FILED PURSUANT TO RULE 424(b)(3)
FILE NO. 333-62153
PROSPECTUS
THE BARBERS, HAIRSTYLING FOR MEN & WOMEN, INC.
100,000 Shares of Common Stock
This is a public offering of shares of common stock by The Barbers,
Hairstyling for Men & Women, Inc. We will issue the shares offered by this
prospectus to our frachisees who qualify to receive the shares under the our
Designer Salon Programs.
The Nasdaq National Market System lists The Barbers' common stock under
the symbol "BBHF."
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. YOU SHOULD CAREFULLY
CONSIDER THE FACTORS SET FORTH UNDER THE CAPTION "CERTAIN RISK FACTORS,"
BEGINNING ON PAGE 2 OF THIS PROSPECTUS.
Price to the Underwriting Discounts and
Public Commissions Proceeds to The Barbers
------ ----------- -----------------------
Per Share $0 None None
Total $0 None None
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES OR PASSED ON THE
ADEQUACY OF THE DISCLOSURES IN THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is May 17, 1999
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SUMMARY
THE COMPANY
We develop, franchise, service and operate a system of hair care salon
concepts which provide hair care services and products for men, women and
children. We implement our retail concepts through nationwide franchise systems
that we support with a comprehensive package of centralized services. We
primarily earn revenue through our franchise operations from franchise initial
fees, franchise royalties and sales of beauty products, salon equipment and
consumer appliances.
We market three different hair care salon concepts that target a broad
spectrum of the hair care market. Most franchises do business under the names
"Cost Cutters Family Hair Care(R)", "City Looks Salons International(R)", or "We
Care Hair(R)". We also have a limited number of franchises operating under the
names "The Barbers(R)", "The Barbers, Hairstyling for Men & Women(R)", "The Hair
Performers(R)", and "Family Haircut Stores(R)". We currently sell franchises
only in the Cost Cutters, City Looks, and We Care Hair concepts.
Each franchise concept is specifically tailored to satisfy a particular
market niche. Cost Cutters franchises provide value-priced hair care services
targeted to price sensitive customers. City Looks franchises provide full
service, high-fashion hair care as well as various personal grooming and spa
services, including facials, manicures, massages and tanning facilities targeted
to customers who place a premium on full service. We Care Hair franchises
provide hair care services, tanning, nail care and waxing services targeted at
adults aged 18 to 40.
At December 24, 1998, We had a total of 979 salons consisting of 947
franchised salons and 32 company-owned salons. On January 25, 1999, we entered
into an agreement and plan of merger with Regis Corporation ("Regis') and Regis
Merger Sub, Inc. under which we will be acquired by Regis through a merger of
Regis Merger Sub and us. Florence F. Francis, who owns a majority of the shares
of our common stock has agreed to vote her shares in favor of the merger.
Therefore, approval of the merger is assured. Our principal executive offices of
The Barbers are located at 300 Industrial Boulevard N.E., Minneapolis, Minnesota
55413 and its telephone number is (612) 331-8500.
THE OFFERING
Securities: 100,000 shares of our common stock.
Designer Salon Program: The offering is being made to our franchisees who
qualify to receive the shares under our Designer
Salon Programs. We have implemented a "Designer Salon
Program" for each of our franchise systems. The
objective of the Designer Salon Programs is to
encourage our franchisees to purchase beauty products
through us.
In addition to receiving other benefits, if a
franchisee exceeds a level of purchases of beauty
products set annually by us and meets other
compliance criteria designated by us, the franchisee
earns a rebate on these purchases which we pay in
shares of our common stock. The amount of shares a
franchisee earns is equal to the rebate amount
divided by the current fair market value of our
common stock at the end of our fiscal year. No
additional consideration is required from the
franchisee to purchase the shares of common stock.
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CERTAIN RISK FACTORS
YOU SHOULD CONSIDER CAREFULLY, IN ADDITION TO THE OTHER INFORMATION
CONTAINED IN THIS PROSPECTUS, THE FOLLOWING FACTORS BEFORE PARTICIPATING IN THE
DESIGNER SALON PROGRAM.
RISKS RELATED TO THE BUSINESS
INCREASED COMPETITION IN THE HAIR CARE INDUSTRY COULD HAVE A MATERIAL
ADVERSE EFFECT ON OUR BUSINESS. The hair care industry is highly competitive and
has limited barriers to entry. In every locality in which Regis and The Barbers
currently operate, there are competitors offering similar services and products.
These competitors may be single salon operators or national chains such as Great
Clips or Regis. In many cases, we face one or more competitors within malls in
which we operate, including companies operating salons as departments within
department stores, salon chains, independently owned salons, and salons
operating under franchises from other franchising companies. This competition
could have a material adverse effect on our business, results of operations and
financial position. After the Regis merger is consummated, competition will
remain and could increase. Any increased competition from these competitors
could negatively effect sales volume of the combined company's company-owned and
franchised salons. In turn, this would reduce the combined company's
company-owned salons' revenue and profits and reduce royalty revenue from the
combined company's franchised locations and could have a material adverse effect
on the business, results of operations, and financial position of combined
company.
INCREASED COMPETITION FOR RETAIL SITES COULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR BUSINESS. Our ability to grow depends upon our ability to obtain
attractive retail sites for new company-owned salons and the ability of our
franchisees to obtain attractive retail sites for new franchised salons. A
salon's success depends significantly on the quality of the site selected for a
new salon. Our franchisees and us face intense competition for retail sites from
other companies operating in the hair care industry and from retailers operating
in other industries. The failure of our franchisees or us to obtain adequate
retail sites could have a material adverse effect on our business, results of
operations and financial position. After the Regis merger is consummated,
competition for such sites will remain and could increase. Any increased
competition for retail sites could result in higher occupancy and other costs
for new salons. In turn, this could have a material adverse effect on the
business, results of operations, and financial position of the combined company.
OUR INABILITY TO RETAIN AND HIRE QUALIFIED EMPLOYEES FOR OUR
COMPANY-OWNED SALONS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS. Our
growth is dependent, in part, upon our ability to retain and hire qualified
employees to work in our company-owned salons. Although we have each established
criteria to evaluate prospective employees, there is no assurance that potential
future employees will have the qualifications and skills necessary or desirable
for our business to grow. In addition, after the consummation of the Regis
merger, there is no assurance that Regis' existing employees will remain with
Regis or that The Barbers' existing employees will remain with The Barbers. The
inability to retain or hire qualified employees could have a material adverse
effect on the post-merger business, results of operations, and financial
position of the combined company.
OUR INABILITY TO RETAIN AND ATTRACT QUALIFIED FRANCHISEES COULD HAVE A
MATERIAL ADVERSE EFFECT ON OUR BUSINESS. Our growth is dependent, in part, upon
our ability to retain qualified franchisees and to attract new franchisees.
Although we have each established criteria to evaluate prospective franchisees,
there is no assurance that our existing or future franchisees will have the
business abilities or access to financial resources necessary to open new
locations or that they will successfully develop and operate these salons in a
manner consistent with our standards. In addition, after the consummation of the
Regis merger, there is no assurance that Regis' existing franchisees will remain
with Regis or that The Barbers' existing franchisees will remain with The
Barbers. The inability to retain qualified franchisees or attract new qualified
franchisees could have a material adverse effect on the post-merger business,
results of operations, and financial position of the combined company.
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THE INABILITY OF OUR FRANCHISEES TO OBTAIN ADEQUATE CAPITAL AND TO
OVERCOME OTHER FACTORS AFFECTING A FRANCHISEE'S GROWTH COULD HAVE A MATERIAL
ADVERSE EFFECT ON OUR BUSINESS. Our ability to meet our growth objectives
depends not only on our ability to find qualified franchisees for new locations
but also on the ability of these franchisees to obtain financing or investment
capital adequate to meet their market development obligations. In addition, the
development of a franchised location depends on a number of factors, including
the ability to obtain various government permits and licenses necessary to
operate a franchised location, that are beyond the control of us and the
franchisee. If these franchisees are unable to obtain the financing or
investment capital to meet their market development obligations or are unable to
overcome the factors that affect their development, this failure could have a
material adverse effect on the our business, results of operations, and
financial position. These issues will continue to face ours and Regis'
franchisees after the consummation of the Regis merger and could have a material
adverse effect on the post-merger business, results of operations, and financial
position of the combined company.
CHANGES IN OUR RELATIONSHIP WITH OUR SUPPLIERS COULD HAVE A MATERIAL
ADVERSE EFFECT ON OUR BUSINESS. We are dependent upon our relationships with our
suppliers who supply us with hair care and other beauty products that we, in
turn, sell to our customers through company-owned salons and sell to our
franchisees for resale to such franchisee's customers. Although we presently
have no reason to believe that any of our major beauty product suppliers will
cancel their distribution agreements with Regis and/or us as a result of the
Regis merger or for any other reason, if these suppliers did cancel their
distribution agreements with Regis and/or us, this could cause a reduction in
the sale of beauty products and the loss of those corresponding margins. Any
such cancellation of distribution could have a material adverse effect on the
post-merger business, results of operations, and financial position of the
combined company.
COSTS ASSOCIATED WITH YEAR 2000 COMPLIANCE ISSUES COULD BE GREATER THAN
ANTICIPATED. Regis has initiated a comprehensive project to prepare its computer
systems for the year 2000. Regis has completed the awareness, assessment, and
remediation phases of the project and is in the process of validation and
implementation. Based on Regis' most recent assessment, the associated expense
to be incurred is estimated to be approximately $5 million and will be charged
to earnings, primarily over the next nine months. The validation and
implementation phases are planned to be completed by late summer of calendar
year 1999. Accordingly, management of Regis believes the year 2000 will not have
a significant impact on operations. If necessary modification and conversions
are not completed on a timely basis, the year 2000 could have an adverse effect
on Regis' operations. At this time, Regis believes it is unnecessary to adopt a
contingency plan covering the possibility that the project will not be completed
in a timely manner, but as part of the overall project, Regis will continue to
assess the need for a contingency plan.
Regis is in contact with critical suppliers of products and services to
assess whether the suppliers' operations and the products and services they
provide are year 2000 capable or to monitor their progress toward year 2000
compliance. There can be no absolute assurance that another company's failure to
ensure year 2000 compliance would not have an adverse effect on Regis.
Time and cost estimates are based on currently available information
and are Regis' best estimates. However, there is no guarantee that these
estimates will be achieved, and actual results may differ materially from those
anticipated. Developments which could affect estimates include, but are not
limited to, the availability and cost of trained personnel; the ability to
locate and correct all relevant computer code and equipment; and planning and
modification success of third party suppliers of products and services.
RISKS RELATED TO THE MERGER
THE MARKET PRICE OF REGIS COMMON STOCK WILL FLUCTUATE. At the time the
Regis merger is consummated, each share of The Barbers common stock will be
converted into the right to receive 1/2 of one share of Regis common stock. This
conversion ratio will not be adjusted in the event of any increase or decrease
in the price of Regis common stock or The Barbers common stock that occurs prior
to the
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consummation of the merger. Therefore, the value of the Regis common stock
received by shareholders of The Barbers will vary with fluctuations in the value
of Regis common stock. Although the value of the Regis common stock to be
received by shareholders of The Barbers fluctuates, The Barbers may terminate
the merger agreement if the closing price of Regis' common stock falls below
$21.07 for five consecutive trading days during the time between the execution
of the merger agreement and the consummation of the merger.
DIFFICULTIES RELATED TO THE COMBINATION OF THE BUSINESSES OF REGIS AND
THE BARBERS COULD HAVE A MATERIAL ADVERSE EFFECT ON REGIS' POST-MERGER BUSINESS.
If Regis and The Barbers cannot successfully combine their business operations,
Regis may experience a material adverse effect on its post-merger business,
results of operations, or financial position. The merger involves the combining
of two companies that have previously operated on a stand-alone basis. This
combination presents a number of risks including:
* Demands on management to integrate the business and the diversion
of their attention from normal business operations.
* Difficulty in combining operations and systems.
* Difficulties in the assimilation and retention of employees.
COST SAVINGS EXPECTED TO RESULT FROM THE MERGER ARE NOT ACHIEVED. Regis
and The Barbers expect cost savings and other benefits from the merger that
neither company could achieve separately. These cost savings estimates are based
on many assumptions, including future sales levels and operating results, that
are beyond the control of Regis and The Barbers. If any of these assumptions
prove to be incorrect, then the actual cost savings, if any, as a result of the
merger could differ from the expected cost savings and these differences could
be material. In addition, there may be unforeseen costs and expenses associated
with the merger that will offset the expected cost savings of the merger.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements under the captions "Summary," "Certain Risk
Factors," and elsewhere in this prospectus constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 (the "Reform Act"). These forward-looking statements may be identified
by the use of the terminology such as "may," "will," "expect," "anticipate,"
"intend," "designed," "estimate," "should," or "continue" or the negatives of
these words, other variations of these words, or comparable terminology. These
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may affect the actual results, performance or achievements
expressed or implied by such forward-looking statements. These factors include:
* Increased competition from other hair salon chains in the
consumer marketplace could negatively affect sales volume at both
franchised and company-owned salons, reducing royalty revenue
from franchises and from company-owned salons.
* Increased competition for sites for new salons from hair care
salons and other retail concepts could increase occupancy costs
and other operating expenses.
* An inability to find qualified franchisees for new locations or
the inability of franchisees to finance the construction of new
salons could limit our ability to grow.
* Although we presently have no reason to believe it will occur,
major beauty product vendors could cancel their distribution
agreements with us thereby causing reductions in the sale of
beauty products and the loss of those corresponding margins.
* Costs and other adverse effects associated with year 2000
compliance issues could be greater than anticipated.
* Difficulties related to the combination of the businesses of
Regis and The Barbers could have a material adverse effect on
Regis' post-Merger business.
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* The risk that Regis incorrectly analyzes these risks and
difficulties, or that the strategies Regis develops to address
them are unsuccessful.
USE OF PROCEEDS
We will not receive any proceeds from the issuance of the shares.
DESCRIPTION OF SECURITIES
GENERAL
Our authorized capital stock consists of 7,500,000 shares of capital
stock, $.10 par value per share. In addition, our board of directors is
authorized to divide the shares of our authorized capital stock into classes and
series, with such designations, voting rights, and other rights and preferences,
and subject to the restrictions, that our board of directors may from time to
time establish. As of the date of this prospectus, the board of directors has
not authorized or established any class or series of capital stock other than
our common stock. These shares of capital stock could be issued to deter or
prevent a hostile takeover of The Barbers even though the transaction was
favored by our shareholders. Our board of directors has no present intention to
authorize or issue any shares of capital stock to deter or prevent a
transaction.
COMMON STOCK
As of April 19, 1999, a total of 3,990,769 shares of our common stock
were issued and outstanding. All outstanding shares of our common stock are duly
authorized, validly issued, fully paid and nonassessable. Holders of our common
stock are entitled to receive dividends, when, as and if declared by our board
of directors, out of funds legally available for dividends and to share ratably
in the our net assets upon liquidation. Holders of our common stock do not have
preemptive or other rights to subscribe for additional shares. There are no
redemption or sinking fund provisions associated with the common stock.
Holders of our common stock are entitled to one vote per share on all
matters requiring a vote of shareholders. Our common stock does not have
cumulative voting rights in electing directors.
MINNESOTA BUSINESS CORPORATION ACT
Section 302A.671 of the Minnesota Business Corporation Act applies,
with certain exceptions, to any acquisition of our voting stock (from a person
other than us, and other than in connection with certain mergers and exchanges
to which we are a party) resulting in the beneficial ownership of 20 percent or
more of our voting stock then outstanding. Section 302A.671 of the Minnesota
Business Corporation Act requires approval of any such acquisitions by a
majority vote of our shareholders prior to its consummation. In general, shares
acquired in the absence of this approval are denied voting rights and are
redeemable at their then fair market value by us within 30 days after the
acquiring person has failed to give a timely information statement to us or the
date the shareholders voted not to grant voting rights to the acquiring person's
shares.
Section 302A.673 of the Minnesota Business Corporation Act generally
prohibits any business combination by us, or by any of our subsidiaries, with
any shareholder which purchases ten percent or more of our voting shares (an
"interested shareholder") within four years following the interested
shareholder's share acquisition date, unless the business combination is
approved by a committee of all of the disinterested members of our board of
directors before the interested shareholder's share acquisition date.
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TRANSFER AGENT
The transfer agent and registrar for our common stock is Norwest Bank
Minnesota, N.A., 161 North Concord Exchange, South St. Paul, Minnesota
55075-0738 and its telephone number is (612) 450-4000.
PLAN OF DISTRIBUTION
This offering of common stock is not underwritten. The common stock is
being issued by the Company for its own account and no commissions or
remuneration will be paid for any activities in connection with the issuance of
the common stock contemplated hereby.
The offering is being made pursuant to the Company's Designer Salon
Program. The Company has implemented the Designer Salon Program for each of its
franchise systems. The objective of the each of the Designer Salon Programs is
to encourage franchisees to purchase beauty products through the Company.
In addition to receiving other benefits, if the franchisee exceeds a
level of purchases of beauty products set by the Company and meets other
compliance criteria designated by the Company, the franchisee earns a rebate
which is paid in shares of the Company's common stock. The amount of shares
earned is equal to the rebate amount divided by the current fair market value of
the Company's common stock at the end of the Company's fiscal year. No
additional consideration is required from the franchisee to purchase the shares
of common stock.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a Registration Statement on Form S-2 (the
"Registration Statement") under the Securities Act of 1933 that registers the
distribution of the shares of our common stock to be issued under the Designer
Salon Program. The Registration Statement, including attached exhibits and
schedules, contains additional relevant information about us. The rules and
regulations of the SEC allow us to omit some information included in the
Registration Statement from this prospectus.
In addition, we file annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any
document we file with the SEC at the following locations of the SEC:
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Washington, D.C. 20549 Suite 1300 500 West Madison Street
New York, New York 10048 Suite 1400
Chicago, Illinois 60661
You can call the SEC at 1-800-SEC-0300 (1-800-732-0300) for further
information on the operation of public reference rooms. You can also obtain
copies of this information from the Public Reference Section of the SEC, 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The SEC also
maintains an internet site that contains reports, proxy and information
statements, and other information regarding issuers who file information
electronically with the SEC, including us. The address of this internet site is
http://www.sec.gov.
The SEC allows us to incorporate by reference the information we file
with them (File No. 024466) into this prospectus. This means that we can
disclose important information to you by referring you to those documents. The
information incorporated by reference is considered to be a part of this
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prospectus, except for information that is superseded by information that is
included directly in this prospectus. This prospectus incorporates by reference
the documents listed below that we have previously filed with the SEC. A copy of
each of these documents is included with this prospectus. They contain important
information about us, our businesses, financial position, and results of
operations. These documents are:
* Our annual report on Form 10-KSB for the year ended September 24,
1998.
* Our quarterly report on Form 10-QSB for the quarter ended
December 24, 1998.
* Our quarterly report on Form 10-QSB for the quarter ended March
25, 1999.
You can obtain any of the documents incorporated by reference in this
prospectus through us or from the SEC in the manner discussed above. The
documents incorporated by reference are available from us without charge,
excluding exhibits to those documents unless the exhibit is specifically
incorporated by reference in this prospectus, by requesting them in writing or
by telephone from us at the following address and phone number:
Mr. J. Brent Hanson
Chief Financial Officer
The Barbers, Hairstyling for Men & Women, Inc.
300 Industrial Boulevard, N.E.
Minneapolis, Minnesota 55413
(612) 331-8500
We have not authorized anyone to give any information or make any
representation about the us that differs from, or adds to, the information in
this document or in the documents incorporated by reference in this document.
Therefore, if anyone does give you different or additional information, you
should not rely on it.
If you are in a jurisdiction where it is unlawful to offer to exchange
or sell, or ask for offers to exchange or buy, the securities offered by this
document or to ask for proxies, or if you are a person to whom it is unlawful to
direct these activities, then the offer presented by this document does not
extend to you.
The information contained in this document speaks only as of its date
unless the information specifically indicates that another date applies.
LEGAL MATTERS
The legality of the securities covered by this prospectus has been
passed upon by Gray, Plant, Mooty, Mooty & Bennett, P.A., Minneapolis,
Minnesota, our legal counsel.
EXPERTS
The consolidated financial statements of The Barbers, Hairstyling for
Men & Women, Inc., incorporated by reference in The Barbers, Hairstyling for Men
& Women, Inc. Annual Report (Form 10-KSB) for the year ended September 24, 1998,
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon incorporated by reference therein and incorporated herein
by reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
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INDEMNIFICATION
Our Amended and Restated Bylaws, dated January 21, 1993, require us to
indemnify and hold harmless our officers and directors who are made a party to
any suit or proceeding or who are threatened to be made party to any suit or
proceeding to the full extent permitted by Minnesota law. The right includes the
right to be paid all expenses incurred in defending an action in advance of its
final disposition if an officer or director (a) delivers a written affirmation
that the criteria for indemnification set forth in the Minnesota Business
Corporation Act has been satisfied, (b) is determined to be eligible for
indemnification pursuant to the Minnesota Business Corporation Act or our bylaws
and (c) delivers to us a promise to repay all amounts so advanced if it is
determined in the future that the officer or director was not entitled to
indemnification. Although indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to our directors, officers and
controlling persons pursuant to these provisions or in another manner, we have
been advised that in the opinion of the Securities and Exchange Commission this
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
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No dealer, salesman or any other
person has been authorized to give any
information or to make any
representations other than those
contained in this prospectus in
connection with the offer made by this
prospectus and, if given or made, the
information or representations must not
be relied upon as having been authorized
by us. This prospectus does not
constitute an offer to sell or the
solicitation of any offer to buy any
security other than the securities
offered by this prospectus, nor does it
constitute an offer to sell or a
solicitation of any offer to buy the
securities offered by this prospectus by THE BARBERS, HAIRSTYLING FOR MEN
anyone in any jurisdiction in which the & WOMEN, INC.
offer or solicitation is not authorized,
or in which the person making the offer
or solicitation is not qualified to do
so, or to any person to whom it is
unlawful to make an offer or
solicitation. Neither the delivery of
this prospectus nor any sale made under
this prospectus shall, under any
circumstances, create any implication
that information contained in this
prospectus is correct as of any time
subsequent to the date of this
prospectus.
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TABLE OF CONTENTS
Page
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Summary................................1
Certain Risk Factors...................2 ------------
Special Note Regarding Forward-Looking
Statements...........................4 PROSPECTUS
Use of Proceeds........................5
Description of Securities..............5 ------------
Plan of Distribution...................6
Where You Can Find More Information....6
Legal Matters..........................7
Experts................................7
Indemnification........................8 MAY 17, 1999
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