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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): September 18, 1997
Acorn Products, Inc.
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-22717 22-3265462
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(State or Other Jurisdiction of (Commission File Number) (IRS Employer
Incorporation) Identification No.)
500 Dublin Avenue, Columbus Ohio 43215
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (614) 222-4400
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS
In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, Acorn Products, Inc. (the "Company")
hereby is filing a cautionary statement identifying important factors that
could cause the Company's actual results to differ materially from those
projected in forward looking statements of the Company made by or on behalf of
the Company.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
(c) Exhibits
99.1 Cautionary Statement for Purposes of the "Safe Harbor" Provisions of
the Private Securities Litigation Reform Act of 1995.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Acorn Products, Inc.
(Registrant)
By: /s/ J. Mitchell Dolloff
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Name: J. Mitchell Dolloff
Title: Vice President and General Counsel
Date: September 18, 1997
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Index to Exhibits
EXHIBITS DESCRIPTION
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99.1 Cautionary Statement for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act
of 1995.
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EXHIBIT 99.1
Cautionary Statement for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act of 1995
In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995 (the "Reform Act"), Acorn Products,
Inc. (the "Company") hereby is filing cautionary statements identifying
important factors that could cause the Company's actual results to differ
materially from those projected in forward-looking statements, whether oral or
written, made by or on behalf of the Company. The Company wishes to ensure that
all forward-looking statements made by or on behalf of the Company are
accompanied by meaningful cautionary statements in order to maximize to the
fullest extent possible the protections of the safe harbor established by the
Reform Act. Accordingly, any such statements are qualified in their entirety by
reference to, and are accompanied by, the following important factors, among
others, that could cause the Company's actual results to differ materially from
those projected in forward-looking statements of the Company made by or on
behalf of the Company.
Statements that indicate the Company's or management's intentions,
hopes, beliefs, expectations or predictions of the future are forward-looking
statements. It is important to note that the Company's actual results could
differ materially from those projected in such forward-looking statements due
to, among other risks and uncertainties inherent in the Company's business, the
following important factors:
* Weather is the most significant factor in determining market demand for
the Company's products and is inherently unpredictable. Inclement weather
during the spring gardening season and lack of snow during the winter may
have a material adverse effect on the Company's business, financial
condition and results of operations.
* The lawn and garden industry is seasonal in nature, with a high
proportion of sales and operating income generated in January through May.
Accordingly, the Company's sales tend to be greater during its third and
fourth fiscal quarters. As a result, the Company's operating results
depend significantly on the spring selling season. To support this sales
peak, the Company must anticipate demand and build inventories of finished
goods throughout the fall and winter. Accordingly, the Company's levels of
raw materials and finished goods inventories tend to be at their highest,
relative to sales, during the Company's first and second fiscal quarters.
These factors increase variations in the Company's quarterly results of
operations and potentially expose the Company to greater adverse effects
of changes in economic and industry trends. Moreover, actual demand for
the Company's products may vary
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substantially from the anticipated demand, leaving the Company with either
excess inventory or insufficient inventory to satisfy customer orders.
* The Company's five largest customers in the aggregate accounted for
approximately 36.7% of gross sales in fiscal 1997. A substantial
reduction or cessation of sales to these or other major customers could
have a material adverse effect on the Company's business, financial
condition and results of operations.
* Certain retail distribution channels in the lawn and garden industry,
such as mass merchants and home centers, are experiencing consolidation.
There can be no assurance that such consolidation will not have an adverse
impact on certain of Company's customers or result in a substantial
reduction or cessation of purchases of the Company's products by certain
customers. In addition, the Company is facing increasing pressures from
retailers with respect to pricing, co-operative advertising and other
rebates as the market power of large retailers continues to grow. There
can be no assurance that such pressures will not have an adverse impact on
the Company's business, financial condition and results of operations.
* A key element of the Company's growth strategy is to increase sales in
certain distribution channels, such as home centers and mass merchants
through retailers such as The Home Depot, Inc. ("Home Depot") and Sears,
Roebuck & Company ("Sears"). Although Home Depot has indicated that it
expects to open over 450 additional stores over the next five years and
Sears has indicated that it expects to open or acquire over 500 additional
non-mall hardware stores over the next five years, there can be no
assurance that such stores will be opened or, if opened, that the Company
will be chosen to supply its products to all or a significant portion of
such stores. In addition, there can be no assurance that such stores will
generate significant additional sales for the Company or that such stores
will not result in a reduction of sales to the Company's other customers,
whether through consolidation or otherwise.
* The recent growth and development of the Company largely has been
dependent upon the services of Gabe Mihaly, President and Chief Executive
Officer of the Company, as well as the other executive officers of the
Company. The loss of Mr. Mihaly's services, or the services of one or more
of the other executive officers of the Company, could have a material
adverse effect on the Company.
* A key element of the Company's strategy is the acquisition of businesses
and assets in the lawn and garden industry. There can be no assurance,
however, that the Company will be able to identify attractive acquisition
opportunities, obtain sufficient financing for acquisitions on
satisfactory terms or successfully acquire identified targets. In
addition, there can be no assurance that the Company will be successful in
integrating acquired businesses into its existing operations or that such
integration will not result in
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unforeseen operational difficulties or require a disproportionate amount of
management's attention. Such acquisitions may result in the incurrence of
additional indebtedness by the Company or the issuance of preferred stock
or additional Common Stock by the Company. Furthermore, there can be no
assurance that competition for acquisition opportunities in the industry
will not escalate, thereby increasing the cost to the Company of making
acquisitions or causing the Company to refrain from making further
acquisitions.
* The Company's products require the supply of raw materials consisting
primarily of steel, plastics and ash wood. The Company has several
suppliers for most of its raw materials. There can be no assurance,
however, that the Company will not experience shortages of raw materials
or components essential to its production processes or be forced to seek
alternative sources of supply. In addition, there can be no assurance that
prices for such materials will remain stable. Any shortages of raw
materials may result in production delays and increased costs which could
have a material adverse effect on the Company's business, financial
condition and results of operations.
* All aspects of the lawn and garden industry, including attracting and
retaining customers and pricing, are highly competitive. The Company
competes for customers with large consumer product manufacturers and
numerous other companies that produce specialty home and garden products,
as well as with foreign manufacturers that export their products to the
U.S. Many of these competitors are larger and have significantly greater
financial resources than the Company. There can be no assurance that
increased competition in the lawn and garden industry, whether from
existing competitors, new domestic manufacturers or additional foreign
manufacturers entering the U.S. market, will not have a material adverse
effect on the Company's business, financial condition and results of
operations.
* Most of the Company's hourly employees are covered by collective
bargaining or similar labor agreements. The Company currently is a party
to four such agreements, one of which expires in 1998 and three of which
expire in 1999. There can be no assurance that the Company will be
successful in negotiating new labor contracts on terms satisfactory to the
Company or without work stoppages or strikes. A prolonged work stoppage or
strike at any of the Company's facilities could have a material adverse
effect on the Company's business, financial condition and results of
operations. The Company is subject to various Federal, state, and local
environmental laws, ordinances and regulations governing, among other
things, emissions to air, discharge to waters and the generation, handling,
storage, transportation, treatment and disposal of hazardous substances and
wastes. The Company has made, and will continue to make, expenditures to
comply with these environmental requirements and regularly reviews its
procedures and policies for compliance with environmental laws. The Company
also has been involved in remediation actions with respect to
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certain of its facilities. Amounts expended by the Company in such
compliance and remediation activities have not been material to the
Company. However, current conditions and future events, such as changes in
existing laws and regulations, may give rise to additional compliance or
remediation costs that could have a material adverse effect on the
Company's business, financial condition or results of operations.
Furthermore, as is the case with manufacturers in general, if a release of
hazardous substances occurs on or from the Company's properties or any
associated offsite disposal location, or if contamination from prior
activities is discovered at any of the Company's properties, the Company
may be held liable and the amount of such liability could be material.
* New housing starts often represent an addition to the overall number of
consumers in the lawn and garden tool market and, accordingly, an increase
in demand. Similarly, government spending on highways, bridges and other
construction projects often represents an increase in demand for long
handled tools. A decline in housing starts or government spending on
construction projects could result in a decrease in demand for the
Company's products and, accordingly, could have a material adverse effect
on the Company's business, financial condition and results of operations.
* Adverse changes in general economic conditions in the United States,
including the level and availability of consumer debt, the level of
interest rates and consumer sentiment regarding the economy in general,
could result in a decrease in demand for the Company's products and,
accordingly, could have a material adverse effect on the Company's
business, financial condition and results of operations.
The factors set forth above are not exhaustive. Further, any
forward-looking statement speaks only as of the date on which such statement is
made, and the Company will not undertake, and specifically declines, any
obligation to publicly release the results of any revisions which may be made
to any forward-looking statement to reflect events or circumstances after the
date on which such statement is made or to reflect the occurrence of
anticipated or unanticipated events. New factors emerge from time to time and
it is not possible for management to predict all of such factors, nor can it
assess the impact of each such factor on the business or the extent to which
any factor, or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements. Therefore,
forward-looking statements should not be relied upon as a prediction of actual
future results.
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