<PAGE> 1
Filed Pursuant to Rule 424(b)(1)
Registration Statement No. 333-51377
4,196,999 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
4,196,999 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) 8,332 shares of Common Stock (the "Gilleland
Shares") issued pursuant to the Acquisition Agreement (the "Gilleland
Agreement") dated June 25, 1997 by and among the Company, Gilleland Products,
Inc., a Georgia corporation ("Gilleland"), and Earl Gilleland, the sole
shareholder of Gilleland; (ii) 27,200 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) 14,196
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) 21,954
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; (v) 931,965 shares of Common Stock (the "CMJ Shares")
issued pursuant to the Acquisition Agreement (the "CMJ Agreement") dated
November 24, 1997 by and among the Company, CMJ Management, Inc., an Arizona
corporation ("CMJ") and the former General Partner and successor in interest to
Mountain Country Supply Limited Partnership, a liquidated and dissolved Arizona
limited partnership, and the shareholders of CMJ; (vi) 12,149 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; (vii) 1,221,431 shares of Common Stock (the "International
Shares") issued pursuant to the Acquisition Agreement (the "International
Agreement") dated December 19, 1997 by and among the Company, International
Supply Company, Industrial International, Inc., International Supply of Austin,
Inc., International Supply of San Antonio, Inc., International Supply of
Houston, Inc. and International Supply of East Texas, Inc., each a Texas
corporation (collectively "International"), and the shareholders of
International; (viii) 89,855 shares of Common Stock (the "Merex Shares") issued
pursuant to the Acquisition Agreement (the "Merex Agreement") dated January 12,
1998 by and among the Company, Merex Corporation, a Texas corporation ("Merex")
and Hans E. Roeschel, the sole shareholder of Merex; (ix) 1,408,530 shares of
Common Stock (the "Chad Supply Shares") issued pursuant to the Acquisition
Agreement (the "Chad Supply Agreement") dated January 30, 1998 by and among the
Company, Chad Supply of Tennessee, Inc., a Tennessee corporation, Chad Supply of
South Carolina, Inc., a South Carolina corporation, Chad Supply of Ohio, Inc.,
an Ohio corporation, Chad Supply of North Carolina, Inc., a North Carolina
corporation, Chad Supply of Louisiana, Inc., a Louisiana corporation, Chad
Supply of Kentucky, Inc., a Kentucky corporation, Chad Supply of Georgia, Inc.,
a Georgia corporation, Chad Supply of Alabama, Inc., an Alabama corporation,
Chad Supply, Inc., a Florida corporation and Harney Mfg. Co., Inc., a Florida
corporation (collectively "Chad Supply"), and the shareholders of Chad Supply;
(x) 272,678 shares of Common Stock (the "SAPD Shares") issued pursuant to the
Acquisition Agreement (the "SAPD Agreement") dated February 18, 1998 by and
among the Company, San Antonio Plumbing Distributors, Inc., a Texas corporation
("SAPD") and Craig Rosenstein, the sole shareholder of SAPD; and (xi) 188,709
shares of Common Stock (the "Union Shares") issued pursuant to the Acquisition
Agreement (the "Union Agreement") dated April 23, 1998 by and among the Company,
Union Warehouse and Realty Company ("Union"), and Jake Plyler, the sole
shareholder of Union. The Gilleland Shares, the Shrader Shares, the Allied
Shares, the VWW Shares, the CMJ Shares, the APPCO Shares, the International
Shares, the Merex Shares, the Chad Supply Shares, the SAPD Shares and the Union
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 April 27, 1998, the last sale price for the Common Stock as
reported on the NYSE was $37.56 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 May 4, 1998.
<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.
The Commission maintains a 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. 333-51377) (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 30, 1998; and
(b) Hughes Supply's Proxy Statement for the Annual Meeting of
Shareholders to be held on May 20, 1998, as filed with the Commission on
April 15, 1998.
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, southwestern and midwestern United
States. As of April 1, 1998, the Company distributed more than 210,000 products
through 404 branches located in 27 states, Mexico and Puerto Rico. The Company's
principal customers are electrical, plumbing and mechanical contractors,
electric utility companies, property management companies, municipal and
industrial accounts. Industrial accounts include companies in the petrochemical,
food and beverage, pulp and paper, mining, pharmaceutical and marine industries.
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, southwestern and midwestern United
States. The Company's largest geographic market is Florida (representing
approximately 34% of fiscal 1998 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
maintenance, 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, plate, 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, new branch openings and the addition
of new product groups. Since January 29, 1993, the Company has opened 53 new
branches (exclusive of new branches acquired through acquisitions). In addition,
the Company continues to pursue an active acquisition program to capitalize on
the 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 1997, and no wholesale distributor of these products
accounted for more than 5% of the total market. Since January 29, 1993, the
Company has completed 51 acquisitions representing 216 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. All of the Company's significant
acquisitions have been accretive to the Company's earnings per share in the
first full year subsequent to the transaction.
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 49 branches, and management believes that significant
additional fill-in acquisition opportunities are available.
4
<PAGE> 5
New market acquisitions represent the addition of new product groups,
within related commercial construction, residential and industrial product
categories, or the entry into new geographic markets, or both. During the last
five 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) Sunbelt Supply Company, resulting in a
significant increase in the Company's valve and fitting business in new
geographic markets; (ii) 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; (iii) Mountain Country Supply,
Inc., resulting in a significant increase in the Company's plumbing, water and
sewer, and air conditioning and heating business in new geographic markets; (iv)
International Supply Company, Inc., and its affiliates, resulting in a
significant increase in the Company's water and sewer and plumbing business in
new geographic markets; (v) Merex Corporation, resulting in an increased
presence in export markets; and (vi) Chad Supply, Inc., the Company's initial
entry into the distribution of repair and maintenance products to the
multi-family housing industry.
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. 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;
- Centralized administrative functions; 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 $1.9 billion in fiscal 1998 from $851.7 million in fiscal
1994, a compound annual growth rate of 21.9%; operating income increased to
$83.7 million in fiscal 1998 from $18.7 million in fiscal 1994, a compound
annual growth rate of 45.5%; and the number of branches increased to 384
branches at the end of fiscal 1998 from 151 branches at the end of fiscal 1994,
a compound annual growth rate of 26.3%.
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. These forward-looking statements speak only as of the date hereof.
THE OFFERING
<TABLE>
<S> <C>
Common Stock being offered hereby........................... 4,196,999 shares
Common Stock outstanding (as of April 23, 1998)(1).......... 23,016,321 shares
NYSE symbol................................................. HUG
</TABLE>
- ---------------
(1) Includes all shares offered hereby.
6
<PAGE> 7
SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
(IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
-------------------------------------------------------------------
JANUARY 30, JANUARY 31, JANUARY 26, JANUARY 27, JANUARY 28,
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
STATEMENTS OF INCOME DATA:(1)
Net sales............................. $1,878,739 $1,567,571 $1,285,328 $1,027,919 $851,691
Cost of sales......................... 1,466,764 1,235,099 1,018,804 818,611 681,100
---------- ---------- ---------- ---------- --------
Gross profit.......................... 411,975 332,472 266,524 209,308 170,591
Operating expenses.................... 328,305 269,955 225,585 178,842 151,926
---------- ---------- ---------- ---------- --------
Operating income...................... 83,670 62,517 40,939 30,466 18,665
Interest expense...................... 18,544 14,232 9,917 6,564 6,284
Interest and other income............. 5,791 6,207 5,092 3,202 3,679
---------- ---------- ---------- ---------- --------
Income before income taxes............ 70,917 54,492 36,114 27,104 16,060
Income taxes.......................... 26,093 19,178 11,661 7,979 4,710
---------- ---------- ---------- ---------- --------
Net income............................ $ 44,824 $ 35,314 $ 24,453 $ 19,125 $ 11,350
========== ========== ========== ========== ========
Earnings per share:
Basic............................... $ 2.34 $ 2.14 $ 1.80 $ 1.51 $ 1.03
========== ========== ========== ========== ========
Diluted............................. $ 2.30 $ 2.09 $ 1.77 $ 1.47 $ 0.96
========== ========== ========== ========== ========
Average shares outstanding:
Basic............................... 19,194 16,537 13,575 12,661 11,057
Diluted............................. 19,518 16,872 13,804 13,149 12,832
Cash dividends per share.............. $ 0.31 $ 0.25 $ 0.20 $ 0.15 $ 0.11
========== ========== ========== ========== ========
Pro forma earnings per share:(2)
Basic............................... $ 2.26 $ 2.02 $ 1.58 $ 1.29 $ 0.87
Diluted............................. $ 2.23 $ 1.98 $ 1.56 $ 1.26 $ 0.83
OPERATING DATA:
Branches at end of period............. 384 272 212 173 143
Comparable branch sales
increases(3)........................ 6% 8% 8% 14% 18%
</TABLE>
<TABLE>
<CAPTION>
AS OF
JANUARY 30, 1998
----------------
<S> <C>
BALANCE SHEET DATA (END OF PERIOD):
Working capital............................................. $474,343
Total assets................................................ 942,029
Long-term debt, less current portion........................ 335,207
Shareholders' equity........................................ 414,342
</TABLE>
- ---------------
(1) Statements of Income Data was restated for transactions accounted for as
poolings of interests and a three-for-two stock split declared July 10,
1997.
(2) Pro forma earnings per share assumes that the earnings of certain Subchapter
S corporations would have been taxed at the Company's effective rate for
each period presented. These entities consist of Electric Laboratories and
Sales Corporation and ELASCO Agency Sales, Inc., acquired by the Company on
April 26, 1996, Metals, Incorporated and Stainless Tubular Products, Inc.,
acquired by the Company on January 24, 1997, and Chad Supply, Inc., acquired
by the Company on January 30, 1998.
(3) Comparable branch sales increases 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).
7
<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
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 34% of
the Company's net sales in fiscal 1998.
UNCERTAINTY OF SUPPLY AND PRICE OF PRODUCTS
The Company distributes construction materials and supplies manufactured by
over 8,500 manufacturers and suppliers, no one of which accounted for more than
5% of the Company's total purchases during fiscal 1998. 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
8
<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" 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.
9
<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 APRIL 28, 1998 SALE HEREBY(1) NUMBER PERCENT
--------------- --------------------- ---------------- -------- --------
<S> <C> <C> <C> <C>
Earl Gilleland(2)........................... 213,852 8,332 205,520 *
3437 Winder Highway
Flowery Branch, Georgia 30542
Ronnie J. Shrader(3)........................ 302,838 27,200 275,638 1.2%
581 Oakridge
Austin, Arkansas 72007
Offenhauser Company(4)...................... 34,920 1,841 33,079 *
P.O. Box 230068
Houston, Texas 77223
Charles P. and/or Sandra K. Berger(4)....... 31,819 1,677 30,142 *
8006 Rebawood
Humble, Texas 77346
Charles F. Offenhauser(4)................... 26,941 1,420 25,521 *
P.O. Box 1371
Port Aransas, Texas 78373
Timothy S. Kostom(4)........................ 18,121 955 17,166 *
1507 West T.C. Jester
Houston, Texas 77008
Paula C. Offenhauser(4)..................... 2,581 923 1,658 *
1239 Turnbury Oak
Houston, Texas 77055
George Offenhauser(4)....................... 11,610 612 10,998 *
1002 Briarcreek Drive
Friendswood, Texas 77546
Victoria O. Bates(4)........................ 1,597 571 1,026 *
6914 Afton Woods Drive
Houston, Texas 77055
Rosa Lee Kostom(4).......................... 8,919 470 8,449 *
1507 West T.C. Jester
Houston, Texas 77008
Mae Ola Grebe(4)............................ 7,004 369 6,635 *
P.O. Box 2004
Brenham, Texas 77833
Rosalie H. Offenhauser(4)................... 6,677 352 6,325 *
1002 Briar Creek Drive
Friendswood, Texas 77546
M.F. Offenhauser(4)......................... 6,411 338 6,073 *
c/o Offenhauser Company
P.O. Box 230068
Houston, Texas 77223
C.F. Offenhauser and Shirley
Offenhauser(4)............................ 6,345 334 6,011 *
P.O. Box 1371
Port Aransas, Texas 78373
Oscar Lee Towns and/or Shirley A.
Towns(4).................................. 6,334 334 6,000 *
1016 Richelieu
Houston, Texas 77018
</TABLE>
10
<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 APRIL 28, 1998 SALE HEREBY(1) NUMBER PERCENT
--------------- --------------------- ---------------- -------- --------
<S> <C> <C> <C> <C>
Naomi Kostom(4)............................. 6,312 333 5,979 *
2319 West T.C. Jester
Houston, Texas 77008
Teddy M. and/or Letha Dwigans(4)............ 5,806 306 5,500 *
1011 Candlelight
Houston, Texas 77018
Mary Lizabeth Offenhauser(4)................ 624 291 333 *
23126 South Warmstone Way
Katy, Texas 77494
Shirley M. Offenhauser(4)................... 5,177 273 4,904 *
P.O. Box 1371
Port Aransas, Texas 78373
Deborah O. Tullos -- DLO Trust(4)........... 624 223 401 *
1975 West Geronimo Trail
Cleveland, Texas 77327
Charles F. Offenhauser, Jr. -- DLO
Trust(4).................................. 468 167 301 *
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)......... 422 151 271 *
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)............ 2,702 142 2,560 *
9183 False River Road
New Roads, Louisiana 70760
Dorothy Halpen Kolb(4)...................... 2,702 142 2,560 *
7420 Rienzi
Baton Rouge, Louisiana 70809
Walter Miller(4)............................ 2,215 117 2,098 *
4312 South 31st Street, #32
Temple, Texas 76502
Eula S. Miller(4)........................... 2,015 106 1,909 *
4312 South 31st Street, #32
Temple, Texas 76502
Iletha Overstreet(4)........................ 1,749 1,749 0 *
4035 West Main
Houston, Texas 77027
Ronald L. Whitney(5)........................ 92,813 6,586 86,227 *
1403 Stonehenge Rd.
Charleston, W. Virginia 25314
John F. Bedick(5)........................... 79,813 6,586 73,227 *
#4 Walking Horse Lane
Scott Depot, W. Virginia 25560
Robert Steven Clay(5)....................... 72,635 4,391 68,244 *
2604 Avenham Avenue
Roanoke, Virginia 24014
</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 APRIL 28, 1998 SALE HEREBY(1) NUMBER PERCENT
--------------- --------------------- ---------------- -------- --------
<S> <C> <C> <C> <C>
David Dove Burns, Jr.(5).................... 66,904 4,391 62,513 *
1812 Ashbury Drive
Roanoke, Virginia 24012
Kevin Smith and Dana Smith(6)............... 880,707 880,707 0 *
6708 East San Juan Avenue
Paradise Valley, Arizona 85253
The Kevin and Dana Smith Children's
Trust(6).................................. 51,258 51,258 0 *
6708 East San Juan Avenue
Paradise Valley, Arizona 85253
Anthony W. Bell(7).......................... 45,697 12,149 33,548 *
8929 Blair Road
Charlotte, North Carolina 28227
Leo R. Butter(8)............................ 248,561 248,561 0 *
1801 Centenary
Longview, Texas 75601
Zane R. Butter(8)........................... 248,561 248,561 0 *
5871 Elderwood
Dallas, Texas 75230
Stephen R. Butter, Jr.(8)................... 248,561 248,561 0 *
234 Corona Avenue
San Antonio, Texas 78208
John C. Vogt(8)............................. 311,832 311,832 0 *
Box 542015
Dallas, Texas 75354
Paul Ponder(8).............................. 8,306 8,306 0 *
5932 Amcliffe
Houston, Texas 77088
Lara C. Vogt, Trust(8)...................... 77,805 77,805 0 *
Trust #75-6508-089
Box 542015
Dallas, Texas 75354
Lisa K. Vogt, Trust(8)...................... 77,805 77,805 0 *
Trust #75-8503-090
Box 542015
Dallas, Texas 75354
Hans E. Roeschel(9)......................... 89,855 89,855 0 *
1003 Stoney Hill Drive
Houston, Texas 77077
David Mark Chadwell(10)..................... 11,324 11,324 0 *
2821 Timber Knoll Dr.
Valrico, Florida 33594
Deborah L. Price(10)........................ 11,267 11,267 0 *
1013 Mallow Way
Brandon, Florida 33510
Dana M. Crockett(10)........................ 11,312 11,312 0 *
906 Delaney Circle #101
Brandon, Florida 33511
Steven M. Chadwell(10)...................... 11,197 11,197 0 *
9116 Kenton Rd
Wesley Chapel, Florida 33544
Pamela R. McDaniel(10)...................... 11,000 11,000 0 *
1127 Belladonna Drive
Brandon, Florida 33510
</TABLE>
12
<PAGE> 13
<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 APRIL 28, 1998 SALE HEREBY(1) NUMBER PERCENT
--------------- --------------------- ---------------- -------- --------
<S> <C> <C> <C> <C>
Robert J. Chadwell(10)...................... 11,213 11,213 0 *
1502 Gulf Stream Circle #203
Brandon, Florida 33511
Melanie Norris(10).......................... 6,225 6,225 0 *
719 Millifold Place
Brandon, Florida 33510
Larry E. Chadwell, Jr.(10).................. 6,331 6,331 0 *
2425 Valrico Forrest Drive
Valrico, Florida 33594
Juanita E. Chadwell(10)..................... 6,326 6,326 0 *
2425 Valrico Forrest Drive
Valrico, Florida 33594
Roxie E. Chadwell(10)....................... 6,137 6,137 0 *
2425 Valrico Forrest Drive
Valrico, Florida 33594
Laura E. Chadwell(10)....................... 6,197 6,197 0 *
2425 Valrico Forrest Drive
Valrico, Florida 33594
David R. Chadwell(10)....................... 464,237 464,237 0 *
2821 Timber Knoll Drive
Valrico, Florida 33594
James M. Chadwell(10)....................... 462,926 462,926 0 *
9116 Kenton Road
Wesley Chapel, Florida 33544
Larry E. Chadwell(10)....................... 382,838 382,838 0 *
2425 Valrico Forrest Drive
Valrico, Florida 33594
Craig Rosenstein(11)........................ 272,678 272,678 0 *
115 Honey Bee Lane
San Antonio, Texas 78231
James C. Plyler, As Trustee(12)............. 75,483 75,483 0 *
under Trust between James C. Plyler,
"Settlor" and James C. Plyler, "Trustee,"
dated March 29, 1993
c/o James C. Plyler
2614 Rolling Hills Drive
Monroe, North Carolina 28110
James C. Plyler, Jr.(12) ................... 55,967 37,742 18,225 *
102 Dogwood Circle
Monroe, North Carolina 28110
Anne Plyler Lee(12)......................... 37,742 37,742 0 *
104 Dogwood Circle
Monroe, North Carolina 28207
William Weaver Plyler(12)................... 37,742 37,742 0 *
1604 Biltmore Drive
Charlotte, North Carolina 28207
</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.
13
<PAGE> 14
(2) On June 25, 1997, the Company, pursuant to the Gilleland Agreement,
acquired Gilleland from its shareholder for the aggregate base price of
$7,370,293 (the "Base Price"), subject to adjustment, if necessary, to
increase or decrease the Base Price to the Final Adjusted Price (as defined
in the Gilleland Agreement) to reflect any change in the value of Gilleland
from the assumed value at the date of the Gilleland Agreement. The Base
Price was paid by the Company at closing by delivery of consideration
consisting of 273,492 shares of Common Stock of the Company with an
aggregate value, as determined under the Gilleland Agreement at $24.33 per
share (the "Gilleland Share Price"), of $6,654,972. At closing, 29,397
shares of Common Stock of the Company were delivered in escrow under the
terms of the Escrow Agreement (as defined in the Gilleland Agreement). Of
those 29,397 shares, all such shares have been delivered to Mr. Gilleland.
Mr. Gilleland was the sole shareholder of Gilleland prior to its
acquisition by the Company. See Note (13) 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). Of those 34,455 shares, 7,255 have been returned to the
Company based on a decrease in the net asset value of Shrader from the
assumed value at the date of the Shrader Agreement, and 27,200 shares have
been delivered to Ronnie Shrader. Mr. Shrader was a shareholder of Shrader
prior to its acquisition by the Company. See Note (13) 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 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 at the date of the Allied Agreement. Pursuant to the Allied
Agreement, each Allied shareholder received, in exchange for 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 and $38,200 in cash were delivered in escrow
under the terms of the Escrow Agreement (as defined in the Allied
Agreement). The Allied Shares covered by this Prospectus include 12,539
shares that were issued to the Allied shareholders based on an increase in
the value of Allied from the assumed value, 1,657 shares that were
previously issued incorrectly in the name of Wayne Overstreet, together
with $21,223 in additional cash consideration. 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 (13) 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
14
<PAGE> 15
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). Of those 23,498 shares, 1,544 shares have been returned to the
Company based on a decrease in the net asset value of VWW from the assumed
value at the date of the VWW Agreement, and 21,954 shares have been
delivered to the VWW shareholders. Messrs. Whitney, Bedick, Clay and Burns
were each shareholders of VWW prior to its acquisition by the Company. See
Note (13) below.
(6) On November 24, 1997, the Company, pursuant to the CMJ Agreement, acquired
CMJ from its shareholders for an aggregate base price of $39,000,000 (the
"Base Price"), subject to adjustment, if necessary, to increase or decrease
the Base Price to the Final Adjusted Price (as defined in the CMJ
Agreement) to reflect any change in the value of CMJ from the assumed value
at the date of the CMJ Agreement. The Base Price was paid by the Company at
closing by delivery of consideration consisting of 814,821 shares of Common
Stock of the Company with an aggregate value, as determined under the CMJ
Agreement at $28.00 per share (the "CMJ Share Price"), of $22,814,988 and
$12,285,000 in cash. At closing, 90,537 shares of Common Stock and
$1,365,000 in cash were delivered under the terms of the Escrow Agreement
(as defined in the CMJ Agreement). The CMJ Shares covered by this
Prospectus include 90,537 that were released from escrow and delivered to
the CMJ shareholders, as well as an additional 26,607 shares that were
issued based on an increase in the value of CMJ from the assumed value. Mr.
and Mrs. Smith and the Kevin and Dana Smith Children's Trust were each
shareholders of CMJ prior to its acquisition by the Company. See Note (13)
below.
(7) 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) to reflect any change in the value of APPCO from the assumed
value at the date of 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 were
delivered in escrow under the terms of the Escrow Agreement (as defined in
the APPCO Agreement). The APPCO Shares covered by this Prospectus include
8,388 shares that were released from escrow and delivered to the APPCO
shareholder, as well as an additional 3,761 shares that were issued based
on an increase in the value of APPCO from the assumed value. Mr. Bell was
the sole shareholder of APPCO prior to its acquisition by the Company. See
Note (13) below.
(8) On December 19, 1997, the Company, pursuant to the International Agreement,
acquired International from its shareholders for an aggregate base price of
$57,000,000 (the "Base Price"), subject to adjustment, if necessary, to
increase or decrease the Base Price to the Final Adjusted Price (as defined
in the International Agreement) to reflect any change in the value of
International from the assumed value at the date of the International
Agreement. The Base Price was delivered at closing by delivery of
consideration consisting of 965,142 shares of Common Stock of the Company
with an aggregate value, as determined under the International Agreement at
$28.00 per share (the "International Share Price"), of $27,023,976 and
$18,716,000 in cash. At closing, 241,289 shares of Common Stock and
$4,504,000 in cash was delivered in escrow under the terms of the Escrow
Agreement (as defined in the International Agreement). The International
Shares covered by this Prospectus include 241,289 shares that were released
from escrow, as well as an additional 15,000 shares that were issued in
order to comply with the terms of the International Agreement. In addition,
to further comply with the International Agreement, $420,000 was returned
to the Company. Leo R. Butter, Zane R. Butter, Stephen R. Butter, Jr., John
C. Vogt, Paul Ponder, Lara C. Vogt, Trust and Lisa K. Vogt, Trust were each
shareholders of International prior to its acquisition by the Company. See
Note (13) below.
(9) On January 12, 1998, the Company, pursuant to the Merex Agreement, acquired
Merex from its shareholder for an aggregate base price of $3,100,000 (the
"Base Price"), subject to adjustment, if necessary, to increase or decrease
the Base Price to the Final Adjusted Price (as defined in the Merex
15
<PAGE> 16
Agreement) to reflect any change in the value of Merex from the assumed
value at the date of the Merex Agreement. The Base Price was delivered at
closing by delivery of consideration consisting of 80,869 shares of Common
Stock of the Company with an aggregate value, as determined under the Merex
Agreement at $34.50 per share (the "Merex Share Price"), of $2,789,980. At
closing, 8,986 shares of Common Stock were delivered in escrow under the
terms of the Escrow Agreement (as defined in the Merex Agreement) as
security in the event the Final Adjusted Price is determined to be less 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
shares of Common Stock of the Company at the Merex Share Price. Mr. Roeschel
was the sole shareholder of Merex prior to its acquisition by the Company.
See Note (13) below.
(10) On January 30, 1998, the Company, pursuant to the Chad Supply Agreement,
exchanged 1,362,171 shares of Common Stock of the Company for all of the
outstanding shares of Chad Supply and certain real estate leased to Chad
Supply from its shareholders, subject to adjustment, if necessary, to
reflect any change in the net asset value of Chad Supply from the assumed
value at the date of the Chad Supply Agreement to the value determined
under the Chad Supply Agreement at the closing date. At closing, 46,359
shares of Common Stock were delivered in escrow under the terms of the
Escrow Agreement (as defined in the Chad Supply Agreement). All escrowed
shares have been delivered to the Chad Supply shareholders and are included
in the Chad Supply Shares covered by this Prospectus. David Mark Chadwell,
Deborah L. Price, Dana M. Crockett, Steven M. Chadwell, Pamela R. McDaniel,
Robert J. Chadwell, Melanie Norris, Larry E. Chadwell, Jr., Juanita E.
Chadwell, Roxie E. Chadwell, Laura E. Chadwell, David R. Chadwell, James M.
Chadwell and Larry E. Chadwell were each shareholders of Chad Supply prior
to its acquisition by the Company. See Note (13) below.
(11) On February 18, 1998, the Company, pursuant to the SAPD Agreement,
exchanged 245,415 shares of Common Stock of the Company for all of the
outstanding shares of SAPD, subject to adjustment, if necessary, to reflect
any change in the net asset value of SAPD from the assumed value at the
date of the SAPD Agreement to the value determined under the SAPD Agreement
at the closing date. At closing, 27,263 shares of Common Stock were
delivered in escrow under the terms of the Escrow Agreement (as defined in
the SAPD Agreement) as security in the event the Final Adjusted Price is
determined to be less 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 shares of Common Stock of the Company at the SAPD
Share Price. Mr. Rosenstein was the sole shareholder of SAPD prior to its
acquisition by the Company. See Note (13) below.
(12) On April 23, 1998, pursuant to the Union Agreement, the Company acquired
Union from its shareholders for an aggregate purchase price of $7,739,000
(the "Purchase Price"). The Purchase Price was delivered at closing by
satisfaction of certain indebtedness in the amount of $1,039,946.01 and by
the delivery of consideration consisting of 188,709 shares of Common Stock
of the Company at $35.50 per share. James C. Plyler, Anne Plyler Lee,
William Weaver Plyler and James C. Plyler, as Trustee and Trust between
James C. Plyler, "Settlor" and James C. Plyler, "Trustee" were each
shareholders of Union prior to its acquisition by the Company. See Note
(13) below.
(13) 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.
16
<PAGE> 17
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 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 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
17
<PAGE> 18
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 has 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 30, 1998,
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.
18
<PAGE> 19
======================================================
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.................. 17
Legal Matters......................... 18
Experts............................... 18
</TABLE>
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4,196,999 SHARES
HUGHES SUPPLY, INC.
COMMON STOCK
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PROSPECTUS
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DATED MAY 4, 1998
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