Wild Oats Community Market
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Prospectus
928,432 Shares
Wild Oats Markets, Inc.
Common Stock
All of the 928,432 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 June 17, 1998 was $31.75 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 June 17, 1998
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TABLE OF CONTENTS
Page
Statement Regarding Forward-Looking Statements............................... ii
Prospectus Summary............................................................ 1
Risk Factors.................................................................. 2
Use of Proceeds............................................................... 7
Selling Stockholders.......................................................... 7
Plan of Distribution.......................................................... 8
Legal Matters................................................................. 9
Experts....................................................................... 9
Available Information......................................................... 9
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 Company's 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 Company's management information needs, changes in
customer needs and expectations and governmental actions.
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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 Company's 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 Company's
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 58 stores in 15 states: Arizona, 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 54 stores in 13 states and Canada at the end of the first quarter of
1998. In 1996, Wild Oats acquired 13 stores, including 10 stores owned by
Alfalfa's, Inc. ("Alfalfa's"), 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 15, 1998, the Company acquired five natural
foods stores and opened two new 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 Alfalfa's,
the Company effected a merger into WO Holdings, Inc., a Delaware corporation,
which subsequently changed its name to Wild Oats Markets, Inc. The Company's
executive offices are located at 1645 Broadway, Boulder, Colorado, and its
telephone number is (303) 440-5220.
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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 Company's business has grown considerably in size and geographic
scope, increasing from eleven stores in 1993, to its current size of 58 stores
in 15 states and Canada. Through June 15, 1998, the Company has acquired five
natural foods stores and opened two stores. During 1997, the Company opened four
stores, relocated one store and acquired nine stores. The Company's 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 Company's
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
Company's reported operating results, diversion of management's 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 Company's 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 Company's business, results of operations and financial condition will be
materially and adversely affected. In addition, the Company's 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 Company's future growth rate.
Fluctuations in Financial Results
The Company's 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. 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 Company's results of operations. For example, the
Company's profitability was lower in 1995 and 1996, due in part to the opening
of a significantly larger number of stores in 1995 and 1996 than in previous
years. 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.
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A variety of factors affect the Company's 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 Company's 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.
Comparable store sales results in 1996 were negatively affected 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 Company's store
clustering strategy. The Company expects that comparable store sales increases
will be negatively affected by planned cannibalization in the second and third
quarters of 1998 due to new stores in existing markets in Santa Monica and
Denver. Comparable store sales for the Company's Colorado and Canadian stores
were negatively affected in the second quarter of 1997 resulting from strikes at
the Company's major conventional competitors in those markets in the second
quarter of 1996, which resulted in increased sales in that quarter at the
Company's stores in those markets. There can be no assurance that comparable
store sales for any particular period will not decrease in the future. As a
result, the Company's comparable store sales could cause the price of the Common
Stock to fluctuate substantially.
Possible Inability to Manage Growth
The Company's business has grown considerably in size and geographic
scope, increasing from eleven stores located primarily in Colorado in 1993, to
its current size of 58 stores in 15 states and Canada. The Company's continued
growth may place a significant strain on the Company's 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 Company's
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 Company's 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 Company's 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 Company's corporate
office and its stores. Failure to successfully complete these upgrades or
unexpected difficulties encountered with these systems could adversely affect
the Company's business, financial condition and results of operations. The
Company's inability to manage growth effectively could have a material adverse
effect on the Company's business, results of operations and financial condition.
Competition
The Company's 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 Company's 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 Company's 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 Company's 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
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operations. As Wild Oats enters new geographic markets, its success will depend
in part on its ability to gain 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
Company's headquarters and three of its stores and as a result, sales at the
Company's 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 Company's 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 Company's Boulder, Colorado stores account for less
than 10% of the Company's 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. If Whole Foods is successful in opening stores in
locations in which the Company has or intends to open stores, the Company's
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 Company's 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 Company's 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 Company's demands may
temporarily disrupt store-level merchandise selection.
Ownership and Sale of Real Property
In the fourth quarter of 1996 and in 1997, the Company purchased, or
entered into contracts to purchase, four parcels of real property for the
construction of new stores or the relocation of existing stores. The Company has
constructed and opened one store on a purchased parcel of real property and
intends to construct or remodel three new stores on 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 Company's 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 Company's 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 Company's cash that would otherwise be available to fund
operations.
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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 Company's
performance by increasing the Company's costs or affecting its sales of certain
products. Federal legislation raising the minimum wage in the future may
increase the Company's employee costs and adversely affect the Company's
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 Company's 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 Company's 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 Company's
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 Company's 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 Company's 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 General's
office alleging possible violations of New Mexico's anti-trust laws as a result
of the acquisition of Alfalfa's. 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 General's 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 General's claim but has not received a response from the
Attorney General's office. The Attorney General's 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 Company's business,
results of operations and financial condition.
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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 Company's 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 Company's 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 certain attempts to acquire the Company that
could deprive the Company's 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 Company's 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.
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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 Company's Common Stock as of June 15, 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>
Chase Capital Partners (2)............. 1,887,629 14.6 900,000 987,629 7.7
David Sinensky........................... 28,732 * 28,432 300 *
* less than one percent
</TABLE>
(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 June 15, 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.
(2) Consists of 1,870,629 shares held of record by Chase Venture Capital
Associates, L.P., a California limited partnership ("Chase"). The general
partner of CVCA is Chase Capital Partners, a New York general partnership,
of which David Ferguson, a director of the Company, is one of several
general partners. Mr. Ferguson disclaims beneficial ownership of the
shares owned by Chase except to the extent of his pecuniary interest
therein arising from his general partnership interest therein. Also
includes 12,000 shares held by Mr. Ferguson and 5,000 shares subject to
stock options that are exercisable within 60 days of June 15, 1998 held by
Mr. Ferguson.
Chase and certain other persons are parties to a Registration Rights
Agreement under which each was granted the right to require the Company to
register under the Act shares of restricted stock held by such parties. The
Shares are being registered pursuant to that agreement. Chase and certain other
persons holding an aggregate of approximately 5,272,666 shares of common stock
are parties to a Stockholders' Agreement, as amended and restated effective
October 22, 1996 (the "Stockholders' Agreement"). The Stockholders' Agreement
provides, among other things, that such holders are to vote for Chase's nominee
to the Board of Directors. David Ferguson, a general partner of Chase Capital
Partners, the general partner of Chase, has been a director of the Company since
November 1994 and serves as such nominee.
David Sinensky was the sole shareholder of DDJ, Inc., an Ohio
corporation acquired by the Company in May of 1998 in a stock-for-stock
transaction. Mr. Sinensky was granted certain registration rights pursuant to
the Stock Purchase Agreement executed as part of the transaction. The Shares
held by Mr. Sinensky are being registered pursuant to that agreement.
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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 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.
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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.
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 Price
Waterhouse 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 Company's Prospectus dated October 22, 1996 have been so
incorporated in reliance on the reports of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
The consolidated financial statements of Alfalfa's, 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
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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.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Incorporated by reference in this Prospectus are (i) the Company's
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 Company's Quarterly Report
on Form 10-Q for the quarter ended March 28,1998; (iii) the description of the
Company's Common Stock contained in the Company's 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 Company's 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).
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