<PAGE> 1
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-41699
834,268 SHARES
HUGHES SUPPLY, INC.
COMMON STOCK
---------------------
This prospectus (this "Prospectus") relates to the offering by the selling
shareholders named herein (the "Selling Shareholders") of up to an aggregate of
834,268 shares of Common Stock, par value $1.00 per share (the "Common Stock"),
of Hughes Supply, Inc., a Florida corporation ("Hughes Supply" or the
"Company"), consisting of: (i) 7,606 shares of Common Stock (the "PPP Shares")
issued pursuant to the Acquisition Agreement (the "PPP Agreement") dated
September 30, 1996 by and among the Company, Palm Pool Products, Inc., a
Michigan Corporation ("PPP"), and the shareholders of PPP; (ii) 356,264 shares
of Common Stock (the "Shrader Shares") issued pursuant to the Acquisition
Agreement (the "Shrader Agreement") dated July 25, 1997 by and among the
Company, Shrader Holding Company, Inc., an Arkansas corporation ("Shrader"), and
the shareholders of Shrader; (iii) 225,368 shares of Common Stock (the "Allied
Shares") issued pursuant to the Acquisition Agreement (the "Allied Agreement")
dated October 2, 1997 by and among the Company, Allied Metals Inc. and Allied
Merger Corp., Inc., each a Texas corporation (collectively "Allied") and the
shareholders of Allied; (iv) 211,482 shares of Common Stock (the "VWW Shares")
issued pursuant to the Acquisition Agreement (the "VWW Agreement") dated
November 4, 1997 by and among the Company, Virginia Water & Waste Supply
Company, Inc., a Virginia corporation ("VWW"), and the shareholders of VWW; and
(v) 33,548 shares of Common Stock (the "APPCO Shares") issued pursuant to the
Acquisition Agreement (the "APPCO Agreement") dated December 1, 1997 by and
among the Company, APPCO, Inc., a North Carolina corporation ("APPCO"), and
Anthony W. Bell, the sole shareholder of APPCO. The PPP Shares, the Shrader
Shares, the Allied Shares, the VWW Shares and the APPCO Shares are collectively
referred to herein as the "Shares."
The Shares, when sold, will be sold by and for the account of the Selling
Shareholders. The Company will not receive any proceeds from the sale of the
Shares by the Selling Shareholders. See "Use of Proceeds." The Company's Common
Stock is listed on the New York Stock Exchange, Inc. (the "NYSE") under the
symbol "HUG." On December 3, 1997, the last sale price for the Common Stock as
reported on the NYSE was $33.313 per share.
All expenses relating to the distribution of the Shares shall be borne by
the Company, other than selling commissions and fees and expenses of counsel and
other representatives of the Selling Shareholders. See "Plan of Distribution."
SEE "RISK FACTORS" BEGINNING ON PAGE 8 OF THIS PROSPECTUS FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN EVALUATING 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 Company has been advised by the Selling Shareholders that the Selling
Shareholders, acting as principals for their own accounts, directly, through
agents designated from time to time, or to or through broker-dealers or
underwriters also to be designated, may sell all or a portion of the Shares
offered hereby from time to time on terms to be determined at the time of sale.
The aggregate proceeds to the Selling Shareholders from the sale of the Shares
sold by the Selling Shareholders pursuant to this Prospectus will be the
purchase price of such shares less any commissions. See "Plan of Distribution."
Any broker-dealers, agents or underwriters that participate with the
Selling Shareholders in the distribution of the Shares may be deemed
"underwriters" within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"), in which event any commissions received by such
broker-dealers, agents or underwriters and any profit on the resale of the
Shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.
---------------------
The date of this Prospectus is December 15, 1997.
<PAGE> 2
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549-1104, and at the following
regional offices of the Commission: New York Regional Office, Seven World Trade
Center, 13th Floor, New York, New York 10048; and Chicago Regional Office,
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material can also be obtained from the Public Reference Section
of the Commission at prescribed rates at the principal office of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission maintains a
World Wide Web site at http://www.sec.gov containing reports, proxy and
information statements and other information regarding registrants, including
the Company, that file electronically with the Commission. In addition, the
Common Stock of the Company is traded on the NYSE, and such reports, proxy
statements and other information concerning the Company can also be inspected at
the offices of the NYSE, Room 401, 20 Broad Street, New York, New York 10005.
The right to purchase one one-hundredth of a share of the Company's Series
A Junior Participating Preferred Stock, no par value per share (collectively,
"Rights"), is attached to each share of Common Stock, including each share of
Common Stock offered hereby. Any reference in this Prospectus to the Common
Stock shall include such Rights. This Prospectus, which constitutes part of the
Registration Statement on Form S-3 (Registration No. 333-41699) (the
"Registration Statement") filed by the Company with the Commission under the
Securities Act, omits certain of the information contained in the Registration
Statement. Reference is hereby made to the Registration Statement and to the
exhibits relating thereto for further information with respect to the Company
and the securities offered hereby. This Prospectus does not contain all
information set forth in the Registration Statement. Certain parts of the
Registration Statement have been omitted in accordance with the rules and
regulations of the Commission. For further information, reference is made to the
Registration Statement which can be inspected at the public reference rooms at
the offices of the Commission.
2
<PAGE> 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents or portions thereof, filed by the Company with the
Commission under the Exchange Act and the Securities Act, are incorporated
herein by reference:
(a) Hughes Supply's Annual Report on Form 10-K (File No. 001-08772)
for the year ended January 31, 1997;
(b) Hughes Supply's Quarterly Report on Form 10-Q (File No. 001-08772)
for the quarter ended April 30, 1997;
(c) Hughes Supply's Quarterly Report on Form 10-Q (File No. 001-08772)
for the quarter ended July 31, 1997;
(d) Hughes Supply's Proxy Statement for the Annual Meeting of
Shareholders held on May 20, 1997;
(e) Hughes Supply's Registration Statement on Form S-3 (File No.
333-27937), as filed with the Commission on May 28, 1997; and
(f) Hughes Supply's Current Report on Form 8-K (File No. 333-27937),
as filed with the Commission on September 22, 1997.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act prior to the termination of this offering
shall be deemed to be incorporated by reference in this Prospectus and to be a
part of this Prospectus from the date of filing thereof. 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 to any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statements so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus has been delivered, upon the written or oral
request of any such person, a copy of any or all of the documents referred to
above which shall have been or may be incorporated in this Prospectus by
reference (not including exhibits to such information, unless such exhibits are
specifically incorporated by reference into such information). Requests for such
copies shall be directed to Hughes Supply, Inc., Attention: J. Stephen Zepf,
Treasurer and Chief Financial Officer, at 20 North Orange Avenue, Suite 200,
Orlando, Florida 32801, telephone number (407) 841-4755.
3
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and the consolidated financial statements and related notes thereto
incorporated by reference in this Prospectus. As used in this Prospectus, unless
the context indicates otherwise, the terms "Company" and "Hughes Supply" mean
Hughes Supply, Inc., its subsidiaries and its predecessors. The Company's fiscal
year ends on the last Friday in January of each year.
THE COMPANY
Hughes Supply is one of the largest diversified wholesale distributors of
materials, equipment and supplies for the construction and industrial markets
operating primarily in the southeastern and midwestern United States. As of
January 31, 1997, the Company distributed more than 130,000 products through 272
branches located in 25 states and Puerto Rico. The Company's customers are
subcontractors, general contractors, utilities, municipalities and
manufacturers. Management believes that the Company holds a significant market
share in a majority of its local markets and is one of the largest distributors
of its range of products in the southeastern and midwestern United States. The
Company's largest geographic market is Florida (representing approximately 36%
of fiscal 1997 net sales), which is one of the largest commercial and
residential construction markets in the United States.
The products which the Company distributes are used in new construction for
commercial, residential, utility and industrial applications and for replacement
and renovation projects. Such products include materials and supplies associated
with the Company's nine major product groups as follows: electrical; plumbing;
water and sewer; air conditioning and heating; industrial pipe, valves and
fittings; building materials; electric utilities; water systems; and pool
equipment and supplies. Each product group is sold by the Company's own
specialized and experienced sales force consisting of outside sales
representatives and inside account executives. Management believes that the
Company's mix of commercial, residential, utility and industrial business,
geographic diversification and multiple product groups reduces the impact of
economic cycles on the Company's net sales and profitability. Management
believes that no other company competes against it across all of its product
groups.
The Company's principal business objective is to achieve profitable growth,
both internally and through selective acquisitions, primarily in existing and
contiguous geographic markets. The Company has grown internally through
increases in comparable branch net sales and new branch openings and the
addition of new product groups. Since January 29, 1993, the Company has opened
52 new branches (exclusive of new branches acquired through acquisitions). In
addition, the Company continues to pursue an active acquisition program as a
result of opportunities presented by the substantial size and highly fragmented
ownership structure of its industry. Based upon estimates available to the
Company, industry sales in the United States of products sold by the Company
exceeded $100 billion in 1996, and no wholesale distributor of these products
accounted for more than 3.5% of the total market. Since January 29, 1993, the
Company has completed 46 acquisitions representing 147 branches. In addition to
increased geographic penetration, acquisitions often provide opportunities for
the Company to gain market share and to enhance and diversify product offerings.
Management believes that the most cost effective way for the Company to enter
new geographic markets is through acquisitions.
The Company's acquisition strategy is to acquire profitable distribution
businesses with strong management and well-developed market positions and
customer franchises. Acquisitions can generally be categorized as fill-in
acquisitions or new market acquisitions. Fill-in acquisitions are generally
smaller in size and represent new branches within existing product groups and
existing geographic markets. Since January 29, 1993, the Company has completed
fill-in acquisitions of 40 branches, and management believes that significant
additional fill-in acquisition opportunities are available.
New market acquisitions represent the addition of new product groups,
within related commercial construction and industrial products categories, or
the entry into new geographic markets, or both. During the
4
<PAGE> 5
last four fiscal years, the Company has increasingly focused on new market
acquisitions with the goal of adding products and product groups with higher
gross margins, increasing sales to the replacement and industrial markets (which
tend to be less cyclical than new construction markets), achieving greater
geographic diversification and developing additional opportunities for future
fill-in acquisitions and new branch openings. Recent new market acquisitions
completed by the Company include: (i) The Treaty Distribution Group, resulting
in a significant increase in the Company's water and sewer products business in
new geographic markets; (ii) Moore Electric Supply, Inc., resulting in a
significant increase in the Company's electrical products business in new
geographic markets; (iii) Florida Pipe & Supply Company, the Company's initial
entry into the industrial pipe, valve and fitting market; (iv) Electric
Laboratories and Sales Corporation and ELASCO Agency Sales, Inc. (collectively,
"ELASCO"), resulting in a significant increase in the Company's electric
utilities business in new geographic markets; (v) PVF Holdings, Inc., resulting
in a significant increase in the Company's industrial pipe, valve and fitting
business in new geographic markets; (vi) Sunbelt Supply Co., resulting in a
significant increase in the Company's valve and fitting business in new
geographic markets; and (vii) Metals, Incorporated, Stainless Tubular Products,
Inc., and Metals, Inc. -- Gulf Coast Division, resulting in a significant
increase in the Company's specialty pipe, valve and fitting business as well as
the metal fabrication business in new geographic markets.
The Company's operating strategy is based on decentralizing customer
related functions at the branch level, such as sales and local inventory
management, and centralizing certain administrative functions at the corporate
level, such as credit, human resources, finance and accounting, legal and
management information systems. Other key elements of the Company's operating
strategy include:
- Comprehensive and diversified product groups;
- Superior customer service;
- Local market focus;
- Well-trained and experienced workforce; and
- Volume purchasing power.
Hughes Supply differentiates itself from consumer-oriented, large format,
do-it-yourself ("DIY") home center retailers with respect to the type of
customer served, breadth of products offered and level of service provided.
Management believes that the Company's customers, unlike DIY customers, are
typically professionals who choose their building materials suppliers primarily
on the basis of product availability, price, relationships with sales personnel,
and the quality and scope of services offered by such suppliers. Furthermore,
professional customers generally buy in large volumes, are involved in ongoing
jobs or projects lasting months or years resulting in repeat buying situations,
and require specialized services not typically provided by large format DIY home
center retailers. Customer services provided by the Company include credit,
design assistance, material specifications, scheduled job site delivery, job
site visits to ensure satisfaction, technical product services, including
blueprint take-off and computerized order quotes, and assistance with product
returns. Accordingly, the Company has been able to serve customer groups that
large format DIY home center retailers generally do not emphasize.
As a result of the Company's operating and acquisition strategies, net
sales increased to $1.5 billion in fiscal 1997 from $827.3 million in fiscal
1994, a compound annual growth rate of 22.4%; operating income increased to
$59.3 million in fiscal 1997 from $16.8 million in fiscal 1994, a compound
annual growth rate of 52.2%; and the number of branches increased to 272
branches at the end of fiscal 1997 from 151 branches at the end of fiscal 1994,
a compound annual growth rate of 22.2%.
Hughes Supply was founded as a general partnership in Orlando, Florida in
1928 and was incorporated as a Florida corporation in 1947. The Company's
executive offices are located at 20 North Orange Avenue, Suite 200, Orlando,
Florida 32801, and its telephone number is (407) 841-4755.
5
<PAGE> 6
RISK FACTORS
For a discussion of certain factors that should be considered by
prospective purchasers of the Common Stock offered hereby, see "Risk Factors."
FORWARD-LOOKING STATEMENTS
This Prospectus, including the information incorporated by reference
herein, includes "forward-looking statements" within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act, and is subject to the
safe-harbor created by such sections. When used in this Prospectus, the words
"believe," "anticipate," "estimate," "expect," and similar expressions are
intended to identify forward-looking statements. Although the Company believes
that the expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to be
correct. The Company's actual results may differ significantly from the results
discussed in such forward-looking statements. Certain factors that might cause
such differences include, but are not limited to, the "Risk Factors" described
herein.
THE OFFERING
<TABLE>
<S> <C>
Common Stock being offered hereby........................... 834,268 shares
Common Stock outstanding (as of November 30, 1997)(1)....... 18,824,314 shares
Common Stock to be outstanding after this offering(2)....... 18,824,314 shares
NYSE symbol................................................. HUG
</TABLE>
- ---------------
(1) Includes all shares offered hereby.
(2) Assumes all shares offered hereby have been sold. Because the Selling
Shareholders may sell all, some or none of the respective shares pursuant to
this Prospectus, no actual estimate can be made of the aggregate number of
shares that each Selling Shareholder will own upon completion of the
offering to which this Prospectus relates.
6
<PAGE> 7
SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL YEARS ENDED SIX MONTHS ENDED
------------------------------------------------------------------- -------------------
JANUARY 31, JANUARY 26, JANUARY 27, JANUARY 28, JANUARY 29, JULY 31, JULY 31,
1997 1996 1995 1994 1993 1997 1996
----------- ----------- ----------- ----------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF INCOME
DATA:
Net sales............ $1,516,088 $1,242,446 $994,811 $827,251 $676,465 $882,779 $745,317
Cost of sales........ 1,200,179 989,214 797,123 664,696 547,636 693,752 594,378
---------- ---------- -------- -------- -------- -------- --------
Gross profit......... 315,909 253,232 197,688 162,555 128,829 189,027 150,939
Operating expenses... 256,636 213,946 170,617 145,749 119,340 149,934 124,876
---------- ---------- -------- -------- -------- -------- --------
Operating income..... 59,273 39,286 27,071 16,806 9,489 39,093 26,063
Interest expense..... 13,520 9,380 6,414 6,048 5,774 8,414 5,926
Interest and other
income............. 5,953 4,961 3,203 3,679 4,072 2,480 3,608
---------- ---------- -------- -------- -------- -------- --------
Income before income
taxes.............. 51,706 34,867 23,860 14,437 7,787 33,159 23,745
Income taxes......... 19,178 11,661 7,979 4,710 1,734 13,099 9,024
---------- ---------- -------- -------- -------- -------- --------
Net income........... $ 32,528 $ 23,206 $ 15,881 $ 9,727 $ 6,053 $ 20,060 $ 14,721
========== ========== ======== ======== ======== ======== ========
Earnings per
share:(1)
Primary............ $ 2.05 $ 1.82 $ 1.34 $ 0.95 $ 0.60 $ 1.12 $ 1.01
========== ========== ======== ======== ======== ======== ========
Fully diluted...... $ 2.05 $ 1.80 $ 1.32 $ 0.90 $ 0.60 $ 1.12 $ 1.01
========== ========== ======== ======== ======== ======== ========
Cash dividends per
share(1)........... $ 0.25 $ 0.20 $ 0.15 $ 0.11 $ 0.08 $ 0.15 $ 0.12
========== ========== ======== ======== ======== ======== ========
Pro forma earnings
per share:(1)(2)
Primary............ $ 2.00 $ 1.62 $ 1.21 $ .85 $ .50 $ N/A $ .98
Fully diluted...... $ 2.00 $ 1.61 $ 1.20 $ .81 $ .50 $ N/A $ .98
OPERATING DATA:
Branches at end of
period............. 272 226 182 151 136 302 244
Comparable branch
sales increases
(decreases)(3)..... 8% 11% 14% 18% (1%) 7% 11%
</TABLE>
<TABLE>
<CAPTION>
AS OF AS OF
JANUARY 31, 1997 JULY 31, 1997
---------------- --------------
<S> <C> <C>
BALANCE SHEET DATA (END OF PERIOD):
Working capital............................................. $330,388 $372,304
Total assets................................................ 649,502 748,476
Long-term debt, less current portion........................ 221,988 262,096
Shareholders' equity........................................ 278,934 307,585
</TABLE>
- ---------------
(1) All per share data has been restated to give retroactive effect to the
three-for-two stock split applicable for shareholders of record as of July
10, 1997. Issue date for the additional shares was July 17, 1997.
(2) Pro forma earnings per share assumes that the earnings of ELASCO, a
Subchapter S corporation acquired by the Company on April 26, 1996, and
Metals, Incorporated and Stainless Tubular Products, Inc., also Subchapter S
corporations acquired by the Company on January 24, 1997, would have been
taxed at the Company's effective rate for each period presented.
(3) Comparable branch sales increases (decreases) are calculated for each period
presented by comparing the net sales results in the period with the net
sales results for the comparable prior year period (for branches that were
open for the entire duration of both periods).
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<PAGE> 8
RISK FACTORS
In addition to the other information included or incorporated by reference
in this Prospectus, prospective investors should consider carefully the
following information relating to the Company and the Common Stock before making
an investment in the Common Stock offered hereby.
RISKS OF ACQUISITION STRATEGY
A significant portion of the Company's growth strategy is based upon the
acquisition of other building products businesses. During the normal course of
its business, the Company pursues suitable acquisition opportunities in selected
markets. There can be no assurance, however, that the Company will be able to
continue to identify and acquire appropriate businesses or obtain financing for
such acquisitions on satisfactory terms. In addition, no assurance can be given
that the Company will be successful in integrating acquired businesses into its
existing operations, or that such integration will not result in unforeseen
operational difficulties or require a disproportionate amount of management's
attention. Future acquisitions may be financed through the incurrence of
additional indebtedness or through the issuance of Common Stock, preferred stock
or the issuance of equity-linked securities, which may be dilutive to the
Company's shareholders. Furthermore, there can be no assurance that competition
for acquisition opportunities in the building products industry will not
escalate, thereby increasing the cost to the Company of making further
acquisitions or causing the Company to refrain from making further acquisitions.
DEPENDENCE ON CONSTRUCTION MARKETS, ESPECIALLY IN FLORIDA
Demand for the Company's products depends to a significant degree on the
commercial, residential and industrial construction markets. The level of
activity in the commercial construction market depends largely on vacancy and
absorption rates, interest rates, regional economic outlooks, the availability
of financing and general economic conditions. The level of activity in the
residential construction market depends on new housing starts and residential
renovation projects, which are a function of many factors, including interest
rates, availability of financing, housing affordability, unemployment,
demographic trends, gross domestic product growth and consumer confidence. The
level of activity in the industrial construction market is linked to the
industrial economic outlook, corporate profitability, interest rates and
capacity utilization. Consequently, the level of activity in the commercial,
residential and industrial construction markets is determined by factors that
are not within the Company's control. Moreover, since such markets are sensitive
to cyclical changes in the economy, future downturns in the economy or lack of
further improvement in the economy could negatively affect the Company's results
of operations, especially in Florida which accounted for approximately 36% of
the Company's net sales in fiscal 1997.
UNCERTAINTY OF SUPPLY AND PRICE OF PRODUCTS
The Company distributes construction materials and supplies manufactured by
over 6,000 manufacturers and suppliers, no one of which accounted for more than
5% of the Company's total purchases during fiscal 1997. Although the Company has
a widely diversified base of suppliers, future supply shortages may occur from
time to time as a result of unanticipated demand or production difficulties. In
such cases, suppliers often allocate products among distributors, which could
have a short-term adverse effect on the Company's results of operations.
Although the Company has entered into strategic partnerships with certain
suppliers, if the Company fails to maintain such strategic partnerships or if
such suppliers cease to offer competitive pricing terms, the Company's results
of operations may be adversely affected.
COMPETITION
The building products industry is highly competitive and fragmented. The
principal competitive factors in the Company's business are availability of
materials and supplies, pricing of products, availability of credit, technical
product knowledge as to application and usage, and advisory and other service
capabilities. The Company competes with other wholesalers, manufacturers who
sell certain lines directly to contractors and other customers of the Company
and, to a limited extent, retailers in the markets for plumbing, electrical
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<PAGE> 9
fixtures and supplies, building materials, pool supplies and contractor's tools.
The Company's competition varies by product line, customer classification and
geographic market. No assurance can be given that the Company will be able to
respond effectively to the competitive pressures created by those entities,
especially since certain of those entities have substantially greater financial
and other resources than those of the Company.
RELIANCE ON EXECUTIVE OFFICERS
The Company is highly dependent upon the skills, experience and efforts of
its executive officers. Loss of the services of one or more of the Company's
executive officers could have a material adverse effect on the Company's
business and development. The Company's continued growth also depends in part on
its ability to attract and retain qualified managers, salespersons and other key
employees, and on its executive officers' ability to manage growth successfully.
No assurance can be given that the Company will be able to attract and retain
such employees or that such executive officers will be able to manage growth
successfully.
LIMITATIONS ON PAYMENT OF DIVIDENDS
The amount of future dividends, as well as the decision to pay any
dividends, in respect of the Common Stock will depend on the Company's results
of operations, capital requirements and financial condition and other factors
that the Board of Directors deems relevant. In addition, certain debt
instruments and agreements to which the Company and its subsidiaries are or may
in the future become parties contain or may contain restrictive covenants and
provisions that limit the amount of dividends payable by the Company.
VOLATILITY OF MARKET PRICE FOR COMMON STOCK
There may be significant volatility in the market price for the Common
Stock. Operating results of the Company or of other companies participating in
the building products industry, changes in general economic conditions and the
financial markets, or other developments affecting the Company or its
competitors could cause the market price for the Common Stock to fluctuate
substantially. See "Dependence on Construction Markets, Especially in Florida"
above.
USE OF PROCEEDS
The Common Stock offered hereby is being offered for the accounts of the
respective Selling Shareholders. The Company will receive no proceeds from the
sale of such shares.
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<PAGE> 10
SELLING SHAREHOLDERS
The following table sets forth certain information regarding the ownership
of the Common Stock by each of the Selling Shareholders. Each of the Selling
Shareholders has sole voting and investment power with respect to such shares.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
OWNED AFTER THE
NUMBER OF SHARES NUMBER OF SHARES OFFERING(1)
NAME OF SELLING BENEFICIALLY OWNED AS REGISTERED FOR ----------------
SHAREHOLDER OF DECEMBER 4, 1997 SALE HEREBY(1) NUMBER PERCENT
--------------- --------------------- ---------------- ------ -------
<S> <C> <C> <C> <C>
Graham Clements(2)........................... 54,000 3,803 54,000 *
3349 South Shores Circle
West Bloomfield, Michigan 48323
Donald Telman(2)............................. 60,394 3,803 60,394 *
2650 Norwood
Bloomfield, Michigan 48302
Ronnie J. Shrader(3)......................... 310,093 310,093 0 *
581 Oakridge
Austin, Arkansas 72007
Shrader Family, LLC(3)....................... 32,992 32,992 0 *
581 Oakridge
Austin, Arkansas 72007
Ronnie J. and Yvonne A. Shrader(3)........... 3,450 3,450 0 *
581 Oakridge
Austin, Arkansas 72007
Sonny Properties, Inc., Trustee for(3)....... 9,729 9,729 0 *
Ronnie J. and Yvonne A. Shrader
581 Oakridge
Austin, Arkansas 72007
Offenhauser Company(4)....................... 33,079 33,079 0 *
P.O. Box 230068
Houston, Texas 77223
Charles P. and/or Sandra K. Berger(4)........ 30,142 30,142 0 *
8006 Rebawood
Humble, Texas 77346
Charles F. Offenhauser(4).................... 25,521 25,521 0 *
P.O. Box 1371
Port Aransas, Texas 78373
Timothy S. Kostom(4)......................... 17,166 17,166 0 *
1507 West T.C. Jester
Houston, Texas 77008
Paula C. Offenhauser(4)...................... 16,579 16,579 0 *
1239 Turnbury Oak
Houston, Texas 77055
George Offenhauser(4)........................ 10,998 10,998 0 *
1002 Briarcreek Drive
Friendswood, Texas 77546
Victoria O. Bates(4)......................... 10,264 10,264 0 *
6914 Afton Woods Drive
Houston, Texas 77055
Rosa Lee Kostom(4)........................... 8,449 8,449 0 *
1507 West T.C. Jester
Houston, Texas 77008
Mae Ola Grebe(4)............................. 6,635 6,635 0 *
P.O. Box 2004
Brenham, Texas 77833
</TABLE>
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<PAGE> 11
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
OWNED AFTER THE
NUMBER OF SHARES NUMBER OF SHARES OFFERING(1)
NAME OF SELLING BENEFICIALLY OWNED AS REGISTERED FOR ----------------
SHAREHOLDER OF DECEMBER 4, 1997 SALE HEREBY(1) NUMBER PERCENT
--------------- --------------------- ---------------- ------ -------
<S> <C> <C> <C> <C>
Rosalie H. Offenhauser(4).................... 6,325 6,325 0 *
1002 Briar Creek Drive
Friendswood, Texas 77546
M.F. Offenhauser(4).......................... 6,073 6,073 0 *
c/o Offenhauser Company
P.O. Box 230068
Houston, Texas 77223
C.F. Offenhauser and Shirley
Offenhauser(4)............................. 6,011 6,011 0 *
P.O. Box 1371
Port Aransas, Texas 78373
Oscar Lee Towns and/or Shirley A. Towns(4)... 6,000 6,000 0 *
1016 Richelieu
Houston, Texas 77018
Naomi Kostom(4).............................. 5,979 5,979 0 *
2319 West T.C. Jester
Houston, Texas 77008
Teddy M. and/or Letha Dwigans(4)............. 5,502 5,502 0 *
1011 Candlelight
Houston, Texas 77018
Mary Lizabeth Offenhauser(4)................. 5,234 5,234 0 *
23126 South Warmstone Way
Katy, Texas 77494
Shirley M. Offenhauser(4).................... 4,904 4,904 0 *
P.O. Box 1371
Port Aransas, Texas 78373
Deborah O. Tullos -- DLO Trust(4)............ 4,007 4,007 0 *
1975 West Geronimo Trail
Cleveland, Texas 77327
Charles F. Offenhauser, Jr. -- DLO
Trust(4)................................... 3,005 3,005 0 *
c/o Paula C. Offenhauser Daisey Lee
Offenhauser Testamentary Trust F/B/O
Charles F. Offenhauser
1239 Turnbury Oak
Houston, Texas 77055
John M. Offenhauser -- DLO Trust(4).......... 2,711 2,711 0 *
c/o Paula C. Offenhauser Daisey Lee
Offenhauser Testamentary Trust F/B/O
John M. Offenhauser
1239 Turnbury Oak
Houston, Texas 77055
Shirley H. Chauvin (Bergeron)(4)............. 2,560 2,560 0 *
9183 False River Road
New Roads, LA 70760
Dorothy Halpen Kolb(4)....................... 2,560 2,560 0 *
7420 Rienzi
Baton Rouge, LA 70809
Walter Miller(4)............................. 2,098 2,098 0 *
4312 South 31st Street, #32
Temple, Texas 76502
Eula S. Miller(4)............................ 1,909 1,909 0 *
4312 South 31st Street, #32
Temple, Texas 76502
</TABLE>
11
<PAGE> 12
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
OWNED AFTER THE
NUMBER OF SHARES NUMBER OF SHARES OFFERING(1)
NAME OF SELLING BENEFICIALLY OWNED AS REGISTERED FOR ----------------
SHAREHOLDER OF DECEMBER 4, 1997 SALE HEREBY(1) NUMBER PERCENT
--------------- --------------------- ---------------- ------ -------
<S> <C> <C> <C> <C>
Wayne Overstreet(4).......................... 1,657 1,657 0 *
4035 West Main
Houston, Texas 77027
Ronald L. Whitney(5)......................... 63,445 63,445 0 *
1403 Stonehenge Rd.
Charleston, W. Virginia 25314
John F. Bedick(5)............................ 63,445 63,445 0 *
#4 Walking Horse Lane
Scott Depot, W. Virginia 25560
Robert Steven Clay(5)........................ 42,296 42,296 0 *
2604 Avenham Avenue
Roanoke, Virginia 24014
David Dove Burns, Jr.(5)..................... 42,296 42,296 0 *
1812 Ashbury Drive
Roanoke, Virginia 24012
Anthony W. Bell(6)........................... 33,548 33,548 0 *
8929 Blair Road
Charlotte, NC 28227
</TABLE>
- ---------------
* Less than 1%.
(1) Assumes all shares offered hereby have been sold. Because the Selling
Shareholders may sell all, some or none of their respective shares pursuant
to this Prospectus, no actual estimate can be made of the aggregate number
of shares that each Selling Shareholder will own upon completion of the
offering to which this Prospectus relates.
(2) On September 30, 1996, the Company, pursuant to the PPP Agreement, exchanged
94,364 shares of Common Stock of the Company for all of the outstanding
shares of PPP, subject to adjustment, if necessary, to reflect any change in
the net asset value of PPP from the assumed value at the date of the PPP
Agreement to the value determined under the PPP Agreement at the closing
date. At closing, 10,486 shares of Common Stock were delivered in escrow
under the terms of the Escrow Agreement (as defined in the PPP Agreement).
Of those 10,486 shares, 2,880 have been returned to the Company based on a
decrease in the net asset value of PPP from the assumed value at the date of
the PPP Agreement, and 7,606 Shares have been delivered to the shareholders
of PPP. Messrs. Clements and Telman were each shareholders of PPP prior to
the consummation of that transaction. See Note (7) below.
(3) On July 25, 1997, the Company, pursuant to the Shrader Agreement, exchanged
356,264 shares of Common Stock of the Company for all of the outstanding
shares of Shrader and certain real estate leased to Shrader from its
shareholders, subject to adjustment, if necessary, to reflect any change in
the net asset value of Shrader from the assumed value at the date of the
Shrader Agreement to the value determined under the Shrader Agreement at the
closing date. At closing, 34,455 shares of Common Stock were delivered in
escrow under the terms of the Escrow Agreement (as defined in the Shrader
Agreement) and may be returned to the Company or additional shares may be
issued to the sole shareholder of Shrader based upon a finalization of the
net asset value of Shrader as of the closing date. Mr. Ronnie Shrader, Mrs.
Yvonne Shrader, Shrader Family, LLC and Sonny Properties, Inc., trustee for
Ronnie J. Shrader and Yvonne A. Shrader, were each shareholders of Shrader
prior to its acquisition by the Company. See Note (7) below.
(4) On October 2, 1997, the Company, pursuant to the Allied Agreement, acquired
Allied from its shareholders for the aggregate base price of $6,250,000 (the
"Base Price"), subject to adjustment, if necessary, to increase or decrease
the price from the Base Price to the Final Adjusted Price (as defined in the
Allied Agreement) to reflect any change in the value of Allied from the
assumed value of $5,463,568.
12
<PAGE> 13
Pursuant to the Allied Agreement, each Allied shareholder received, in
consideration for the cancellation of his or her Allied common stock, his or
her Ratable Interest (as defined in the Allied Agreement) in the Base Price
in the form of either cash or shares of the Company's Common Stock. Each
Allied shareholder holding three hundred (300) or more shares of Allied
common stock was entitled to exchange his or her shares of Allied common
stock for the right to receive Common Stock of the Company at $26.04 per
share (the "Allied Share Price"). Each Allied shareholder holding fewer than
three hundred (300) shares of Allied common stock, exchanged his or her
shares of Allied Common Stock for the right to receive $136.56 in cash for
each share of Allied Common Stock. The Base Price was paid by the Company at
closing by delivery of consideration consisting of 225,368 shares of Common
Stock of the Company, with an aggregate value as determined under the Allied
Agreement at the Allied Share Price of $5,868,583, and $381,962 in cash. At
closing, 22,538 shares of Common Stock of the Company with an aggregate
value of $588,061 and $38,200 in cash was delivered in escrow under the
terms of the Escrow Agreement (as defined in the Allied Agreement) as
security in the event the Final Adjusted Price is determined to be less than
or more than the Base Price. In the event the Final Adjusted Price is
determined to be less than or more than the Base Price, the amount of such
difference will be returned to the Company or paid by the Company, as the
case may be, in the form initially distributed to the Allied shareholder
(Common Stock or cash). Any difference paid in Common Stock shall be
calculated at the Allied Share Price. Charles P. Berger, Sandra K. Berger,
Charles F. Offenhauser, Timothy S. Kostom, George Offenhauser, Rosalie
Offenhauser, C.F. Offenhauser, Shirley Offenhauser, Teddy M. Dwigans, Letha
Dwigans, Shirley M. Offenhauser, Paula C. Offenhauser, Victoria O. Bates,
Rosa Lee Kostom, Mae Ola Grebe, M. F. Offenhauser, Oscar Lee Towns, Shirley
A. Towns, Naomi Kostom, Mary Lizabeth Offenhauser, Deborah O. Tullos -- DLO
Trust, Charles F. Offenhauser, Jr. -- DLO Trust, John M. Offenhauser -- DLO
Trust, Shirley H. Chauvin, Dorothy Halpen Kolb, Walter Miller, Eula S.
Miller, Wayne Overstreet and the Offenhauser Company were each shareholders
of Allied prior to its acquisition by the Company. See Note (7) below.
(5) On November 4, 1997, the Company, pursuant to the VWW Agreement, exchanged
211,482 shares of Common Stock of the Company for all of the outstanding
shares of VWW, subject to adjustment, if necessary, to reflect any change in
the net asset value of VWW from the assumed value at the date of the VWW
Agreement to the value determined under the VWW Agreement at the closing
date. At closing, 23,498 shares of Common Stock were delivered in escrow
under the terms of the Escrow Agreement (as defined in the VWW Agreement)
and may be returned to the Company or additional shares may be issued to the
VWW shareholders based upon a finalization of the net asset value of VWW as
of the closing date. Messrs. Whitney, Bedick, Clay and Burns were each
shareholders of VWW prior to its acquisition by the Company. See Note (7)
below.
(6) On December 2, 1997, the Company, pursuant to the APPCO Agreement, acquired
APPCO from its shareholder for an aggregate base price of $1,300,000 (the
"Base Price"), subject to adjustment, if necessary, to increase or decrease
the Base Price to the Final Adjusted Price (as defined in the APPCO
Agreement). The Base Price was paid by the Company at closing by delivery of
consideration consisting of 33,548 shares of Common Stock of the Company
with an aggregate value, as determined under the APPCO Agreement at $31.00
per share (the "APPCO Agreement Share Price"), of $1,039,988. At closing,
8,388 shares of Common Stock with an aggregate value of $260,028 were
delivered in escrow under the terms of the Escrow Agreement (as defined in
the APPCO Agreement) as security to be returned to the Company or paid by
the Company, as the case may be, in the event the Final Adjusted Price is
determined to be more than or less than the Base Price. In the event that
the Final Adjusted Price is determined to be more than or less than the Base
Price, the amount of such difference shall be paid by the Company or
returned to the Company in shares of Common Stock of the Company at the
APPCO Share Price. Mr. Bell was the sole shareholder of APPCO prior to its
acquisition by the Company. See Note (7) below.
(7) The registration under the Securities Act of the shares offered hereby to
permit resale of the shares by the respective Selling Shareholders after the
closing of the acquisition or share exchange, as applicable, was, in each
case, a condition of the acquisition or share exchange under the applicable
agreement.
13
<PAGE> 14
PLAN OF DISTRIBUTION
The Shares offered hereby are being offered by the respective Selling
Shareholders. The Company will receive no proceeds from the sale of any of the
Shares by the Selling Shareholders. The sale of the Shares may be effected by
the Selling Shareholders from time to time in transactions in the
over-the-counter market, on the NYSE or on other exchanges on which the Shares
may be listed, in negotiated transactions, or a combination of such methods of
sale, at fixed prices which may be changed, at market prices prevailing at the
time of sale, at prices related to prevailing market prices or at negotiated
prices. Such shares may be sold by one or more of the following: (a) a block
trade in which the broker or dealer so engaged will attempt to sell the shares
as agent but may position and resell a portion of the block as principal to
facilitate the transaction; (b) purchases by a broker or dealer as principal and
resale by such broker or dealer for its account pursuant to this Prospectus; (c)
an exchange distribution in accordance with the rules of such exchange; and (d)
ordinary brokerage transactions, transactions directly with a market maker, and
transactions in which the broker solicits purchasers. In effecting sales,
brokers or dealers engaged by a Selling Shareholder may arrange for other
brokers or dealers to participate. In addition, and without limiting the
foregoing, the Selling Shareholders may effect such transactions by selling the
Shares to or through underwriters or broker-dealers, and such underwriters or
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Shareholders and/or the purchasers of the Shares
for whom such underwriters or broker-dealers may act as agents or to whom they
sell as principals, or both (which compensation as to a particular underwriter
or broker-dealer might be in excess of customary commissions).
In connection with distribution of the Shares of Common Stock or otherwise,
the Selling Shareholders may enter into hedging transactions with
broker-dealers. In connection with such transactions, broker-dealers may engage
in short sales of the Shares registered hereunder in the course of hedging the
positions they assume with Selling Shareholders. The Selling Shareholders may
also sell Shares short and redeliver the Shares of Common Stock to close out
such short positions. The Selling Shareholders may also enter into option or
other transactions with broker-dealers which require the delivery to the
broker-dealer of the Shares of Common Stock registered hereunder, which the
broker-dealer may resell or otherwise transfer pursuant to this Prospectus. The
Selling Shareholders may also loan or pledge the Shares registered hereunder to
a broker-dealer and the broker-dealer may sell the shares so loaned or upon a
default the broker-dealer may effect sales of the pledged Shares pursuant to
this Prospectus.
To the extent required, the number of Shares to be sold, the purchase
price, the name of any such agent, dealer or underwriter and any applicable
commissions with respect to a particular offer will be set forth in an
accompanying Prospectus Supplement. The aggregate proceeds to the Selling
Shareholders from the sale of the Shares sold by the Selling Shareholders hereby
will be the purchase price of such Shares less any broker's commissions or
underwriters' discounts. In addition, any securities covered by this Prospectus
which qualify for sale under Rule 144 under the Securities Act ("Rule 144") may
be sold under Rule 144 rather than pursuant to this Prospectus.
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
Any broker-dealers, agents or underwriters that participate with the
Selling Shareholders in the distribution of the Shares may be deemed to be
"underwriters" within the meaning of the Securities Act, in which event any
commissions received by such broker-dealers, agents, or underwriters and any
profit on their sale of the Shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the Shares may not simultaneously engage in
market making activities with respect to the Common Stock of the Company for a
period of two business days prior to the commencement of such distribution. In
addition and without limiting the foregoing, each Selling Shareholder will be
subject to applicable provisions of the
14
<PAGE> 15
Exchange Act and the rules and regulations thereunder, which provisions may
limit the timing of purchases and sales of shares of the Company's Common Stock
by the Selling Shareholders.
The Company agreed to register the Shares under the Securities Act and to
indemnify certain Selling Shareholders against certain liabilities under the
Securities Act that could arise in connection with the sale by such Selling
Shareholders of the Shares. The Company has agreed to pay certain fees and
expenses incident to the registration of the Shares. The Company has agreed to
use its best effort to maintain the effectiveness of the Registration Statement
of which this Prospectus constitutes a part for a period of two years from the
respective dates on which the transactions with each Selling Shareholder were
consummated.
LEGAL MATTERS
Certain legal matters with respect to the legality of the issuance of the
Shares offered hereby will be passed upon for the Company by its General
Counsel, Benjamin P. Butterfield, Esq.
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Company's Annual Report on Form 10-K for the year ended January 31, 1997,
have been so incorporated in reliance on the report of Price Waterhouse LLP,
independent certified public accountants, given on the authority of said firm as
experts in auditing and accounting.
15
<PAGE> 16
======================================================
No person has been authorized to give any information or make any
representations in connection with this offering other than those contained in
this Prospectus and, if given or made, such other information and
representations must not be relied upon as having been authorized by the Company
or the Selling Shareholders. Neither the delivery of this Prospectus nor any
sale made hereunder shall, under any circumstances, create any implication that
there has been no change in the affairs of the Company subsequent to its date.
This Prospectus does not constitute an offer to sell, or a solicitation of an
offer to buy, any securities other than the registered securities to which it
relates. This Prospectus does not constitute an offer to sell, or a solicitation
of an offer to buy, such securities in any circumstances in which such offer or
solicitation is unlawful.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Incorporation of Certain Documents By
Reference........................... 3
Prospectus Summary.................... 4
Risk Factors.......................... 8
Use of Proceeds....................... 9
Selling Shareholders.................. 10
Plan of Distribution.................. 14
Legal Matters......................... 15
Experts............................... 15
</TABLE>
======================================================
======================================================
834,268 SHARES
HUGHES SUPPLY, INC.
COMMON STOCK
-------------------------
PROSPECTUS
-------------------------
DATED DECEMBER 15, 1997
======================================================
