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Filed pursuant to Rule 424(b)(3)
Registration No. 333-51481
PROSPECTUS
295,048 SHARES
HA-LO INDUSTRIES, INC.
COMMON STOCK
(NO PAR VALUE PER SHARE)
This Prospectus relates to 295,048 shares (the "Shares") of common stock, no
par value per share (the "Common Stock"), of HA-LO Industries, Inc., an Illinois
corporation (the "Company" or "HA-LO"). 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 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 April 27, 1998 on the NYSE was
$31 5/8 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 NOR HAS THE 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 May 6, 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, 1997 (the "HA-LO 10-K"); (ii) the portions of the Company's Proxy
Statement for the Annual Meeting of Shareholders to be held on June 2, 1998 that
have been incorporated by reference into the HA-LO 10-K; (iii) the portions of
the Company's 1998 Annual Report to Shareholders that have been incorporated by
reference into the HA-LO 10-K; and (iv) 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 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,
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Attention: Michael Nemlich, Vice President of Corporate Development/Financial
Relations, Telephone (847) 647-2300.
RISK FACTORS
The following factors should be considered carefully in evaluating an
investment in the Shares offered hereby.
RISKS ASSOCIATED WITH GROWTH THROUGH ACQUISITIONS
An important element of the Company's growth strategy has been and continues
to be the acquisition of businesses that complement, enhance or geographically
expand its existing services. Since January 1, 1993, the Company has acquired 18
promotional products companies and two telephone-based marketing companies.
There can be no assurance, however, that HA-LO will be able to (i) maintain its
recent growth rate through acquisitions, (ii) identify suitable acquisition
candidates and acquire such companies on favorable terms, (iii) successfully
integrate acquired businesses into its existing operations or realize the
intended benefits of such acquisitions, or (iv) retain sales representatives and
key employees previously associated with acquired businesses. To complete future
acquisitions, the Company may issue a significant number of shares of Common
Stock and/or incur significant additional indebtedness, which could have a
dilutive effect on the Company's earnings or book value per share of Common
Stock.
DIFFICULTIES OF MANAGING RAPID GROWTH
The Company has experienced rapid growth over the past several years as a
result of internal growth and acquisitions. The Company's anticipated continued
rapid growth can be expected to place significant demands on its management and
resources. If the Company is unable to manage growth effectively, its business,
results of operations or financial condition could be materially adversely
affected.
QUARTERLY FLUCTUATIONS IN SALES AND EARNINGS; FOURTH QUARTER CONCENTRATION
Some of the Company's customers tend to utilize a greater portion of their
advertising and promotional budgets in the latter half of the year, which
historically has resulted and may continue to result in a disproportionately
large share of the Company's net sales being recognized in the fourth quarter.
The Company incurs general and administrative expenses evenly throughout the
year, which historically has resulted and may continue to result in a
disproportionate share of its net income being reported in the fourth quarter.
In addition, the timing of and method of accounting used to report the results
of operations of acquired businesses may cause substantial fluctuations in the
Company's operating results from quarter to quarter. Therefore, the operating
results for one quarter may not be a reliable indicator of the results to be
expected in any future quarter.
DEPENDENCE UPON SALES REPRESENTATIVES AND KEY PERSONNEL
The success of the Company is largely attributable to its ability to
attract, motivate and retain high quality sales representatives. The Company's
sales force currently consists of approximately 700 core sales representatives.
Most of the Company's sales representatives are independent contractors who are
not contractually prohibited from representing other companies, including the
Company's competitors. The Company is not dependent upon any one or any
affiliated group of sales representatives for a material amount of its revenues;
however, when a sales representative terminates his or her relationship with the
Company, that representative's customers may cease to utilize the Company's
services. There can be no assurance that the Company will not experience a
significant turnover rate in the future. In addition, the Company's success has
been the result, in large part, of the skills and efforts of the Company's
senior management. The Company's success and continued growth will depend on its
ability to recruit, hire, motivate and retain other highly qualified managerial
personnel, including personnel previously employed
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by or associated with businesses acquired by the Company. The loss of one or
several members of senior management or the inability of the Company to attract
and retain highly qualified managerial personnel could have a material adverse
effect on the Company's business, future growth, results of operations or
financial condition.
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS
The Company currently has offices in the United States, Canada, Italy, Great
Britain, Argentina, Belgium and Hong Kong, and an important component of the
Company's growth strategy is to expand its international distribution
capabilities. The Company seeks to acquire additional international businesses
to further enhance its abilities to meet the needs of its multi-national
clients; however, there can be no assurance that the Company will be able
successfully to identify suitable international acquisition candidates, acquire
such candidates on economically favorable terms or integrate acquired businesses
into its existing operations. In addition, there are certain risks inherent in
conducting international business, including exposure to currency fluctuations,
longer collection cycles, compliance with foreign laws, unexpected changes in
regulatory requirements, staffing and managing foreign operations, political
instability, currency control laws and potentially adverse tax consequences.
There can be no assurance that one or more of such factors will not have a
material adverse effect on the Company's existing international operations and
on its international expansion plans.
COMPETITION
The promotional products industry is highly fragmented and competitive, with
few barriers to entry. The Company believes that its national and international
distribution capabilities, professional sales force and complementary,
value-added marketing services provide it with a competitive advantage; however,
these capabilities also may result in higher administrative costs than those
incurred by certain of HA-LO's smaller competitors. In addition, certain of the
Company's competitors are manufacturers as well as distributors and may enjoy an
advantage over the Company with respect to the cost of the goods they
manufacture. The Company's existing competitors, and companies that may enter
the market, may have substantially greater financial and other resources than
HA-LO. The Company also competes for advertising dollars with other media, such
as television, radio, newspapers, magazines and billboards. There can be no
assurance that HA-LO will be able to continue to compete successfully against
current and future competitors or that competitive pressures faced by HA-LO will
not materially adversely affect its business, operating results and financial
condition.
THE COMPANY
HA-LO is the largest and one of the fastest growing distributors of
promotional products in the United States and also has substantial operations in
Canada and Europe. In addition to its promotional products business, the Company
provides other value-added marketing services, such as telephone-based
marketing, full-service advertising, events planning services and sports
marketing.
HA-LO's promotional products business represented over 80% of its 1997 net
sales. To market its promotional products, HA-LO utilizes a system of 25 sales
offices with showrooms located primarily in the United States and also in Canada
and Europe. The showrooms display some of the 300,000 products provided by the
Company's network of more than 2,500 vendors. HA-LO's approximately 700 core
sales representatives market and sell promotional products primarily to large
and mid-sized corporations. The Company's promotional products are items that
are useful or decorative and are imprinted or otherwise customized with a
customer's name, logo or message. These products are utilized by the Company's
customers for marketing, to build brand recognition and as employee incentives,
customer gifts and giveaways. Promotional products are designed to be utilized
by the recipient over an extended period of time, so that the products enjoy
repeated exposure and reinforce a brand name or marketing message. The Company
has exclusive rights to distribute merchandise manufactured by Champion
Products, Inc. and
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Roots, Canada to corporate customers in the United States and Canada. HA-LO also
has established a joint marketing relationship with Sony Signatures, a division
of Sony Corporation of America and one of the lead sponsors of World Cup Soccer
'98. Customers of HA-LO include AlliedSignal, America Online, Ameritech, Ford
Motor Company, General Electric, General Mills, Motorola, Time Warner, the
Chicago Bulls and the Green Bay Packers.
The Company is incorporated under the laws of the State of Illinois. Its
principal executive officers 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 April 27, 1998
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
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<S> <C> <C> <C> <C> <C>
Joel Collen............................... 10,233 * 4,367 5,866 *
The David H. Morrison Trust............... 74,882 * 37,441 37,441 *
The Hal M. Schwartz Agreement of Trust.... 74,883 * 37,441 37,442 *
The Steve Schwartz Revocable Living
Trust.................................... 74,883 * 37,441 37,442 *
Madelyn Stoll............................. 51,329 * 22,415 28,914 *
Michael Stoll............................. 39,349 * 17,174 22,175 *
Stephen Wolff............................. 352,261 1.6 138,769 213,492 1.0
</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.
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 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. Joel Collen and
Mr. Michael Stoll became employees of a subsidiary of the Company, (ii) each of
the trustees of the above-referenced trusts, Mr. David H. Morrison, Mr. Hal M.
Schwartz and Mr. Steve Schwartz, respectively, became employees of a subsidiary
of the Company and (iii) Mr. Stephen Wolff became President of a subsidiary of
the Company.
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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 acquisitions
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, 1997
and 1996 and for each of the three years in the period ended December 31, 1997,
incorporated in this Prospectus by reference to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1997, 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............................................................... 4
Use of Proceeds........................................................... 5
Selling Shareholders...................................................... 6
Plan of Distribution...................................................... 7
Legal Matters............................................................. 8
Experts................................................................... 8
</TABLE>
295,048 SHARES
HA-LO INDUSTRIES, INC.
COMMON STOCK
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PROSPECTUS
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May 6, 1998
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