As filed with the Securities and Exchange Commission on August 14,1998.
Registration No.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SPORT CHALET, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
95-4390071
(I.R.S. Employer Identification No.)
920 Foothill Boulevard, La Canada, California 91101
(Address of principal executive office)
1992 INCENTIVE AWARD PLAN
(Full title of the Plan)
HOWARD K. KAMINSKY
Senior Vice President - Finance
Chief Financial Officer &
Secretary
920 Foothill Boulevard
La Canada, California 91701
(Name and address of
agent for service)
Copies to:
ALEXANDER SHIPMAN, ESQ.
Knapp, Marsh, Jones & Doran,
L.L.P.
515 South Figueroa Street
Suite 1240
Los Angeles, California 90071
Telephone number, including area code, of agent for service: (818) 790-2717
<PAGE>
Calculation of Registration Fee
Title of
Securities
to be
registered
Common Stock,
$.01 Par Value
Amount
to be
registered
600,000
Proposed
maximum
offering
price
per share (1)
$ 6.50
Proposed
maximum
aggregate
offering
price (1)
$3,900,000.00
Amount of
registration
fee
$
1,150.50
(1) Estimated solely for purposes of calculating the registration fee.
Pursuant to Rule
457(b) promulgated under the Securities Act of 1933, as amended
(the "Securities Act"),
based upon the average of the "bid" and "ask" prices of Sport Chalet,
Inc., Common
Stock, $.01 par value (the "Common Stock"), reported on the National
Association of
Securities Dealers, Inc. Automated Quotation System-National Market System
("NASDAQ-
NMS") on August 6, 1998.
EXPLANATORY NOTE
This Registration Statement registers 600,000 additional shares of
Common Stock
to be issued pursuant to the Sport Chalet, Inc., 1992 Incentive Award Plan
(the "Plan"), as
amended. The issuance of the additional shares of Common Stock have been
authorized under
an Amendment to the Plan to increase the maximum number of shares authorized
under the Plan
from 600,000 shares to 1,200,000 shares (the "Amendment"). The Amendment was
approved by
Sport Chalet, Inc.'s (the "Registrant") Board of Directors on March 31, 1998
and ratified by
a vote of shareholders on August 6, 1998.
STATEMENT UNDER GENERAL INSTRUCTIONS C AND E
REGISTRATION OF ADDITIONAL SECURITIES
This Registration Statement on Form S-8 under the Securities Act
registers
additional securities of the same class as other securities for which a
Registration Statement
on Form S-8 relating to the Registrant's Plan is effective. Accordingly,
pursuant to General
Instruction E to Form S-8, the Registrant hereby incorporates by reference
herein the contents
of such Registration Statement on From S-8 (Registration No. 33-61612) filed on
or about April
26, 1993 and hereby deems such contents to be a part hereof, except as
otherwise updated or
modified by this Registration Statement. In addition, pursuant to General
Instruction C of
Form S-8, the Registration Statement also contains a prospectus prepared in
accordance with
the requirements of Part I on Form S-3 relating to reofferings of the shares of
Common Stock
registered hereunder.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation Of Documents By Reference
The following documents are incorporated herein by reference:
(1) Registrant's Annual Report on Form 10-K for the
year ended March 31, 1998
filed with the Securities and Exchange Commission
(the "Commission") on or about June 30, 1998;
(2) Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30,
1998 filed with the Commission on or about August 12, 1998;
(3) Registrant's Proxy Statement with respect to its
1998 Annual Meeting of
Shareholders filed with the Commission on or about June 30, 1998;
and
(4) The description of the Registrant's Common Stock
contained in its
registration statement filed pursuant to Section 12 of the
Exchange Act.
All documents subsequently filed by Registrant pursuant to Sections
13(a), 13(c),
14 and 15(d) of the Exchange Act prior to the filing of a post-effective
amendment which
indicates that all securities offered have been sold or which deregisters all
securities then
remaining unsold, shall be deemed to be incorporated by reference in this
Registration
Statement and to be part hereof from the date of filing of such documents.
The Registrant will provide without charge to each participant in the
Plan, on
the written or oral request of any such person, a copy of any or all of the
documents
incorporated herein by reference (other than exhibits to such documents which
are not
specifically incorporated by reference in such documents). Written requests
for such copies
should be directed to: Howard K. Kaminsky, Senior Vice President-Finance,
Chief Financial
Officer & Secretary, Sport Chalet, Inc., 920 Foothill Boulevard, La Canada,
California 91701.
Telephone requests may be directed to: (818) 790-2717.
Item No. 8. Exhibits
The following exhibits are filled with or incorporated by reference
in this Registration Statement:
Exhibit No. Description of Exhibit
5.1 Opinion of Knapp, Marsh, Jones & Doran, L.L.P., regarding
legality of securities being registered.
23.1 Consent of Knapp, Marsh, Jones & Doran, L.L.P., (included in
their opinion filed as Exhibit 5.1 hereto).
23.2 Consent of Ernst & Young, LLP
SIGNATURES
Pursuant to the requirements of the Securities Act, the
Registrant certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing
on Form S-8 and has duly caused this Registration Statement to be signed on its
behalf by the
undersigned, thereunto duly authorized, in the City of La Canada, State of
California on this
12th day of August, 1998.
<PAGE>
SPORT CHALET, INC.
(Registrant)
By: /s/ Norbert J. Olberz
Norbert J. Olberz, Chairman of the
Board
Interim Chief Executive Officer
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration
Statement has been signed below by the following persons in the capacities and
on the date
indicated:
Signature
Title
Date
PRINCIPAL EXECUTIVE OFFICER
/s/ Norbert J. Olberz
Norbert J. Olberz
Chairman of the Board and
Interim Chief Executive
Officer
August 13, 1998
PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER
/s/ Howard K. Kaminsky
Howard K. Kaminsky
Senior Vice President-Finance
Chief Financial Officer &
Secretary
August 13, 1998
DIRECTORS
/s/ Eric S. Olberz
Eric S. Olberz
Director
August 13, 1998
/s/ Kenneth Olsen
Kenneth Olsen
Director
August 13, 1998
EXHIBIT "5.1"
August 13, 1998
Sport Chalet, Inc.
920 Foothill Boulevard
La Canada, California 91011
Re: 1992 Incentive Award Plan
Gentlemen:
At your request, we have examined the Registration Statement on Form S-8
(the "Registration Statement") to be filed by you with the Securities and
Exchange Commission in order to register under the Securities Act of 1933, as
amended, an additional 600,000 shares of Common Stock, par value $.01 per share
(the "Shares") reserved for issuance under the 1992 Incentive Award Plan
(the "Plan").
Subject to compliance with applicable state securities and "Blue Sky"
laws, we are of the opinion that the Shares have been duly authorized and upon
issuance and sale in conformity with and pursuant to the Plan, and receipt of
the purchase price therefor as specified in the Plan, such Shares will be
legally and validly issued, fully paid and non-assessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and to the use of our name in the Prospectus constituting a part
thereof.
Respectfully submitted,
KNAPP, MARSH, JONES & DORAN, L.L.P.
By: /s/ James G. Jones
James G. Jones, Partner<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-8 pertaining to the 1992 Incentive Award Plan
of Sport Chalet, Inc. and to the incorporation by reference therein of our
report dated May 22, 1998, with respect to the financial statements of Sport
Chalet, Inc. included in its Annual Report (Form 10-K) for the year ended
March 31, 1998, filed with the Securities and Exchange Commission.
Ernst & Young LLP
August 12, 1998
Los Angeles, California
Reoffer Prospectus
SPORT CHALET, INC.
600,000 Shares of Common Stock
($.01 par value)
This Prospectus relates to 600,000 Shares (the
"Shares") of
common stock, $.01 par value ("Common Stock"), of SPORT CHALET,
INC. (the
"Company") that may be issued under the Company's 1992 Incentive
Award
Plan adopted in October, 1992 (the "Plan"). The Shares may be
acquired
by certain employees, consultants, officers and/or directors of
the
Company ("Selling Shareholders"), some of whom may be deemed
affiliates
of the Company pursuant to the exercise by them of options
granted or
stock awards received pursuant to the terms of the Plan. Such
Shares may
be offered by certain of the Selling Shareholders from time to
time in
transactions in the over-the-counter market, in negotiated
transactions,
or a combination of such methods of sale, at fixed prices which
may be
changed, at market prices prevailing at the time of sale, at
prices
related to such prevailing market prices or at negotiated prices.
The
Selling Shareholders may effect such transactions by selling the
Shares
to or through broker-dealers, and such broker-dealers may receive
compensation in the form of discounts, concessions or commissions
from
the Selling Shareholders and/or the purchasers of the Shares for
whom
such broker-dealers may act as agents or to whom they sell as
principals,
or both (which compensation as to a particular broker-dealer
might be in
excess of customary commissions). In connection with such
resales or
offers of sale, certain officers and/or directors of the Company
and the
brokers or dealers through whom such shares may be sold may be
deemed to
be "underwriters" as that term is defined in Section 2(11) of the
Securities Act of 1933, as amended (the "Securities Act"). See,
"Principal Shareholder and Selling Shareholders" and "Plan of
Distribution."
None of the proceeds from the sale of the Shares by the
Selling
Shareholders will be received by the Company. The Company has
agreed to
bear the expenses of preparing this Prospectus in connection with
the
registration of the Shares being offered by the Selling
Shareholders.
Each of the Selling Shareholders will separately bear the expense
of any
selling discounts, concessions or commissions in connection with
any sale
of the Shares.
The shares of Common Stock of the Company are traded in
the
over-the-counter market on the National Association of Securities
Dealers
Inc.'s National Market System ("NASDAQ/NMS"). On
August 13, 1998, the last sales price for the shares of Common
Stock as
reported on NASDAQ/NMS was $6.50 per share.
See "Investment Considerations" for a discussion of
certain
risk and other factors that should be considered by prospective
investors.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE
SECURITIES AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL
OFFENSE.
No person has been authorized to give any information
or to
make any representations, other than as contained herein, in
connection
with the offer contained in this Prospectus, and, if given or
made, such
information or representations must not be relied upon.
The date of this Prospectus is August 14, 1998.<PAGE>
EXPLANATORY NOTE
The Company has filed with the Securities and Exchange
Commission (the "Commission") a Registration Statement on Form
S-8 under
the Securities Act on or about August 12, 1998 covering the
shares to be
issued under the Company's Plan. That Registration Statement
registered
600,000 additional shares of Common Stock to be issued under the
Plan.
The issuance of additional shares of Common Stock has been
authorized by
Amendment to the Plan which increased the maximum number of
shares
authorized under the Plan from 600,000 shares to 1,200,000
shares. An
earlier Registration Statement on Form S-8 has been filed on or
about
April 26, 1993 (Registration No. 33-61612) covering the initial
600,000
shares authorized under the Plan (the "Initial Registration
Statement").
This Prospectus omits certain information contained in the
Registration
Statements on file with the Commission. For further information
pertaining to the Company and the Common Stock, reference is made
to
these Registration Statements, including the exhibits filed as a
part
thereof.
AVAILABLE INFORMATION
The Company is subject to the informational reporting
requirements under the Securities and Exchange Act of 1934 (the
"Exchange
Act") and files periodic reports, proxy statements and other
information
with the Commission under the Exchange Act relating to its
businesses,
financial statements and other matters. The Registration
Statement as
well as such reports, proxy statements and other information may
be
inspected and copied at the public reference facilities
maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the
Commission
located in the Northwest Atrium Center, 500 West Madison Street,
Suite
1400, Chicago, Illinois 60661-2510 and 7 World Trade Center, New
York,
New York 10048. Copies of such material can also be obtained
from the
Public Reference Section of the Commission at 450 Fifth Street,
N.W.,
Washington, D.C. 20549 at prescribed rates.
Except where otherwise indicated, information in this
Prospectus is given as of the date hereof. Statements contained
in this
Prospectus as to the contents of any documents referred to are
not
necessarily complete, and in each instance reference is made to
the copy
of the document filed as an exhibit to the Registration Statement
referred to herein, each such statement being qualified in all
respects
by such reference.
DOCUMENTS INCORPORATED BY REFERENCE
The Company's Registration Statements on Form S-8
described
above and all documents, reports and definitive proxy statements
filed by
the Company pursuant to Sections 13, 14 and 15(d) of the Exchange
Act
which were filed subsequent to the date of the Initial
Registration
Statement, including, without limitation, all annual reports on
Form 10-K
and quarterly reports on Form 10-Q and all documents, reports and
definitive proxy statements filed by the Company pursuant to
Sections 13,
14 and 15(d) of the Exchange Act, which are filed subsequent to
the date
hereof and prior to the termination of the offering made hereby,
are
deemed to be incorporated herein by reference and to be a part
hereof
from the date of the filing of such documents. The Company will
provide
without charge to each person, including any beneficial owner, to
whom a
copy of this Prospectus has been delivered, on the oral or
written
request of such person, a copy of any or all of the documents
incorporated herein by reference (other than exhibits to such
documents,
unless specifically incorporated by reference). Such requests
for copies
should be directed to Robert W. Haueter, Senior Vice President -
Marketing and Advertising, at the Company's principal executive
offices
presently located at 920 Foothill Boulevard, La Canada,
California
91011.
THE COMPANY
The Company is a leading operator of full service,
specialty
sporting goods superstores in Southern California. The Company
currently
has 19 stores, eight located in Los Angeles County, five in
Orange
County, three in San Diego County, two in San Bernardino County
and one
in Ventura County. These stores average 36,000 square feet in
size. The
Company's stores feature a number of distinct, specialty sporting
goods
shops under one roof, each offering a large assortment of quality
brand
name merchandise at competitive prices. The specialty shops offer
traditional sporting goods merchandise (e.g., footwear, apparel
and other
general athletic products) and nontraditional merchandise such as
downhill skiing, cycling, mountaineering, SCUBA and golf. The
merchandise
within each shop appeals to both experts and beginners. Each shop
is
staffed by sales associates with expertise in the use of the
merchandise
they sell, permitting the Company to offer its customers a high
level of
knowledgeable service.
The Company began operations in 1959. Starting in the
mid-
1980's, the Company embarked on an expansion program which
resulted in
opening two stores per year and relocating and/or expanding
several
existing stores. During this period, the Company upgraded its
inventory
and accounting systems and opened a warehouse and distribution
facility.
During fiscal 1995, the expansion program was scaled down in
response to
stagnating sales and the Board of Directors' desire to focus on
improving
existing operations. The Board of Directors subsequently
completed an
evaluation of the Company's strategic policies, operations and
management
and implemented specific programs aimed at improving the
Company's
competitive position and overall profitability.
Management now believes that improved operating
capabilities
and a more robust local economy provides for an opportunity for
the
Company to expand its presence in Southern California by adopting
a more
aggressive policy towards opening, relocating and/or expanding
store
locations. Two new stores were opened in the last nine calendar
months
and the Company currently plans to relocate one store and open a significant
number of new stores over the next several fiscal
years if suitable locations are found.
RISK FACTORS
The Shares offered hereby are speculative and involve a
high degree of risk. Therefore, each prospective investor should
consider
very carefully the various risks and speculative factors inherent
in and
affecting the Company's business prior to the making of an
investment in
the Shares. Purchase of the Company's Shares is not recommended
for
investors who do not have sufficient financial means to sustain
the loss
of their entire investment. Among the risks involved in an
investment in
the Shares are the following:
1. Expansion Program. The Company's sales have
increased
from $38.9 million in fiscal 1988 to $143.0 million in fiscal
1998. Most
of this sales growth is due to sales in new stores opened during
that
period. The balance of this sales growth was attributable to an
increase
in comparable store sales. The continued growth of the Company is
dependent to a significant degree upon its ability to open new
stores on
a profitable basis and to continue to increase sales in existing
stores.
New stores grow at a faster rate over the first two to three
years as the
stores mature and generally have taken three years to attract a
stable,
mature customer base. General sales growth or decline reflects a
number
of different factors including ski conditions. <PAGE>
The Company plans to open
additional superstores in the next several fiscal years. Its ability to expand
will depend, in part, on business conditions, its ability to locate suitable
sites and to negotiate acceptable lease terms, its ability to attract and retain
qualified
managers and sales associates, and the availability of sufficient
capital. In addition, a decline in the Company's overall
financial performance or increasing rents in the commercial real estate
market in Southern California may adversely affect the Company's current
expansion plan. The Company expects that the net cash generated from
operations, together with borrowings will enable the Company to finance this
expansion. There can be no assurance that it can open these
stores on a timely basis or that they can be operated on a profitable basis.
In that regard, while store openings are expected to have a favorable
impact on sales volume, they generally restrain profits in the short run.
New stores tend to have higher costs in early years of operation, due
primarily to extra labor used to open new stores, reduce sales on
a per employee basis until the store matures and increased promotional
cost.
2. Competition. The retail market for sporting goods
is highly fragmented and competitive. The Company competes with
different types of retail stores, including full-line sporting goods
chains, specialty stores, discount stores and department stores. Certain
of these competitors are affiliated with large national or regional
chains and have substantially greater resources than the Company. In
the past few years, several super store retailers have entered or expanded
their presence of Southern California, increasing competitive pressures
on the Company and adversely affecting same store sales and sales growth
in new stores. There can be no assurance that the Company will be able
to maintain or increase its normal pricing, sales or profitability
or open additional stores in view of such competition, particularly if
new competitors enter into the Company's market. Furthermore, there
is substantial competition from super store retailers for prime
commercial locations and favorable lease terms that could adversely affect
the Company's ability to expand in accordance with its current
business plan.
3. Seasonal Fluctuations. The Company's business is
highly seasonal in nature. Its highest sales levels and operating
profitability predominantly occur during the winter months of November,
December and January, which overlap the third and fourth fiscal quarters ended
December 31 and March 31. Similar to the business of other
retailers, the Company's business is heavily affected by sales of merchandise
during the Christmas season. In addition, the Company's product mix
emphasizes cold weather sporting goods merchandise, particularly ski-related
products, thus boosting sales levels during the winter months and
increasing the seasonality of the Company's business. In fiscal 1996, 1997 and
1998, sales of ski apparel and equipment accounted for 20%, 18% and
19%, respectively, of the Company's total sales for those fiscal
years. In each of fiscal 1996, 1997 and 1998, 33%, 34% and 34%,
respectively, of the Company's sales were attributable to the months of
November, December and January. Almost all of the Company's net income during
fiscal 1997 and 1998 occurred during this three month period. Management
anticipates that this seasonal trend in sales and net income will continue.
Any substantial decrease in sales for the winter months, which could
be influenced by the amount and timing of snowfall at the ski areas
frequented by those living in Southern California, could have a material
adverse effect on the Company's profitability. In order to be
less dependent upon the winter business, Management has emphasized,
and plans to continue to emphasize, a broadened product mix that offers
merchandise with higher sales in the spring, summer and fall seasons.
Moreover, in spite of recent product innovation such as snowboarding and
"shaped" skis, as well as the recent favorable "El Nino" weather
conditions, management believes that the winter-related product category may
have matured with little or no expected growth relative to other
specialty areas carried in the Company's stores, thereby further
underscoring the need for greater product and seasonal diversification.
4. Reliance on Key Personnel. The Company believes
that its continued success will depend to a significant extent upon the
efforts and abilities of its senior management team, including Norbert
Olberz, Chairman of the Board and Interim Chief Executive Officer; Craig
L. Levra, President and Chief Operating Officer; Dennis Trausch,
Executive Vice President; Howard K. Kaminsky, Senior Vice President -
Finance, Chief Financial Officer and Secretary, Robert W. Haueter, Senior
Vice President - Marketing and Advertising and Ronald G. Mann, Senior
Vice President - General Merchandise Manager. The Company does not
maintain insurance on the lives of any of these individuals and only
Messrs. Levra and Mann have entered into employment agreements with the
Company. However, the Company implemented the Plan to provide a long term
incentive to key employees. The loss of the services of one or
more of these individuals would be disruptive and could have a material
adverse effect on the Company's operations.
5. Economic Conditions. The retail sporting goods
industry
is dependent on the economic environment and level of consumer
spending.
The economy in Southern California, where all the Company's
stores are
located, had experienced an economic recession which began in
1990
adversely affected the Company's sales and earnings. However,
the local
economy has experienced significant growth in the past twelve
calendar
months. While recent economic growth and optimistic business
reports
regarding the Southern California area suggest a retail
environment
conducive to the Company's expansion plans, this benefit may be
partially
offset by higher rental expenses for new stores as the real
estate market
for superior retail locations becomes more competitive as the
local
economy improves. In addition, while the Company has experienced
sales
and earnings growth related to the improving economic environment
and
level of consumer spending in Southern California, no assurance
can be
provided that a return to recessionary economic conditions will
not have
a material adverse affect on the Company's business and expansion
plans.
6. Financing. The Company has a credit agreement
with a
commercial bank ("Bank") for a line of credit in the maximum
amount of
$10.0 million less the amount of any outstanding draws and up to
a $1.5
million maximum in authorized letters of credit, with interest
payable at
prime less 1/2%. The Company's obligations to the Bank is secured
by a
first priority lien on substantially all of the Company's
non-real estate
assets, and the Company is subject to several restrictive
covenants. The
principle operating covenants require the Company to maintain
certain
minimum cash flow coverage and debt to equity ratios. These
covenants
restrict the level of losses and capital expenditures, calculated
on a
quarterly basis, that the Company may incur. In addition, the
Company
must reduce borrowings to $2 million or less for thirty
consecutive days
during each fiscal year. The Company is compliance and expects
in the
future to be in full compliance with all of the covenants under
the
agreement. Although these covenants could restrict the Company's
future
business activities, Management believes that it will be able to
implement the Company's business plan for growth described
elsewhere in
this Prospectus without violating any of the restrictive
provisions of
the credit agreement. However, unexpected conditions could cause
the
Company to alter its plans to avoid a breach of the credit
agreement, or
could cause the Company to breach the agreement. If a breach
occurs, the
bank will have all rights customarily provided to a secured
lender,
including the right to foreclose on the inventories and to
accelerate the
maturity of the loan. Absent any earlier default, the credit
agreement
will extend until August 31, 2000, at which time the Company
plans to
seek a renewal.
7. Control of the Company. At present, Norbert
Olberz (the
"Principal Shareholder"), beneficially owns 4,372,617 shares of
Common
Stock or approximately 67% of the Company's outstanding Common
Stock. As
a result, the Principal Shareholder will have sufficient voting
power to
determine the outcome of any matters submitted to the Company's
shareholders for approval, including but not limited to, the
amendment of
the Company's Bylaws and Amended and Restated Certificate of
Incorporation ("Certificate of Incorporation"), the approval of
mergers
or acquisitions, the sale of all or substantially all of the
Company's
assets, and the election of all directors. Certain provisions of
the
Company's Bylaws and Certificate of Incorporation could have the
effect
of delaying, deferring or preventing a change in control of the
Company.
8. Limited Public Market. As of the date of this
Prospectus,
the Common Stock is traded in the over-the-counter market on
NASDAQ/NMS
under the symbols "SPCH". No assurance can be given that there
will be
an established market for the Common Stock in the future or that
the
Company will be able to meet the maintenance requirements set by
NASDAQ/NMS in order to keep trading on the NASDAQ/NMS.
9. No Dividends. The payment by the Company of
dividends, if
any, in the future rests within the discretion of its Board of
Directors
and will depend, among other things, upon the Company's earnings,
its
capital requirements and its financial condition, as well as
other
relevant factors. The Company intends to retain earnings for use
in the
operation and expansion of its business and, therefore, does not
anticipate paying any cash dividends in the foreseeable future.
10. Price Volatility; Future Sales. There can be no
assurance
that a stable market will be sustained, particularly as the
Company has
experienced a limited trading volume for its Common Stock.
Factors such
as quarterly or cyclical variations in the Company's financial
results
and announcements concerning the Company or its competitors could
cause
the market price of the Common Stock to fluctuate substantially.
In
addition, the stock market has experienced substantial price and
volume
fluctuation in recent years. These fluctuations have had a
significant
effect on the market price of the stock of many companies, often
unrelated to the operating performance of such companies. Sales
in the
public market of substantial amounts of the Common Stock could
adversely
affect the market price of the Shares. However, the sale of the
shares
beneficially owned by the Principal Shareholders is subject to
the resale
restrictions on sales by affiliates, and only may be sold in
accordance
with Rule 144 promulgated under the Securities Act or upon
registration
under such Act without regard to the requirements of Rule 144.
USE OF PROCEEDS
The Company will not receive any of the proceeds from
sales by
any of the Selling Shareholders.
PRINCIPAL SHAREHOLDER AND SELLING SHAREHOLDERS
The following table sets forth certain information with
respect
to the beneficial ownership of Common Stock by Selling
Shareholders and
the Principal Shareholder, who is the only recorded and/or
beneficial
owner of more than 5% of the outstanding amount of such stock,
but is not
a Selling Shareholder. For purposes of calculating the amount of
beneficial ownership and the respective percentages, the number
of Shares
which may be acquired by a person upon the exercise of
outstanding
options, if any, notwithstanding the options vesting schedule,
are
considered outstanding, but shall not be deemed to be outstanding
for the
purpose of computing the percentage of Common Stock owned by any
other
person.
<PAGE>
Name of Position Shares (2)
Percent of
Beneficial Owner with Company Beneficially Owned
Common Stock
Norbert J. Olberz Chairman of the 4,372,617
67.0%
Board and Interim
Chief Executive
Officer
John R. Attwood Director 17,000(3)
*
Eric S. Olberz Director 273,403(4)
4.2%
Kenneth Olsen Director 24,100(4)
*
Craig L. Levra President and 150,000(6)
2.4%
Chief Operating
Officer
Dennis D. Trausch Executive Vice 143,486(7)
2.3%
President
Howard K. Kaminsky Senior Vice 154,406(8)
2.5%
President-Finance
Chief Fiancial Officer
and Secretary
Robert W. Haueter Senior Vice 122,451(9)
1.8%
President-Sales,
Marketing and Advertising
Ronald G. Mann Senior Vice President 50,000(10)
*
General Merchandise
Manager
* Less than 1%
(1) Each person has sole voting power and investment power
with respect
to the shares indicated as owned beneficially by such
person. All
persons referred to above are Selling Shareholders except
for the
Principal Shareholder, Norbert J. Olberz. All directors and
officers of the Company are Selling Shareholders except for
the
Principal Shareholder.
(2) All shares listed are owned both of record (including
in Trust or
Individual Retirement Account) and beneficially.
(3) Includes options to purchase 9,000 shares of Common
Stock.
(4) Includes options to purchase 11,000 shares of Common
Stock.
(5) Includes options to purchase 6,000 shares of Common
Stock.
(6) Includes options to purchase 125,000 shares of Common
Stock.
(7) Includes options to purchase 117,000 shares of Common Stock.
(8) Includes options to purchase 122,000 shares of Common
Stock.
(9) Includes options to purchase 105,000 shares of Common
Stock.
(10) Includes options to purchase 45,000 shares of Common
Stock.
<PAGE>
The Company does not know of any arrangement or pledge
of its
Common Stock by persons now considered in control of the Company
that
might result in a change of control of the Company. All officers
and
directors as a group beneficially own 5,305,463 or approximately
69.6% of
the 7,625,000 shares of Common Stock which would be outstanding
if the
options referred to in the Schedule above were exercised.
The names of all Selling Shareholders and the amount of
any
additional Shares to be issued under the Plan and sold by each
specific
Selling Shareholder are not known by the Company as of the date
of this
Prospectus. Accordingly, the Company has referred to the Selling
Shareholders in a generic manner and has named above all Selling
Shareholders and amounts of Shares currently eligible for resale
and
later, as the names of additional Selling Shareholders and the
amounts of
additional Shares are established, will add such Selling
Shareholders and
Shares by prospectus supplement.
PLAN OF DISTRIBUTION
The 600,000 Shares of Common Stock covered by this
Prospectus
(the "Shares") are being registered by the Company for the
account of the
Selling Shareholders. All Selling Shareholders that are
directors and
officers of the Company and/or are employees in the financial or
accounting portion of the Company's business, have agreed with
the
Company not to purchase or sell Common Stock without receiving
preclearance by the Company's legal counsel. If such Selling
Shareholder
contemplates such a transaction, they are required to contact the
Chief
Executive Officer of the Company, so that a legal opinion can be
obtained
in advance. This requirement does not apply to stock option
exercises
under the Plan or otherwise, but would cover market sales of
option
stock. The purpose of this requirement is to assure compliance
with
federal and state securities laws and insider trading
restrictions. No
assurance can be provided that a Selling Shareholder will receive
required preclearance by the Company's legal counsel for any
specific
sale proposed by such Selling Shareholder.
The Company will pay all expenses of registering the
Shares,
but will not receive any of the proceeds from sales by any of the
Selling
Shareholders. The Shares may be sold from time to time by the
Selling
Shareholders either through one or more brokers or dealers in the
over-
the-counter market, through privately negotiated transactions or
otherwise, at market prices prevailing at the time of sale or at
prices
otherwise negotiated and such brokers or dealers may receive
compensation
in the form of discounts, concessions or commissions from the
Selling
Shareholders and/or commission from purchasers of Shares for whom
they
may act as agent.
The number of all Shares to be sold pursuant to this
Prospectus, by each Selling Shareholder, and any other person
with whom
he or she is acting in concert for the purpose of selling
securities of
the Company, may not exceed, during any three-month period, (i)
one
percent of the total number of shares of Common Stock outstanding
as
shown by the most recent report or statement published by the
Company
prior to the sale of the Shares, or (ii) the average weekly
trading
volume of the Company's Common Stock reported on reported on
NASDAQ/NMS
during the four calendar weeks immediately preceding the sale of
the
Shares. In connection therewith, the Company understands that
none of
the Shares will be offered through Underwriters, except to the
extent
that the Selling Shareholders and participating brokers or
dealers may be
deemed to be "underwriters" within the meaning of the Securities
Act, and
commissions or discounts or any profit realized on the sale of
Shares
received by a Selling Shareholder or any such broker or dealer
may be
deemed to be underwriting commissions or discounts within the
meaning of
the Act. As of August 6, 1998, the Company understands that none
of the
Selling Shareholders has any agreement, arrangement or
understanding with
any brokers or dealers concerning the distribution of their
Shares.
DESCRIPTION OF CAPITAL STOCK
The Company has authorized capital of 15,000,000 shares
of
Common Stock, $.01 par value per share, and 2,000,000 shares of
Preferred
Stock, $.01 par value per share. Of the 15,000,000 shares of
Common Stock
authorized, 6,525,000 shares will be outstanding as of the date
of this
Prospectus and 7,625,000 shares could be outstanding if all
shares if all
Shares reserved under the Plan are issued. No shares of
Preferred Stock
have been issued.
1. Common Stock. All shares of Common Stock
currently
outstanding are, and all shares of Common Stock offered hereby,
when duly
issued and paid for, will be fully paid and nonassessable, not
subject to
redemption and without preemptive, conversion or subscription
rights.
Common Stock holders are entitled to one vote per share on all
actions
submitted to a vote of shareholders. Cumulative voting is not
permitted.
Holders of Common Stock are entitled to receive cash dividends
equally on
a per share basis as and when such dividends are declared by the
Board of
Directors from funds legally available therefor, subject to
preferential
rights with respect to any outstanding Preferred Stock. In the
event of
a liquidation, dissolution or winding up of the Company, holders
of
Common Stock are entitled to share with each other on a ratable
basis as
a single class in the remaining assets of the Company available
for
distribution after payment of liabilities and satisfaction of any
preferential rights of holders of Preferred Stock. The rights,
preferences and privileges of holders of Common Stock are subject
to and
may be adversely affected by, the rights of the holders of shares
of any
series of Preferred Stock which the Company may designate and
issue in
the future.
2. Preferred Stock. The Company has an authorized
class of
undesignated Preferred Stock consisting of 2,000,000 shares. The
Board of
Directors has authority, without any further vote or action by
the
shareholders, to provide for the issuance of the shares of
Preferred
Stock in series, to establish from time to time the relative,
participating, optional or other special rights, qualifications
or
restrictions of the shares of each such series and to determine
the
voting powers, if any, of such shares. The issuance of Preferred
Stock
could adversely affect, among other things, the rights of current
shareholders. The issuance of Preferred Stock could decrease the
amount
of earnings and assets available for distribution to holders of
Common
Stock. In addition, any such issuance could have the effect of
delaying,
deferring or preventing a change in control of the Company and
could make
the removal of the present management of the Company more
difficult. The
Company has no present plans to issue any of the Preferred Stock.
3. Delaware Law and Certain Corporate Provisions.
The
Company was originally incorporated in California in 1960 and
reincorporated in Delaware in November 1992. Except as otherwise
specified, all information in this Prospectus gives effect to the
reincorporation. The Company is subject to the provisions of
Section 203
of the Delaware General Corporation Law. This statute prohibits a
publicly held Delaware corporation from engaging, under certain
circumstances, in a "business combination" with an "interested
stockholder" for a period of three years after the date of the
transaction in which the person becomes an interested
stockholder, unless
either (i) prior to the date at which the stockholder became an
interested stockholder the Board of Directors approved either the
business combination or the transaction in which the person
becomes an
interested stockholder, (ii) upon consummation of the transaction
in
which the stockholder becomes an interested stockholder, the
stockholder
owns at least 85% of the voting stock of the corporation
(excluding
shares held by directors who are officers or held in certain
employee
stock plans) outstanding at the time the transaction commenced or
(iii)
on or subsequent to the date of the business combination, the
business
combination is approved by the Board of Directors and by
two-thirds of
the outstanding voting stock of the corporation (excluding shares
held by
the interested stockholder) at a meeting of stockholders (and not
by
written consent). Generally, an "interested stockholder" is a
person who,
together with affiliates and associates, owns (or at any time
within the
prior three years did own) 15% or more of the corporation's
voting stock.
Section 203 defines a "business combination" to include, without
limitation, mergers, consolidations, stock sales and asset based
transactions and other transactions resulting in a financial
benefit to
the interested stockholder.
The Company's Certificate of Incorporation and Bylaws
contain a
number of provisions relating to corporate governance and to the
rights
of shareholders. Certain of these provisions may be deemed to
have a
potential "anti-takeover" effect in that such provisions may
delay, defer
or prevent a change of control of the Company. These provisions
include
(a) the classification of. the Board of Directors into three
classes,
each class serving for staggered three-year terms, (b) a
requirement that
special meetings of shareholders may be called only by the
Chairman of
the Board, the President, the Board of Directors or by holders of
Common
Stock representing at least 66% of the votes entitled to be cast
by the
outstanding Common Stock, (c) a requirement that shareholder
action may
be taken only at shareholder meetings, (d) the authority of the
Board to
issue series of Preferred Stock with such voting rights and other
powers
as the Board of Directors may determine, (e) the requirement that
certain
provisions of the Bylaws and the Certificate of Incorporation
(for
example provisions dealing with removal of directors without
cause) may
only be amended (other than by the Board of Directors) by the
vote of
greater than 66% of the votes entitled to be cast by the
outstanding
Common Stock, (f) notice requirements in the Bylaws relating to
nominations to the Board of Directors and the raising of business
matters
at shareholder meetings, (g) the requirement that certain
transactions
such as mergers or sales of substantially all the Company's
assets must
be approved by the affirmative vote of the holders of at least
66% of the
outstanding Common Stock and (h) the requirement that a director
may be
removed without cause only with the affirmative vote of the
holders of at
least 66% of the outstanding Common Stock.
4. Transfer Agent and Registrar. The transfer agent
and
registrar for the Company's Common Stock is ChaseMellon
Shareholders
Services, L.L.C.
EXPERTS
The financial statements of the Company at March 31,
1998 and
1997, and for each of the three years in the period ended March
31, 1998
appearing in the Company's Annual Report (Form 10-K) for the year
ended
March 31, 1998, have been audited by Ernst & Young, LLP,
independent
auditors, as set forth in their report thereon included therein
and
incorporated herein by reference. Such financial statements are
incorporated herein by reference in reliance upon such report
given upon
the authority of such firm as experts in accounting and auditing.
LEGAL OPINION
The legality of the securities being registered by this
Registration Statement is being passed upon by counsel to the
Company,
Knapp, Marsh, Jones & Doran, L.L.P., 515 South Figueroa Street,
Suite
1400, Los Angeles, California 90071.
<PAGE>
INDEMNIFICATION
Pursuant to the provisions of the Delaware General
Corporation
Law, the Company has adopted provisions in its Certificate of
Incorporation which eliminate the personal liability of its
directors to
the Company or its shareholders for monetary damages for breach
of their
duty of due care, and which require the Company to indemnify its
directors and officers to the fullest extent permitted by
Delaware law,
including those circumstances in which indemnification would
otherwise be
discretionary, except that the Company will not be obligated to
indemnify
any such person with respect to (i) proceedings, claims or
actions
initiated or brought voluntarily by any such person and not by
way of
defense, or (ii) amounts paid in settlement of an action
indemnified
against by the Company without the prior written consent of the
Company.
The Company has entered into indemnity agreements with each of
its
directors and certain of its officers providing for such
indemnification.
Insofar as indemnification for liabilities arising
under the
Securities Act is permitted to directors and officers of the
Company
pursuant to the above-described provisions, the Company
understands that
the Commission is of the opinion that such indemnification
contravenes
federal public policy as expressed in said Act and therefore is
unenforceable.
<PAGE>
TABLE OF CONTENTS
Page
Explanatory Note . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .2
Available Information . . . . . . . . . . . . . . . . . . . . .
. . . . .2
Documents Incorporated
by Reference . . . . . . . . . . . . . . . . . . . . . . .
. . . . .2
The Company . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .3
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .6
Principal Shareholder and Selling
Shareholder . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .6
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . .
. . . . .8
Description of Capital Stock . . . . . . . . . . . . . . . . . .
. . . . .9
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . 10
Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . 10
Indemnification . . . . . . . . . . . . . . . . . . . . . . . .
. . . . 11
No dealer, salesman or any
other person has been authorized to
give any information or to make any
representation other than those
contained in this Prospectus in
connection with the offer contained
in this Prospectus, and if given or
made, such information or
representation must not be relied
upon. Neither the delivery of this
Prospectus nor any sale made
thereunder shall, under any
circumstances, create an
implication that there has been no
change in the affairs of the
Company since the date hereof or
that the information contained or
incorporated by reference herein is
correct as of any time subsequent
to its date. This Prospectus does
not constitute an offer or a
solicitation by anyone in any
jurisdiction in which such offer or
solicitation is not authorized, or
in which the person making such
offer or solicitation is not
qualified to do so, or to anyone to
whom it is unlawful to make such
offer or solicitation.
SPORT CHALET, INC.
{SPORT CHALET LOGO}
Common Stock, par value
$.01 Per Share
PROSPECTUS
August 13, 1998
