[GRAPHIC OMITTED]
104,930 Shares
Prospectus Wild Oats Markets, Inc.
Common Stock
All of the 104,930 shares (the "Shares") of common stock, $.001 par value
("Common Stock"), of Wild Oats Markets, Inc. (the "Company") offered hereby are
being sold by the persons listed under Selling Stockholders (the Selling
Stockholders).
The sale of the Shares may be effected by the Selling Stockholders from time to
time in transactions on the Nasdaq National Market, in privately negotiated
transactions or in a combination of such methods of sale, at fixed prices that
may be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing prices or at negotiated prices. The Selling
Stockholders 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 Stockholders and/or the
purchasers of the Shares for whom such broker-dealers may act as agents or to
whom they may sell as principals or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions). See "Plan of
Distribution."
The Company has agreed, among other things, to bear certain expenses (other than
fees and expenses of counsel and underwriting discounts and commission and
brokerage commissions and fees) in connection with the registration and sale of
the Shares being offered by the Selling Stockholders. The Company also has
agreed to indemnify the Selling Stockholders and certain other persons against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended (the Act). See "Plan of Distribution."
The Common Stock of the Company is quoted on the Nasdaq National Market under
the symbol "OATS." The last reported sales price of the Company's Common Stock
on the Nasdaq National Market on September 4, 1998 was $20.625 per share.
The Selling Stockholders and any agents, broker-dealers or underwriters that
participate in the distribution of the Shares may be deemed to be "underwriters"
within the meaning of the Securities Act, and any commission received by them
and any profit on the resale of the Common Stock purchased by them may be deemed
to be underwriting discounts or commissions under the Act. The Company will not
receive any proceeds from the sale of shares by the Selling Stockholders. See
"Selling Stockholders" and "Plan of Distribution."
See Risk Factors beginning on page 2 for a discussion of certain factors
that should be considered in connection with an investment in the Common Stock
offered hereby.
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 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 September 4, 1998
<PAGE>
TABLE OF CONTENTS
Page
Statement Regarding Forward-Looking Statements ii
Prospectus Summary 1
Risk Factors 2
Use of Proceeds 8
Selling Stockholders 8
Plan of Distribution 8
Legal Matters 9
Experts 10
Available Information 10
Incorporation of Certain Documents by Reference 10
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Prospectus, including statements contained in
the Prospectus Summary, under the caption Risk Factors and elsewhere in this
Prospectus constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, that involve known and unknown
risks. Such forward-looking statements include, without limitation, statements
as to the Companys plans to acquire or open additional stores, the anticipated
performance of new or acquired stores and other statements containing the words
believes, anticipates, estimates, expects, may, intends and words of similar
import or statements of management's opinion. These forward-looking statements
and assumptions involve known and unknown risks, uncertainties and other factors
that may cause the actual results, market performance or achievements of the
Company to differ materially from any future results, performance or
achievements expressed or implied by such forward-looking statements. Important
factors that could cause such differences include, but are not limited to,
changes in economic or business conditions in general or affecting the natural
foods industry in particular, changes in product supply, changes in the
competitive environment in which the Company operates, the availability of sites
for new stores and potential acquisition candidates, changes in the Companys
management information needs, changes in customer needs and expectations and
governmental actions.
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus or incorporated herein by
reference. Except as otherwise specified, all information in this Prospectus
reflects a 3-for-2 stock split of the Companys Common Stock, payable on January
7, 1998, to holders of record on December 22, 1997. Unless otherwise indicated,
references herein to fiscal years of the Company are to the Companys 52- or
53-week fiscal year, which ends on the Saturday nearest to December 31 of each
year. This Prospectus contains forward-looking statements that involve risks and
uncertainties. See Statement Regarding Forward-Looking Statements and Risk
Factors for a discussion of certain risks and their potential impact on the
forward-looking statements contained herein.
The Company
Wild Oats Markets, Inc. (Wild Oats or the Company) is the second largest
natural foods supermarket chain in North America. The Company currently operates
57 stores in 16 states: Arizona, Arkansas, California, Colorado, Florida,
Illinois, Kansas, Missouri, Nevada, New Jersey, New Mexico, New York, Ohio,
Oregon, Tennessee and Utah; and British Columbia, Canada.
Since acquiring its first natural foods store in 1987, Wild Oats has
grown from eleven natural foods stores located primarily in Colorado at the end
of 1993 to 57 stores in 16 states and Canada at the end of the second quarter of
1998. In 1996, Wild Oats acquired 13 stores, including 10 stores owned by
Alfalfas, Inc. (Alfalfas), and opened seven new stores. In 1997, the Company
acquired an additional nine natural foods stores, opened four new stores and
relocated one store. Through June 27, 1998, the Company acquired six natural
foods stores and opened three stores, and it expects to open, acquire or
relocate as many as 10 more stores in the remainder of 1998.
Wild Oats stores range in size from 5,000 to 35,000 square feet and
feature between 10,000 and 25,000 stock-keeping units (SKUs) of natural and
gourmet foods and related products in virtually every product category found in
a conventional supermarket. The Company requires products to be minimally
processed, free of preservatives, artificial colors and chemical additives, and
not tested on animals. The Company emphasizes unique products not typically
found in conventional supermarkets and tailors the product mix of its stores to
meet the preferences of the local market. In addition, the Company has
implemented a variety of competitive price programs which offer high quality,
all natural items in each product category at prices competitive with those of
similar items in conventional supermarkets.
The Company was incorporated in Colorado in 1987 and reincorporated in
Delaware in 1993. In July 1996, in connection with the acquisition of Alfalfas,
the Company effected a merger into WO Holdings, Inc., a Delaware corporation,
which subsequently changed its name to Wild Oats Markets, Inc. The Companys
executive offices are located at 1645 Broadway, Boulder, Colorado, and its
telephone number is (303) 440-5220.
1
<PAGE>
RISK FACTORS
An investment in the Common Stock being offered hereby involves a high
degree of risk. In addition to other information contained in this Prospectus or
incorporated herein by reference, prospective investors should carefully
consider the following risk factors before purchasing any of the Common Stock
offered hereby. See "Cautionary Statement Regarding Forward-Looking Statements."
Uncertain Ability to Execute Growth Strategy
The Companys business has grown considerably in size and geographic
scope, increasing from eleven stores in 1993, to its current size of 57 stores
in 16 states and Canada. Through June 27, 1998, the Company has acquired six
natural foods stores, opened three stores and relocated one store. The Company
also closed two stores in anticipation of relocations to new sites and sold two
stores, both in Colorado, during the six months ended June 27, 1998. During
1997, the Company opened four stores, relocated one store and acquired nine
stores. The Companys ability to implement its growth strategy depends to a
significant degree upon its ability to open or acquire stores in existing and
new markets and to integrate and operate those stores profitably. While the
Company plans to expand primarily through the opening of new stores, it will
continue to pursue acquisitions of natural foods retailers where attractive
opportunities exist. The Companys growth strategy is dependent upon a number of
factors, including its ability to: (i) access adequate capital resources; (ii)
expand into regions where it has no operating experience; (iii) identify markets
that meet its site selection criteria; (iv) locate suitable store sites and
negotiate acceptable lease terms; (v) locate acquisition targets and negotiate
acceptable acquisition terms; (vi) hire, train and integrate management and
store employees; (vii) recruit, train and retain regional pre-opening and
support teams; and (viii) expand its distribution and other operating systems.
In addition, the Company pursues a strategy of clustering stores in each of its
markets to increase overall sales, achieve operating efficiencies and further
penetrate markets. In the past, when the Company has opened a store in a market
where it had an existing presence, the Company has experienced a decline in the
sales and operating results at certain of its existing stores in these markets.
The Company intends to continue to pursue its store clustering strategy and
expects the sales and operating results trends for other stores in an expanded
market to continue to experience temporary declines related to the clustering of
stores. Further, acquisitions involve a number of additional risks, such as
short-term negative effects on the Companys reported operating results,
diversion of managements attention, unanticipated problems or legal liabilities,
and the integration of potentially dissimilar operations, some or all of which
could have a material adverse effect on the Companys business, results of
operations and financial condition. There can be no assurance that the Company
will achieve its planned expansion in existing markets, enter new markets, or
operate or integrate its existing, newly-opened or newly-acquired stores
profitably. If the Company fails to do so, the Companys business, results of
operations and financial condition will be materially and adversely affected. In
addition, the Companys ability to execute its growth strategy is partially
dependent upon the demographic trends and market conditions in the natural foods
industry and any change in those trends and conditions could adversely affect
the Companys future growth rate.
Fluctuations in Financial Results
The Companys results of operations may fluctuate significantly from
period-to-period as the result of a variety of factors, including: (i) the
number, timing, mix and cost of store openings, acquisitions or closings; (ii)
the ratio of stores opened to stores acquired; (iii) the opening of stores by
the Company or its competitors in markets where the Company has existing stores;
(iv) comparable store sales results; and (v) the ratio of urban format to
supermarket format stores and (vi) seasonality in sales volume and sales mix in
certain geographic regions. The Company incurs significant pre-opening expenses
and new stores typically experience an initial period of operating losses. As a
result, the opening of a significant number of stores in a single period will
have an adverse effect on the Companys results of operations. Additionally, the
opening of competing stores may have a similar adverse effect on results of
operations. Due to the foregoing factors, the Company believes that
period-to-period comparisons of its operating results are not necessarily
meaningful and that such comparisons cannot be relied upon as indicators of
future financial performance.
2
<PAGE>
A variety of factors affect the Companys comparable store sales results,
including, among others, the relative proportion of new stores to mature stores,
the opening of stores by the Company or its competitors in markets where the
Company has existing stores, the timing of promotional events, the Companys
ability to execute its operating strategy effectively, changes in consumer
preferences for natural foods and general economic conditions. Past increases in
comparable store sales may not be indicative of future performance. The Companys
comparable store sales results have been negatively affected in the past by
planned cannibalization (the loss of sales at an existing store when the Company
opens a new store nearby) resulting from the implementation of the Companys
store clustering strategy. The Companys comparable store sales increases during
the second quarter of 1998 were negatively affected by planned cannibalization
in its Boulder and Denver, Colorado and Phoenix, Arizona markets, as well as by
new competition in Boulder, Colorado. The Company expects that comparable store
sales increases will be negatively affected by planned cannibalization in the
third and fourth quarters of 1998 due to the opening of new stores in existing
markets in Santa Monica, California and Denver, Colorado. There can be no
assurance that comparable store sales for any particular period will not
decrease in the future.
Possible Inability to Manage Growth
The Companys business has grown considerably in size and geographic
scope, increasing from eleven stores located primarily in Colorado in 1993, to
its size of 57 stores in 16 states and Canada at the end of the second quarter
of 1998. The Companys continued growth may place a significant strain on the
Companys management, distribution capabilities, working capital, and financial
and management control systems. In order for the Company to manage its expanding
store base successfully, management will be required to anticipate the changing
demands of the Companys growing operations and to adapt systems and procedures
accordingly. There can be no assurance that the Company will anticipate all of
the changing demands that its expanding operations will impose on such systems.
To support its planned store growth, the Company will be required to hire and
train a greater number of store managers and store employees than it has in the
past, and there can be no assurance that the training and supervision of a
larger number of employees will not adversely affect the performance of the
Companys stores or the levels of customer service that the Company seeks to
maintain in such stores. The Company will also need to continually evaluate the
adequacy of its management information systems, including its accounting,
pricing, inventory control and distribution systems. Currently, certain
important functions, including certain store-level accounting and inventory
management systems, are processed manually. There can be no assurance that the
Companys current systems will be adequate for its future needs, or that the
Company will be successful in implementing new systems. The Company is currently
upgrading its point of sale, merchandise management, accounting and payroll
software, as well as implementing a wide area network to establish on-line data
communications between the Companys corporate office and its stores. Failure to
successfully complete these upgrades or unexpected difficulties encountered with
these systems could adversely affect the Companys business, financial condition
and results of operations. The Companys inability to manage growth effectively
could have a material adverse effect on the Companys business, results of
operations and financial condition.
Competition
The Companys competitors currently include other independent and
multi-unit natural foods supermarkets, smaller traditional natural foods stores,
conventional supermarkets and specialty grocery stores. A number of other
natural foods supermarkets offer a range of natural foods products similar to
those offered in the Companys stores. While certain conventional supermarkets,
smaller traditional natural foods stores and small specialty stores do not offer
as full a range of products as the Company, they do compete with Wild Oats in
one or more product categories. Many of the Companys competitors have been in
business longer and have greater financial or marketing resources than the
Company and may be able to devote greater resources to securing suitable
locations and to the sourcing, promotion and sale of their products. In
addition, should any of the Companys competitors reduce prices, the Company may
be required to implement price reductions in order to remain competitive, which
could have an adverse impact on its business, financial condition and results of
operations. As Wild Oats enters new geographic markets, its success will depend
in part on its ability to gain
3
<PAGE>
market share from established competitors. In addition, traditional and
specialty grocery stores may expand more aggressively in marketing a broader
range of natural foods and related products and thereby compete directly with
the Company for products, customers and locations. The Company expects
competition from both new and existing competitors to increase in its markets,
and there can be no assurance that the Company will be able to compete
effectively in the future. The Company believes its primary competitor in the
natural foods grocery store market is Whole Foods Market, Inc. (Whole Foods), a
publicly-traded company based in Texas. In February 1998 Whole Foods opened a
39,000 square-foot store in Boulder, Colorado, the location of the Companys
headquarters and two of its stores and as a result, sales at the Companys
Boulder stores have declined. Such decline is similar to the impact of the
Company opening a store in a market where the Company has an existing presence.
While the impact on sales at the Companys Boulder stores has been within the
level expected by management, at this time the Company cannot evaluate what
long-term impact increased competition from Whole Foods will have on its overall
sales. The Companys Boulder, Colorado stores account for less than 10% of the
Companys overall sales revenues. Whole Foods management also has announced that
it intends to seek additional store sites in other cities in which the Company
has stores and has acquired sites in Denver and Santa Fe, where the Company has
existing stores. If Whole Foods is successful in opening stores in locations in
which the Company has or intends to open stores, the Companys sales and
operating results at such stores may be materially adversely affected.
Dependence on Key Personnel
The Company believes that its continued success will depend to a
significant extent upon the leadership and performance of Michael C. Gilliland,
Wild Oats co-founder and the Chief Executive Officer of the Company, and James
Lee, the President and Chief Operating Officer of the Company. The loss of the
services of Mr. Gilliland, Mr. Lee or other of the Companys key personnel could
have a material adverse effect upon the Company. There can be no assurance that
the Company will be able to attract and retain qualified employees.
Possible Disruptions of Product Supply
The Companys business is dependent on its ability to source products
from a small number of distributors and from a large number of relatively small
vendors on a timely basis and at competitive prices. Based on its previous
purchasing patterns, the Company anticipates that it will continue to purchase
approximately 25% of its products through one wholesale distributor. The Company
has no supply contracts with these parties and any vendor or distributor could
discontinue selling to the Company at any time. Any disruption in its product
supply could have a material adverse effect on its results of operations. In
addition, even where the Company has access to alternative sources of supply,
the failure of a vendor or distributor to meet the Companys demands may
temporarily disrupt store-level merchandise selection.
4
<PAGE>
Ownership and Sale of Real Property
In 1996 and in 1997, and in the first six months of 1998, the Company
purchased, or entered into contracts to purchase, parcels of real property for
the construction of new stores or the relocation of existing stores. The Company
also purchased a ground lease on undeveloped real property. The Company has
constructed one and intends to construct three new stores on undeveloped real
property purchased by the Company or subject to a ground lease acquired by the
Company. There can be no assurance that the Company will be successful in
constructing the planned stores within the Companys projected budgets or on the
schedules currently anticipated. Failure to complete these projects on time or
within budget could have a material adverse impact on the Companys business,
results of operations and financial condition. The Company anticipates that
after construction of the stores on the acquired properties is completed, it
will sell the land and buildings in one or more sale and leaseback transactions
under which the Company will lease the stores from the purchaser of the
property. There can be no assurance that the Company will be successful in
locating and negotiating acceptable transactions with one or more parties for
the sale and leaseback of the properties currently owned by the Company, which
may result in unplanned long-term uses of the Companys cash that would otherwise
be available to fund operations.
Government Regulation
The Company is subject to numerous federal, state and local laws,
regulations and ordinances regulating health and sanitation standards, food
labeling and handling, equal employment, minimum wages and licensing for the
sale of food and alcoholic beverages. Difficulties or failures in complying with
these regulations could adversely affect the operations of an existing store or
delay the opening of a new store.
In addition, from time to time, various federal, state and local
legislative and regulatory proposals are made to, among other things, increase
the minimum wage payable to employees, establish minimum store safety
requirements and increase taxes on the retail sale of certain products. Changes
to such laws, regulations or ordinances may adversely affect the Companys
performance by increasing the Companys costs or affecting its sales of certain
products. Federal legislation raising the minimum wage in the future may
increase the Companys employee costs and adversely affect the Companys
profitability.
Safety concerns arising from the recall in 1996 of certain fresh juices
sold nationwide because of bacterial contamination may result in additional
governmental regulations regarding the preparation or sale of unprocessed or
minimally processed foods. Such regulations could have an adverse impact on the
Companys ability to offer certain products for sale. Product recalls or
additional government regulation also may erode customer confidence in the
safety of products carried by the Company, resulting in adverse impacts on
sales.
In December 1997, the United States Department of Agriculture (USDA)
published, pursuant to the Organic Food Production Act of 1990, its proposed
National Organic Program rules, under which the USDA proposes to regulate the
production, handling, labeling and sale of products bearing the organic label.
The Company believes that the rules as published substantially weaken the
current standards for organic food production and labeling, and may undermine
consumer confidence in the quality of certain of the foods sold in its stores.
The rules also may add additional expense to the Companys cost of private label
and in-store prepared foods sold by the Company. If the rules are adopted as
currently proposed, such rules could have an adverse effect on the Companys
business, results of operations and financial condition.
In April 1998, the United States Food and Drug Administration (FDA)
published a proposed amendment to the Dietary Supplement Health and Education
Act of 1994. The Company believes the proposed amendments could substantially
limit the consumers access to important information on vitamins and supplements.
The Company intends to submit a response to the proposed amendment before the
end of the FDA comment period in September 1998. The Company also has launched a
consumer education campaign to encourage consumers to comment to the FDA on the
proposed amendments. If the proposed amendments are adopted as currently
drafted, information about, and perhaps access to, vitamins and supplements
could be
5
<PAGE>
restricted, which could have an adverse effect on the Companys business, results
of operations and financial condition.
The Company also sells nutritional supplements, some of which are
subject to regulation by several federal, state and local agencies. There can be
no assurance that such agencies will not enact regulations that could have an
adverse effect on the Companys business, results of operations and financial
condition. In addition, recent legislation has required manufacturers of
nutritional supplements to label ingredients in their products. Such legislation
could be enacted in the future which may adversely affect the Companys results
of operations.
New Mexico Anti-Trust Proceedings
In February 1996, Wild Oats received a Civil Investigative Demand and
Request for Production of Documents from the New Mexico Attorney Generals office
alleging possible violations of New Mexicos anti-trust laws as a result of the
acquisition of Alfalfas. The focus of the investigation is on the effect, if
any, of the acquisition on competition in New Mexico. In May 1996, the Company
received a letter from the New Mexico Attorney Generals office indicating that
it would recommend that Wild Oats divest one of its three stores in Santa Fe,
New Mexico in connection with the acquisition. The Company replied, refuting the
Attorney Generals claim but has not received a response from the Attorney
Generals office. The Attorney Generals office has not taken any legal action
with respect to the acquisition. The Company believes that the acquisition
complies with federal and state anti-trust law and will continue to vigorously
defend its position in New Mexico. However, there can be no assurance that the
state of New Mexico will not take legal action with respect to the acquisition,
including, but not limited to, demanding the divestiture of one or more stores
in the Santa Fe market to a competitor of the Company. If the Attorney General
of New Mexico elects to take legal action and is successful, such a result could
have a material adverse effect on the Companys business, results of operations
and financial condition.
Potential Volatility of Stock Price; No Dividends
The market price of the shares of Common Stock could be subject to
significant fluctuations in response to the Companys operating results and other
factors, including announcements by its competitors or changes in the growth
rate or acceptance of natural foods. The natural foods industry, according to
independent studies, has grown at an accelerated rate over the past five years,
and any slowing in such growth rate could have a negative impact on the market
price of the Common Stock. In addition, the stock market in recent years has
experienced extreme price and volume fluctuations that often have been unrelated
or disproportionate to the operating performance of companies. These
fluctuations, as well as a shortfall in sales or earnings compared to public
market analysts expectations, changes in analysts recommendations or
projections, and general economic and market conditions, may adversely affect
the market price of the Common Stock. The Company has never paid any cash
dividends and does not anticipate paying cash dividends in the foreseeable
future.
Anti-Takeover Considerations
The Companys Certificate of Incorporation and Bylaws contain provisions
which may have the effect of delaying, deferring or preventing a change in
control of the Company, may discourage bids for the Common Stock at a premium
over the market price of the Common Stock and may adversely affect the market
price of the Common Stock and the voting and other rights of the holders of the
Common Stock. These provisions include, but are not limited to, a classified
Board of Directors and the authority of the Board of Directors to issue up to
5,000,000 shares of preferred stock and to fix the price, rights, preferences,
privileges and restrictions, including voting rights, of those shares without
further vote or action by the stockholders. The rights of the holders of Common
Stock will be subject to, and may be adversely affected by, the rights of the
holders of any preferred stock that may be issued in the future. The Company has
no present plans to issue shares of preferred stock. In addition, certain
provisions of Delaware law applicable to the Company could have the effect of
discouraging
6
<PAGE>
certain attempts to acquire the Company that could deprive the Companys
stockholders of the opportunities to sell their shares of Common Stock at prices
higher than prevailing market prices.
In May 1998, the Company adopted a stockholder rights plan having both "flip-in"
and "flip-over" provisions. Each share of the Companys Common Stock currently
also represents a right (a "Right"), exercisable only in certain circumstances,
to purchase a fractional share of preferred stock at a purchase price of $145
for each share of Common Stock held. Until the Rights become exercisable as
described below and in certain limited circumstances thereafter, the Company
will issue one Right for each share of Common Stock issued hereafter. For the
"flip-in provision," the Rights would become exercisable only if a person or
group acquires beneficial ownership of 15% (the "Threshold Percentage") or more
of the outstanding Common Stock. Holdings of certain existing affiliates of the
Company are excluded from the Threshold Percentage. In the event a flip-in
occurred, all holders of Rights other than the person or group who acquired the
Threshold Percentage would be entitled to purchase shares of Common Stock at a
substantial discount to the then current market price. This right to purchase
Common Stock at a discount would be triggered as of a specified number of days
following the passing of the Threshold Percentage. For the "flip-over"
provision, if the Company were to be acquired in a merger or other business
combination or transaction, the holders of such Rights would be entitled to
purchase shares of the acquiror's common stock at a substantial discount.
Control by Officers, Directors and Principal Stockholders
Directors, executive officers and principal stockholders of the Company,
and certain of their affiliates, beneficially own approximately 33% of the
outstanding shares of Common Stock. Accordingly, these persons, individually and
as a group, will be able to effectively control the Company and direct its
affairs and business, including any determination with respect to the
acquisition or disposition of assets by the Company, future issuances of Common
Stock or other securities by the Company, declaration of dividends in the Common
Stock and the election of directors. Such concentration of ownership may also
have the effect of delaying, deferring or preventing a change in control of the
Company.
7
<PAGE>
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the shares of
Common Stock offered by the Selling Stockholders.
SELLING STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of the Companys Common Stock as of September 3, 1998 by
each Selling Stockholder.
<TABLE>
<CAPTION>
Number of
Beneficial Ownership Shares to be Beneficial Ownership
Prior to Registered After
the Offering (1) In the The Offering (1)
Selling Shareholder Name Number Percent Offering Number Percent
<S> <C> <C> <C> <C> <C>
Ruth Ann Adney 52,540 * 52,465 75 *
Gary Eklund 52,465 * 52,465 -- *
</TABLE>
* less than one percent
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Shares of Common Stock subject to options,
warrants and convertible notes currently exercisable or convertible, or
exercisable or convertible within 60 days of August 20, 1998 are deemed
outstanding for computing the percentage of the person or entity holding such
securities but are not outstanding for computing the percentage of any other
person or entity. Assumes all offered shares are sold.
Ruth Adney and Gary Eklund, husband and wife, were the sole
shareholders of Beans, Grains & Things, Incorporated, an Arkansas corporation
acquired by the Company in June, 1998 in a stock-for-stock transaction. Each of
the Selling Shareholders received 52,465 common shares of the Company. Neither
Selling Shareholder claims any beneficial interest or ownership for any shares
other than those issued, or previously owned by, to that Selling Shareholder.
Each Selling Shareholder was granted certain registration rights pursuant to the
Stock Purchase Agreement executed as part of the transaction. The Shares held by
Ms. Adney and Mr.
Eklund are being registered pursuant to that agreement.
PLAN OF DISTRIBUTION
The Shares offered hereunder may be offered and sold from time to time by the
Selling Stockholders, or by pledgees, donees, transferees or other successors in
interest. Such sales may be made on the Nasdaq National Market or in the
over-the-counter market or otherwise, at prices and on terms then prevailing or
related to the then-current market price, or in negotiated transactions. The
Shares may be sold to or through one or more of the following methods,
including, without limitation, broker-dealers, acting as agent or principal, in
underwritten offerings, block trades, agency placements, exchange distributions,
brokerage transactions or otherwise, or in any combination of such transactions.
In connection with any transaction involving the Shares, broker-dealers or
others may receive from the Selling Stockholders, and/or the purchasers of the
Shares for whom such broker-dealers act as agents or to whom they may sell as
principals or both, compensation in the form of discounts, concessions or
commissions in amounts to be negotiated at the time (which compensation as to a
particular broker-dealer might be in excess of
8
<PAGE>
customary commissions). Broker-dealers and any other persons participating in a
distribution of the Shares may be deemed to be "underwriters" within the meaning
of the Act in connection with such distribution, and any such discounts,
concessions or commissions may be deemed to be underwriting discounts or
commissions under the Act. From time to time, the Selling Stockholders may
pledge, hypothecate or grant a security interest in some or all of the Shares
owned by them, and the pledgees, secured parties or persons to whom such
securities have been hypothecated shall, upon foreclosure in the event of
default, be deemed to be Selling Stockholders hereunder. In addition, the
Selling Stockholders may, from time to time, sell short the Common Stock of the
Company, and in such instances, this Prospectus may be delivered in connection
with such short sales and the Shares offered hereby may be used to cover such
short sales.
Any or all of the sales or other transactions involving the Shares described
above, whether effected by the Selling Stockholders, any broker-dealer or
others, may be made pursuant to this Prospectus. In addition, any Shares that
qualify for sale pursuant to Rule 144 under the Act may be sold under Rule 144
rather than pursuant to this Prospectus. The Selling Stockholders' Shares may
also be offered in one or more underwritten offerings, on a firm commitment or
best efforts basis. The Company will receive no proceeds from the sale of the
Selling Stockholders' Shares by the Selling Stockholders. The Shares may be sold
from time to time in one or more transactions at a fixed offering price, which
may be changed, or at varying prices determined at the time of sale or at
negotiated prices. Such prices will be determined by the Selling Stockholders or
by agreement between the Selling Stockholders and their underwriters, dealers,
brokers or agents.
To the extent required under the Securities Act, the aggregate amount of Selling
Stockholders Shares being offered and the terms of the offering, the names of
any such agents, brokers, dealers or underwriters and any applicable commission
with respect to a particular offer will be set forth in an accompanying
Prospectus supplement. Any underwriters, dealers, brokers or agents
participating in the distribution of the Shares may receive compensation in the
form of underwriting discounts, concessions, commissions or fees from a Selling
Stockholders and/or purchasers of Selling Stockholders Shares, for whom they may
act. In addition, sellers of Selling Stockholders Shares may be deemed to be
underwriters under the Securities Act and any profits on the sale of Selling
Stockholders Shares by them may be deemed to be discount commissions under the
Securities Act. The Selling Stockholders may have other business relationships
with the Company and its subsidiaries or affiliates in the ordinary course of
business.
Including and without limiting the foregoing, in connection with distributions
of the Common Stock, the Selling Stockholders may enter into hedging
transactions with broker-dealers and the broker-dealers may engage in short
sales of the Common Stock in the course of hedging the positions they assume
with the Selling Stockholders. The Selling Stockholders may also enter into
option or other transactions with broker-dealers that involve the delivery of
the Common Stock to the broker-dealers, who may then resell or otherwise
transfer such Common Stock. The Selling Stockholders may also loan or pledge the
Common Stock to a broker-dealer and the broker-dealer may sell the Common Stock
so loaned or upon a default may sell or otherwise transfer the pledged Common
Stock.
All cost associated with this offering, other than fees and expense of counsel
for the Selling Stockholders and any underwriting discounts and commissions,
brokerage commissions and fees and transfer taxes, will be paid by the Company.
LEGAL MATTERS
The validity of the Common Stock offered hereby has been passed upon by
Holme Roberts & Owen LLP, Denver, Colorado as counsel for the Company.
9
<PAGE>
EXPERTS
The financial statements of Wild Oats contained in the 1997 Annual
Report to Stockholders of the Company, which is incorporated in this Prospectus
by reference to the Company's Annual Report on Form 10-K for the year ended
December 27, 1997 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting. The consolidated financial
statements of Alfalfa's, Inc., a company acquired by the Company in July of
1996, as of June 30, 1996 and for the year then ended and the combined financial
statements of New Frontiers Markets, a corporation that owned three Salt Lake
City, Utah stores acquired by Wild Oats, as of December 31, 1995 and 1994 and
for each of the three years in the period ended December 31, 1995 incorporated
in this Prospectus by reference to pages F-17 through F-30 and pages F-36
through F-45, respectively of the Companys Prospectus dated October 22, 1996
have been so incorporated in reliance on the reports of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
The consolidated financial statements of Alfalfas, Inc. and its
subsidiaries as of June 25, 1995 and for the years ended June 25, 1995 and June
26, 1994 incorporated in this Prospectus by reference from the Registration
Statement No. 333-11261 on Form S-1 of Wild Oats Markets, Inc. have been audited
by Deloitte & Touche LLP, independent auditors, as stated in their report which
is incorporated herein by reference, and have been so incorporated in reliance
upon the report of such firm given upon their authority as experts in accounting
and auditing.
AVAILABLE INFORMATION
The Company has filed with the Commission a registration statement on
Form S-3 (the Registration Statement, which term encompasses all amendments,
exhibits, annexes and schedules thereto) under the Securities Act with respect
to the Common Stock offered for resale hereby. This Prospectus, which
constitutes a part of the Registration Statement, does not contain all the
information set forth in the Registration Statement, to which reference is
hereby made. Statements made in this Prospectus as to the contents of any
contract, agreement or other document referred to are not necessarily complete.
With respect to each such contract, agreement or other document filed as an
exhibit to the Registration Statement and the exhibits thereto, reference is
hereby made to the exhibit for a more complete description of the matter
involved, and each statement made herein shall be deemed qualified in its
entirety by such reference.
The Company is subject to the informational requirements of the Exchange
Act and in accordance therewith files periodic reports, proxy and information
statements and other information filed with the Commission. The Registration
Statement filed by the Company with the Commission, as well as such reports,
proxy and information statements and other information filed by the Company with
the Commission, are available at the web site that the Commission maintains at
http://www.sec.gov and can 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 at 7 World Trade Center, New York, New York 10048, and the
Central Regional Office, 1801 California Street, Suite 4800, Denver, CO
80202-2648. Copies of such material, when filed, may also be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. The Common Stock is quoted on the
Nasdaq National Market and such reports, proxy and information statements and
other information concerning the Company are available at the offices of the
Nasdaq National Market located at 1735 K Street, N.W., Washington, D.C. 20006.
10
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Incorporated by reference in this Prospectus are (i) the Companys Annual
Report on Form 10-K for the fiscal year ended December 27, 1997, as amended on
Form 10-K/A dated June 15, 1998; (ii) the Companys Quarterly Reports on Form
10-Q for the quarters ended March 28,1998 and June 27, 1998, (iii) the
description of the Companys Common Stock contained in the Companys Registration
Statement on Form 8-A dated October 17, 1996; and (iv) Pages F-17 through F-30
and Pages F-36 through F-45 of the Companys Prospectus dated October 22, 1996.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act after the date of this Prospectus and prior to the
termination of this offering shall be deemed to be incorporated by reference
herein and to be a part of this Prospectus from the of filing of such documents.
Any statement contained in a document 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 also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any 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 any
beneficial owner of Common Stock, to whom a copy of this Prospectus has been
delivered, on the written or oral request of such person, a copy of any or all
of the foregoing documents incorporated by reference in this Prospectus, other
than exhibits to such documents unless such exhibits are specifically
incorporated by reference into the information that this Prospectus
incorporates. Written or oral requests for such copies should be directed to
Wild Oats Markets, Inc., 1645 Broadway, Boulder, Colorado 80302 (telephone:
(303) 440-5220, extension 392).
11
<PAGE>
