospectus.
PRICE WATERHOUSE LLP
Los Angeles, California
December 5, 1996
