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Filed pursuant to Rule 424(b)(3)
Registration No. 333-43611
PROSPECTUS
1,034,006 SHARES
HA-LO INDUSTRIES, INC.
COMMON STOCK
(NO PAR VALUE PER SHARE)
This Prospectus relates to 1,034,006 shares (the "Shares") of common stock,
no par value per share (the "Common Stock"), of HA-LO Industries, Inc., an
Illinois corporation (the "Company"). The Shares will be offered for sale or
otherwise transferred from time to time by one or more of the shareholders
described herein (the "Selling Shareholders") in transactions (which may include
block transactions) on the New York Stock Exchange (the "NYSE") or in the
over-the-counter market, in negotiated transactions or otherwise, at fixed
prices, which may be changed, at market prices prevailing at the time of sale,
at negotiated prices, or without consideration, or by any other legally
available means. The Selling Shareholders may offer the Shares to third parties
(including purchasers) directly or by or through brokers, dealers, agents or
underwriters who may receive compensation in the form of discounts, concessions
or commissions or otherwise. The Selling Shareholders and any brokers, dealers,
agents or underwriters that participate in the distribution of the Shares may be
deemed to be "underwriters" within the meaning of the Securities Act of 1933, as
amended (the "Act"), in which event any discounts, concessions and commissions
received by any such brokers, dealers, agents or underwriters and any profit on
resale of the Shares purchased by them may be deemed to be underwriting
commissions or discounts under the Act. The aggregate net proceeds to the
Selling Shareholders from the sale of the Shares will be the purchase price of
such Shares less any commissions. See "Plan of Distribution." The Company will
not receive any of the proceeds from the sale of the Shares by the Selling
Shareholders. The expenses incurred in registering the Shares, including legal
and accounting fees, will be paid by the Company.
All of the shares of Common Stock offered hereby were acquired by the
Selling Shareholders from the Company in connection with the Company's
acquisitions in 1997 of three advertising specialty businesses and one provider
of outbound telephone-based sales and marketing services and are "restricted
securities" under the Act prior to their sale hereunder. This Prospectus has
been prepared for the purpose of registering such shares of Common Stock under
the Act to allow for future sales by such Selling Shareholders to the public
without restriction. See "Selling Shareholders."
The Common Stock is listed on the NYSE under the symbol "HMK." The last
reported sale price of the Common Stock on December 29, 1997 on the NYSE was
$25 3/8 per share.
SEE "RISK FACTORS" BEGINNING ON PAGE 3 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
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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.
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The date of this Prospectus is January 14, 1998.
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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 Room of the Commission, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549 and at the Commission's regional offices at Seven World Trade Center,
Suite 1300, New York, New York 10048 and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can be
obtained from the Public Reference Room of the Commission, 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, at prescribed rates. Such materials
also may be accessed electronically by means of the Commission's home page on
the Internet at http://www.sec.gov. The Company's Common Stock is listed on the
NYSE and such reports, proxy statements and other information also can be
inspected at the offices of the NYSE, 20 Broad Street, 17th Floor, New York, New
York 10005.
The Company has filed with the Commission a Registration Statement on Form
S-3 (the "Registration Statement") under the Act, with respect to the securities
offered hereby. This Prospectus, which constitutes a part of the Registration
Statement, does not contain all of the information set forth in the Registration
Statement, certain items of which are contained in schedules and exhibits to the
Registration Statement as permitted by the rules and regulations of the
Commission. Statements made in this Prospectus as to the contents of any
contract, agreement or other document referred to are not necessarily complete.
With respect to each such contract, agreement or other document filed as an
exhibit to the Registration Statement, reference is made to the exhibit for a
more complete description of the matter involved, and each such statement shall
be deemed qualified in its entirety by such reference. Items and information
omitted from this Prospectus but contained in the Registration Statement may be
inspected and copied at the Public Reference Room of the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission pursuant to the Exchange Act, are hereby incorporated by reference in
this Prospectus: (i) Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 (the "HA-LO 10-K"); (ii) the portions of the Company's Proxy
Statement for the Annual Meeting of Shareholders held on June 2, 1997 that have
been incorporated by reference into the HA-LO 10-K; (iii) the portions of the
Company's 1997 Annual Report to Shareholders that have been incorporated by
reference into the HA-LO 10-K; (iv) Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 1997; (v) Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1997; (vi) Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 1997; (vii) Current Report on Form 8-K
dated January 17, 1997; (viii) Current Report on Form 8-K/A dated March 19,
1997; and (ix) the description of the Common Stock contained in the Registration
Statement dated October 20, 1992 filed pursuant to Section 12 of the Exchange
Act and any amendment or report filed for the purpose of updating such
description.
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 the offering
of the Shares, shall be deemed to be incorporated by reference herein and to be
a part hereof from the date of filing of such documents. Any statement contained
herein or in any document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for the purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed to constitute a part of this
Prospectus, except as so modified or superseded. The Company will provide
without charge to each person, including any beneficial owner, to whom a copy of
this Prospectus is delivered, upon written or oral request of such person, a
copy of any or all of the information that has been incorporated by reference in
this Prospectus (excluding exhibits to such
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information which are not specifically incorporated by reference into such
information). Requests for such information should be directed to HA-LO
Industries, Inc., 5980 West Touhy Avenue, Niles, Illinois 60714, Attention:
Michael Nemlich, Vice President of Investor Relations, Telephone (847) 647-2300.
RISK FACTORS
The following factors should be considered carefully in evaluating an
investment in the Shares offered hereby.
GROWTH THROUGH ACQUISITIONS
Acquiring businesses which can be integrated into the Company's operations
has been and continues to be an important element of the Company's strategy for
achieving profitable growth. Since January 1, 1993, the Company has acquired
seventeen advertising specialty businesses and two providers of outsourced
telephone-based sales and marketing services. There can be no assurance,
however, that suitable acquisition candidates will continue to be available at
prices deemed reasonable by the Company, that the Company will be able to
successfully integrate future acquisitions, if any, into its existing business,
that the sales representatives previously associated with an acquired business
will remain with the Company after the acquisition, or that the Company's recent
growth rate will continue in the future. In addition, there is significant
competition for attractive acquisition candidates.
RISKS RELATED TO RAPID GROWTH
Since January 1, 1993, the Company's net sales and net income have increased
as a result of both its acquisitions and its internal growth. As part of its
business strategy, the Company intends to continue to pursue additional
acquisitions, open showrooms and attract and retain additional sales
representatives. The failure to effectively control and manage growth could have
a material adverse effect on the Company's financial condition and results of
operations. In addition, there can be no assurance that the Company's recent
growth rate will continue in the future.
CONCENTRATION OF SALES WITH MONTGOMERY WARD; LOWER GROSS MARGINS WITH MONTGOMERY
WARD BUSINESS
During the fiscal year ended December 31, 1996, sales to Montgomery Ward &
Co. Incorporated ("Montgomery Ward") accounted for approximately 15% of the
Company's net sales. The Company's exclusive agreement with Montgomery Ward
expires on December 31, 2004, subject to earlier termination (i) at the
Company's election in the event that Montgomery Ward fails to purchase specified
minimum amounts of the Company's products annually under the agreement and (ii)
at Montgomery Ward's election on December 31 of any year, commencing in 1998,
upon no less than six-months' notice. In connection with the agreement, a fund
in which Montgomery Ward is the principal investor, acquired shares of Common
Stock and warrants to purchase additional shares of Common Stock. Certain of the
warrants are subject to forfeiture upon early termination of the agreement.
Subsequently, the fund distributed its shares of Common Stock and warrants to
its partners (including Montgomery Ward) pro rata in accordance with their
respective partnership interests. The agreement provides for limitations on the
Company's gross margins relating to sales thereunder, resulting in lower gross
margins on this business than on the Company's other business. This is offset,
however, by lower selling expenses incurred on the sales to Montgomery Ward. In
February 1996, as part of an internal reorganization, Montgomery Ward informed
the Company that it could not forecast its anticipated purchases under the
agreement for the fiscal year ended December 31, 1997. The loss of all or a
significant portion of the Montgomery Ward account would adversely affect the
Company's 1997 results of operations.
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CONCENTRATION OF SALES AND EARNINGS IN FOURTH QUARTER; QUARTERLY FLUCTUATIONS IN
NET SALES AND NET INCOME
Some customers tend to utilize a greater portion of their advertising and
promotion budgets in the latter part of the calendar year, which has
historically resulted in and may continue to result in a disproportionately
large share of the Company's net sales and net income being recognized in the
fourth quarter. In addition, the timing of, and method of accounting used in
connection with, an acquisition may cause substantial fluctuations in operating
results from quarter to quarter.
DEPENDENCE UPON SALES REPRESENTATIVES
The success of the Company is largely attributable to its ability to attract
and retain experienced sales representatives. As of the date of this Prospectus,
the Company's sales force consists of approximately 700 sales representatives,
most of whom are independent representatives. During the fiscal year ended
December 31, 1996, no single sales representative was responsible for more than
3% of the Company's sales. The Company's independent sales representatives
generally have the right to represent other companies, including competitors of
the Company. The Company believes that the decision of a sales representative to
terminate his or her relationship with the Company could result in the Company
losing that representative's customers. Historically, the Company has not had
significant turnover among its sales representatives; however, there can be no
assurance that the Company will not experience higher turnover among its sales
representatives in the future.
COMPETITION
The advertising specialty industry is highly fragmented and competitive, and
the cost of entry is low. Although the Company believes its value-added services
provide it with a competitive advantage, these capabilities may result in higher
administrative costs than those incurred by certain of its smaller competitors.
Existing or new competitors may have substantially greater financial and other
resources than the Company. The Company also competes for advertising dollars
with other sources, such as television, radio, newspapers, magazines and
billboards. There can be no assurance that the Company will be able to continue
to compete successfully against current and future competitors or that
competitive pressures faced by the Company will not materially adversely affect
its business, operating results and financial condition in the future.
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THE COMPANY
The Company is one of the nation's leading marketers and distributors of
advertising specialty products to customers with significant advertising and
promotional requirements. The Company's national marketing strategy includes a
system of 13 showrooms throughout the United States in which it displays
products provided by its network of over 2,500 vendors and marketed by its
approximately 700 sales representatives. The Company and its sales
representatives assist customers by developing innovative advertising specialty
programs which are tailored to customers' specific needs. The Company's
customers utilize these products, which generally are articles of merchandise
imprinted or otherwise customized with a customer's name, logo or message, for
marketing, employee incentives and customer gifts and giveaways. These products
include (i) apparel items such as jackets, sweaters, hats and golf shirts, (ii)
business accessories such as clocks, portfolios, briefcases, blotters and pen
and pencil sets, (iii) recognition awards such as trophies and plaques and (iv)
other miscellaneous advertising items such as etched crystalware, calendars,
golf accessories, key chains, watches and mugs. The Company's customers include
manufacturing, financial service, broadcasting, consumer product and
communications companies as well as professional sports teams. Selected
customers of the Company include Motorola, Inc., The Quaker Oats Company, Time
Warner, Inc., Ameritech Corporation, America Online, Inc., Abbott Laboratories,
Andersen Consulting and Sony Signatures.
The Company is incorporated under the laws of the State of Illinois. Its
principal executive offices are located at 5980 West Touhy Avenue, Niles,
Illinois 60714, and its telephone number is (847) 647-2300.
USE OF PROCEEDS
All of the shares of Common Stock covered hereby are being offered by the
Selling Shareholders. The Company will not receive any of the proceeds from the
sales of Common Stock by the Selling Shareholders.
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SELLING SHAREHOLDERS
The following table sets forth with respect to each of the Selling
Shareholders (i) the number of Shares beneficially owned as of December 31, 1997
and prior to the offering contemplated hereby, (ii) the maximum number of Shares
which may be sold in the offering pursuant to this Prospectus and (iii) the
number of Shares which will be beneficially owned after the offering, assuming
the sale of all the Shares set forth in (ii) above:
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO OFFERING SHARES AFTER OFFERING
--------------------------- TO BE ---------------------------
SELLING SHAREHOLDER SHARES(1) PERCENTAGE OFFERED SHARES PERCENTAGE
- ------------------------------------------ ---------- --------------- ------------------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Linden D. Nelson.......................... 2,012,655(2) 9.7% 780,794 1,231,861(2) 5.9%
Michelle Nelson........................... 137,500 * 30,000 107,500 *
Sanford E. Nelson Trust................... 137,500 * 30,000 107,500 *
Arielle L. Nelson Trust................... 137,500 * 30,000 107,500 *
Linden D. Nelson Foundation............... 100,000 * 50,000 50,000 *
Thomas J. Olson and Mary Ann Olson, Joint
Tenants.................................. 69,713 * 36,946 32,767 *
Frank F. Castellano and Patricia J.
Castellano, Joint Tenants................ 71,476 * 36,946 34,530 *
Steven Wolff.............................. 355,819 1.7 3,558 352,261 1.7
Jacques Van Bavel......................... 17,642 * 17,642 -- --
Jacques Van Bavel, Jr..................... 37 * 37 -- --
Jean Van Bavel............................ 11,026 * 11,026 -- --
Marc Van Bavel............................ 7,020 * 7,020 -- --
Michel Van Bavel.......................... 37 * 37 -- --
</TABLE>
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* Less than 1%.
(1) For purposes of this table, a person is deemed to have "beneficial
ownership" of any shares of Common Stock which such person has the right to
acquire within 60 days after the date of this Prospectus. For purposes of
computing the percentage of outstanding shares of Common Stock held by each
person named above, any security which such person has the right to acquire
from the Company within 60 days after the date of this Prospectus is deemed
to be outstanding, but is not deemed to be outstanding for the purpose of
computing the percentage ownership of any other person.
(2) Includes 28,915 shares owned by Maple Lane Acquisition Limited Liability
Company, of which Mr. Nelson is the managing member, and 262,500 shares
subject to immediately exercisable options held by Mr. Nelson.
All of the shares of Common Stock offered hereby were acquired by the
Selling Shareholders listed in the table above from the Company in connection
with the Company's acquisitions in 1997 of three advertising specialty
businesses and one provider of outbound telephone-based sales and marketing
services and have been registered under the Act for resale by the Selling
Shareholders in accordance with the provisions of the respective acquisition
agreements. Following completion of such acquisitions (i) Mr. Linden D. Nelson,
founder of the Linden D. Nelson Foundation, became a Director and the Vice
Chairman of the Company, (ii) Mr. Thomas J. Olson and Mr. Frank F. Castellano
became employees of a subsidiary of the Company, (iii) Mr. Steven Wolff became
President of a subsidiary of the Company and (iv) each of Jacques Van Bavel,
Jr., Marc Van Bavel and Michel Van Bavel became directors of one of the
Company's foreign subsidiaries.
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PLAN OF DISTRIBUTION
The Company has been advised by each Selling Shareholder that it intends to
sell or transfer all or a portion of the Shares offered hereby from time to time
to third parties (including purchasers) directly or by or through brokers,
dealers, agents or underwriters, who may receive compensation in the form of
underwriting discounts, concessions or commissions from the Selling Shareholder
and/or from purchasers of the Shares for whom they may act as agent. Such sales
and transfers of the Shares may be effected from time to time in one or more
transactions on the NYSE, in the over-the-counter market, in negotiated
transactions or otherwise, at a fixed price or prices, which may be changed, at
market prices prevailing at the time of sale, at negotiated prices, or without
consideration, or by any other legally available means. Any or all of the Shares
may be sold or transferred from time to time by means of (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) ordinary
brokerage transactions and transactions in which the broker solicits purchasers;
(d) through the writing of options on the Shares; (e) pledges as collateral to
secure loans, credit or other financing arrangements and any subsequent
foreclosure, if any, thereunder; (f) gifts, donations and contributions; and (g)
otherwise. To the extent required, the number of Shares to be sold or
transferred, the purchase price, the name of any such agent, broker, dealer or
underwriter and any applicable discounts or commissions and any other required
information with respect to a particular offer will be set forth in an
accompanying Prospectus Supplement. The aggregate net proceeds to the Selling
Shareholders from the sale of the Shares will be the purchase price of such
Shares less any commissions. This Prospectus also may be used, with the
Company's prior written consent, by donees and pledgees of the Selling
Shareholders.
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.
The Selling Shareholders and any brokers, dealers, agents or underwriters
that participate in the distribution of the Shares may be deemed to be
"underwriters" within the meaning of the Securities Act, in which event any
discounts, concessions and commissions received by such brokers, 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 Act.
No underwriter, broker, dealer or agent has been engaged by the Company in
connection with the distribution of the Shares.
Any Shares covered by this Prospectus which qualify for sale pursuant to
Rule 144 under the Securities Act may be sold under Rule 144 rather than
pursuant to this Prospectus. There is no assurance that any of the Selling
Shareholders will sell any or all of the Shares. A Selling Shareholder may
transfer, devise or gift such Shares by other means not described herein.
The Company will pay all of the expenses incident to the registration of the
Shares, other than underwriting discounts and selling commissions, if any.
Pursuant to agreements entered into in connection with the acquisition
described elsewhere herein, the Company and certain of the Selling Shareholders
have agreed to indemnify each other against certain liabilities, including
liabilities under the Act.
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LEGAL MATTERS
The validity of the Shares offered hereby will be passed upon for the
Company by Neal, Gerber & Eisenberg, Chicago, Illinois.
EXPERTS
The consolidated financial statements of the Company as of December 31, 1995
and 1996 and for each of the three years in the period ended December 31, 1996,
incorporated in this Prospectus by reference to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1996, have been audited by
Arthur Andersen LLP, independent public accountants, as set forth in their
report with respect thereto, which is incorporated by reference herein. Such
financial statements are incorporated by reference herein in reliance upon the
authority of such firm as experts in auditing and accounting.
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NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THE SELLING SHAREHOLDERS OR ANY BROKER, DEALER OR AGENT. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
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TABLE OF CONTENTS
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PAGE
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<S> <C>
Available Information..................................................... 2
Incorporation of Certain Documents by Reference........................... 2
Risk Factors.............................................................. 3
The Company............................................................... 5
Use of Proceeds........................................................... 5
Selling Shareholders...................................................... 6
Plan of Distribution...................................................... 7
Legal Matters............................................................. 8
Experts................................................................... 8
</TABLE>
1,034,006 SHARES
HA-LO INDUSTRIES, INC.
COMMON STOCK
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PROSPECTUS
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January 14, 1998
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