Zany Brainy Inc. –

WYNNEWOOD, Pa. – Zany Brainy Inc., a specialty toy retailer, went public June 2, offering 6.1 million shares at $10 apiece. The stock priced at the low end of the company’s $10 to $12 filing range.

Donaldson, Lufkin & Jenrette, BT Alex. Brown, William Blair & Co., U.S. Bancorp Piper Jaffray and DLJdirect Inc. underwrote the initial public offering, which left 20.5 million shares outstanding.

Venture backers include Oak Investment Partners V, Global Retail Partners, Frontenac VI, Fourcar B.V., Nassau Capital Partners II, Vulcan Ventures Inc., WESINVEST Inc. and Brener International Group. Frontenac sold 210,957 shares in the offering, joined by Nassau (305,197), WESINVEST (74,343) and Brener (29,712).

Zany Brainy, which opened its first store in 1991, is a retailer of toys, games, books and multimedia products for children up to 12-years-old. Aside from merchandise, there are daily in-store events intended to create an interactive, “kid-friendly” shopping environment. The chain, which currently operates 82 stores in 23 states, plans to open nearly 50 additional stores in the next two years.

The $34.1 million raised by the company in the IPO will be used to repay debt, open additional stores and a new distribution center, implement new enterprise software and other general corporate purposes.

Zany Brainy made a profit of $9.0 million in 1998, after losing $153,000 in 1997 and $6.0 million in 1996.

Gerald Gallagher, a general partner of Oak Investment Partners, and Yves Sisteron, a principal of Global Retail Partners, joined the company’s board of directors in June 1994.


Zany Brainy – Selected Financial

(in thousands, except per share data)

Fiscal Year Thirteen Weeks Ended

1994 1995 1996 1997 1998 May 2, 1998 May 1, 1999

Net sales 23,471 54,372 92,563 123,345 168,471 27,452 40,577

Net income (loss) -6,658 -7,828 -6,023 -153 8,999 -2,470 -1,378

Net income (loss) per share -1.35 -1.55 -1.19 -0.03 1.67 -0.46 -0.26