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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-69825
PROSPECTUS
590,813 SHARES
HA-LO INDUSTRIES, INC.
COMMON STOCK
(NO PAR VALUE PER SHARE)
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This is a secondary public offering of 590,813 shares of common stock of
HA-LO Industries, Inc. The shares of common stock will be offered for sale or
otherwise transferred from time to time by one or more of the Selling
Shareholders described herein in transactions (which may include block
transactions) on the New York Stock Exchange 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 of common stock 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 of
common stock may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended, 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 of common stock purchased by them may be
deemed to be underwriting commissions or discounts under the Securities Act. The
aggregate net proceeds to the Selling Shareholders from the sale of the shares
of common stock will be the purchase price of such shares of common stock less
any commissions. See "Plan of Distribution." We will not receive any of the
proceeds from the sale of the shares of common stock by the Selling
Shareholders. The expenses incurred in registering the shares of common stock,
including legal and accounting fees, will be paid by us.
Our common stock is listed on the New York Stock Exchange under the symbol
"HMK." The last reported sale price of our common stock on December 28, 1998 on
the New York Stock Exchange was $33 9/16 per share.
Our principal executive offices are located at 5980 West Touhy Avenue,
Niles, Illinois 60714, and our telephone number is (847) 647-2300.
INVESTING IN OUR COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 3.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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THE DATE OF THIS PROSPECTUS IS JANUARY 7, 1999.
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AVAILABLE INFORMATION
HA-LO Industries, Inc., an Illinois corporation (the "Company" or "HA-LO"),
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., 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., Washington, D.C.
20549, at prescribed rates. Information on the operation of the Public Reference
Room is available by telephone at 1-800-SEC-0330. 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, no par value per share (the
"Common Stock"), is listed on the New York Stock Exchange (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 Securities Act of 1933, as amended
(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 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; (iv) Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998; (v) Quarterly Report on Form 10-Q for the quarter
ended June 30, 1998; (vi) Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998; and (vii) 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 590,813 shares of Common Stock (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, Attention:
Michael Nemlich, Vice President of Corporate Development/Financial Relations,
Telephone (847) 647-2300.
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RISK FACTORS
YOU SHOULD CONSIDER CAREFULLY THE FOLLOWING FACTORS AND THE OTHER
INFORMATION IN THIS PROSPECTUS BEFORE DECIDING TO INVEST IN SHARES OF OUR COMMON
STOCK.
RISKS ASSOCIATED WITH GROWTH THROUGH ACQUISITIONS
An important element of our growth strategy has been and continues to be the
acquisition of businesses that complement, enhance or geographically expand our
existing services. Since January 1, 1993, we have acquired 20 promotional
products companies, two telephone-based marketing companies, two promotion
marketing companies and a brand identity and package design firm. We can give
you no assurance, however, that we will be able to (i) maintain our recent
growth rate through acquisitions, (ii) identify suitable acquisition candidates
and acquire such companies on favorable terms, (iii) successfully integrate
acquired businesses into our 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, we may issue a significant number of shares of Common Stock and/or
incur significant additional indebtedness, which could have a dilutive effect on
our earnings or book value per share of Common Stock.
DIFFICULTIES OF MANAGING RAPID GROWTH
We have experienced rapid growth over the past several years as a result of
internal growth and acquisitions; continued rapid growth can be expected to
place significant demands on our management and resources. If we are unable to
manage growth effectively, our business, results of operations or financial
condition could be materially adversely affected.
QUARTERLY FLUCTUATIONS IN SALES AND EARNINGS; FOURTH QUARTER CONCENTRATION
Some of our 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 our
net sales being recognized in the fourth quarter. We incur general and
administrative expenses evenly throughout the year, which historically has
resulted and may continue to result in a disproportionate share of our 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 our 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
Our success is largely attributable to our ability to attract, motivate and
retain high quality sales representatives. Our sales force currently consists of
approximately 700 core sales representatives. Most of our sales representatives
are independent contractors who are not contractually prohibited from
representing other companies, including our competitors. We are not dependent
upon any one or any affiliated group of sales representatives for a material
amount of our revenues; however, when a sales representative terminates his or
her relationship with us, that representative's customers may cease to utilize
our services. We can give you no assurance that we will not experience a
significant turnover rate in the future. In addition, our success has been the
result, in large part, of the skills and efforts of our senior management. Our
success and continued growth will depend on our ability to recruit, hire,
motivate and retain other highly qualified managerial personnel, including
personnel previously employed by or associated with businesses acquired by us.
The loss of one or several members of our senior management or our inability to
attract and retain highly qualified managerial personnel could have a material
adverse effect on our business, future growth, results of operations or
financial condition.
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RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS
We currently have offices in the United States, Canada, Italy, Great
Britain, Argentina, Belgium and Hong Kong, and an important component of our
growth strategy is to expand our international distribution capabilities. We
seek to acquire additional international businesses to further enhance our
abilities to meet the needs of our multi-national clients; however, we can give
you no assurance that we will be able successfully to identify suitable
international acquisition candidates, acquire such candidates on economically
favorable terms or integrate acquired businesses into our 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. We can give you no
assurance that one or more of such factors will not have a material adverse
effect on our existing international operations and on our international
expansion plans.
COMPETITION
The promotional products industry is highly fragmented and competitive, with
few barriers to entry. We believe that our national and international
distribution capabilities, professional sales force and complementary,
value-added marketing services provide us with a competitive advantage; however,
these capabilities also may result in higher administrative costs than those
incurred by certain of our smaller competitors. In addition, certain of our
competitors are manufacturers as well as distributors and may enjoy an advantage
over us with respect to the cost of the goods they manufacture. Our existing
competitors, and companies that may enter the market, may have substantially
greater financial and other resources than we do. We also compete for
advertising dollars with other media, such as television, radio, newspapers,
magazines and billboards. We can give you no assurance that we will be able to
continue to compete successfully against current and future competitors or that
competitive pressures faced by us will not materially adversely affect our
business, operating results and financial condition.
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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 promotion marketing,
brand identity and packaging, 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 Roots, Canada to corporate customers in the United States and
Canada. HA-LO is one of three companies which have been awarded a license to be
a supplier of promotional and premium products to the sponsors of the U.S.
Olympic Team participating in the 2000, 2002, and 2004 Olympic Games. 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 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 are being offered by one or more of the shareholders
described herein (the "Selling Shareholders"). The Company will not receive any
of the proceeds from the sale of Shares by the Selling Shareholders.
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SELLING SHAREHOLDERS
The following table sets forth with respect to the Selling Shareholders (i)
the number of Shares beneficially owned as of December 28, 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
Shares set forth in (ii) above:
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BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO OFFERING AFTER OFFERING
--------------------------- SHARES TO BE ---------------------------
SELLING SHAREHOLDERS SHARES(1) PERCENTAGE OFFERED SHARES PERCENTAGE
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Linden D. Nelson.............................. 1,927,018(2) 6.0 % 460,725(3) 1,466,293 4.6 %
Michelle Nelson............................... 87,500 * 11,671 75,829 *
Sanford E. Nelson Trust....................... 87,500 * 11,671 75,829 *
Arielle L. Nelson Trust....................... 87,500 * 11,671 75,829 *
Linden D. Nelson Foundation................... 52,200 * 13,000 39,200 *
Stephen Wolff................................. 390,761(4) 1.2 106,746 284,015 *
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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; 87,500 shares owned by
Michelle Nelson, Mr. Nelson's wife; 52,200 shares held by the Linden D.
Nelson Foundation, a charitable foundation of which Mr. Nelson is President;
and 287,163 shares subject to immediately exercisable options held by Mr.
Nelson. Excludes 175,000 shares held in the Sanford E. Nelson Trust and the
Arielle L. Nelson Trust, which are trusts for the benefit of Mr. Nelson's
children, over which Mr. Nelson has no voting or dispositive powers.
(3) Consists of 436,054 shares being sold by Mr. Nelson, 11,671 shares being
sold by Michelle Nelson and 13,000 shares being sold by the Linden D. Nelson
Foundation. See note 2.
(4) Includes 75,000 shares subject to immediately exercisable options held by
Mr. Wolff.
All of the Shares 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 two 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. Linden D. Nelson, founder of the Linden
D. Nelson Foundation, became a Director and Vice Chairman of the Company and
(ii) Mr. Steven Wolff became President of a subsidiary of the Company.
PLAN OF DISTRIBUTION
The Company has been advised by the Selling Shareholders that they intend 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 Shareholders
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
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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; and (f)
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.
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 the Selling Shareholders
will sell any or all of the Shares. The Selling Shareholders 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.
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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NEITHER WE NOR THE SELLING SHAREHOLDERS HAVE AUTHORIZED ANY DEALER,
SALESPERSON OR OTHER PERSON TO GIVE ANY INFORMATION OR REPRESENT ANYTHING NOT
CONTAINED IN THIS PROSPECTUS. YOU MUST NOT RELY ON ANY UNAUTHORIZED INFORMATION.
THIS PROSPECTUS DOES NOT OFFER TO SELL OR BUY ANY SHARES IN ANY JURISDICTION
WHERE IT IS UNLAWFUL. THE INFORMATION IN THIS PROSPECTUS IS CURRENT AS OF
DECEMBER 28, 1998.
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TABLE OF CONTENTS
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PAGE
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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....................................................................................... 6
Legal Matters.............................................................................................. 7
Experts.................................................................................................... 7
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590,813 SHARES
HA-LO INDUSTRIES, INC.
COMMON STOCK
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PROSPECTUS
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JANUARY 7, 1999
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