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FILED PURSUANT TO RULE 424(b)(3)
REGISTRATION NO. 333-85937
PROSPECTUS
1,277,610 SHARES
HA-LO INDUSTRIES, INC.
COMMON STOCK
(NO PAR VALUE PER SHARE)
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This prospectus relates to 1,277,610 shares of HA-LO common stock that may
be offered for sale or otherwise transferred from time to time by the selling
shareholders identified in this prospectus. The aggregate net proceeds to the
selling shareholders from the sale of the shares of HA-LO common stock will
equal the sales 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 1,277,610 shares of common stock, including legal and accounting
fees, will be paid by us.
All of the 1,277,610 shares of common stock offered hereby were acquired by
the selling shareholders from us in connection with our August 1998 acquisition
of a brand identity and package design firm. All of the shares offered hereby
will be available immediately for sale hereunder. See "Selling Shareholders."
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 August 24, 1999 on
the New York Stock Exchange was $5 15/16 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 September 10, 1999.
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YOU SHOULD RELY ONLY ON INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. NEITHER WE NOR THE SELLING SHAREHOLDERS HAVE
AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT MAKING
AN OFFER OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT PERMITTED. YOU
SHOULD NOT ASSUME THAT THE INFORMATION PROVIDED BY THE PROSPECTUS IS ACCURATE AS
OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THIS PROSPECTUS.
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TABLE OF CONTENTS
<TABLE>
<S> <C>
RISK FACTORS............................................................................ 3
THE COMPANY............................................................................. 5
USE OF PROCEEDS......................................................................... 6
SELLING SHAREHOLDERS.................................................................... 6
PLAN OF DISTRIBUTION.................................................................... 7
LEGAL MATTERS........................................................................... 8
EXPERTS................................................................................. 8
WHERE TO FIND MORE INFORMATION.......................................................... 9
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE......................................... 9
</TABLE>
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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, NO PAR VALUE PER SHARE (THE "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. We can give you no assurance
that we will be able to successfully integrate acquired businesses into our
existing operations, realize the intended benefits of such acquisitions, or
retain sales representatives and key employees previously associated with
acquired businesses.
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 750 core sales representatives. 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's relationship with us
terminates, customers serviced by such representative may cease to purchase our
products. 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.
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS
We currently have offices in North America, Europe and Asia, 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
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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.
VOLATILITY OF STOCK PRICE
The Common Stock historically has been subject to significant price
fluctuations in response to a variety of factors, including quarterly variations
in operating results, announcing acquisitions, strategic alliances and joint
ventures, general conditions in the promotional products industry, and general
economic and market conditions. In addition, the stock market has experienced
significant price and volume fluctuations that have adversely affected the
market prices of equity securities of some companies and that often have been
unrelated to the operating performance of such companies.
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THE COMPANY
HA-LO Industries, Inc., an Illinois corporation (the "Company" or "HA-LO"),
with substantial operations in Canada and Europe, is a full service, innovative
brand marketing organization whose diverse marketing disciplines, or competency
groups, are centered around its client's brand. Brand marketing builds the value
of the brand by connecting it with target audiences to achieve strategic
marketing objectives.
The Company's competency groups are organized into three operating segments:
promotional products, marketing services and telemarketing. The marketing
services segment includes promotion marketing, brand strategy and identity,
presence marketing and consumer event marketing. Each one of the segments has
similar products and services, production processes, types of customers,
distribution methods and regulatory environments.
COMPETENCY GROUPS INCLUDE:
PROMOTIONAL PRODUCTS, offered by HA-LO, physically connect the brand with
identified target markets and individuals through repeated exposure to
merchandise that builds brand awareness, enhances brand recognition and creates
brand loyalty.
PROMOTION MARKETING, offered by Promotion Marketing LLC d/b/a UPSHOT
("UPSHOT"), connects the brand with the consumer at strategic points of contact
through consumer and retail promotion, merchandising and sponsorship activation.
BRAND STRATEGY AND IDENTITY, offered by Lipson Associates, Inc. ("LAGA"),
connects a company product, service or image with a target audience by creating,
revitalizing, or leveraging a brand through brand identity, design, and
integrated communication programs.
PRESENCE MARKETING, offered by HA-LO Sports & Entertainment and Events By
HA-LO, connects the brand with the target audience through sports and corporate
sponsorships, licensing, corporate meetings, events and sales incentive
programs.
RELATIONSHIP MARKETING, offered by UPSHOT and Market USA, Inc., connects the
brand with the target audience through consumer events--including a new product
sampling and brand awareness programs--and through a range of telemarketing
services.
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.
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USE OF PROCEEDS
All of the 1,277,610 shares of Common Stock (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.
SELLING SHAREHOLDERS
The following table sets forth with respect to the Selling Shareholders (i)
the number of Shares beneficially owned as of August 24, 1999 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:
<TABLE>
<CAPTION>
BENEFICIAL BENEFICIAL
OWNERSHIP OWNERSHIP
PRIOR TO OFFERING AFTER OFFERING
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<S> <C> <C> <C> <C> <C>
SHARES TO BE
SELLING SHAREHOLDERS SHARES(1) PERCENTAGE OFFERED SHARES PERCENTAGE
- ---------------------------------------------- ----------- --------------- ------------------- --------- -----------------
Howard J. Alport.............................. 476,740 * 425,870 50,870 *
Allan R. Glass................................ 476,739 * 425,870 50,869 *
Stevan G. Lipson.............................. 851,740 1.7% 425,870 425,870 *
</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.
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The Shares hereby offered by the Selling Shareholders were acquired from the
Company in connection with the Company's acquisition in 1998 of LAGA. All of the
Shares offered hereby have been registered under the Act for resale by such
Selling Shareholders in accordance with the provisions of the acquisition
agreement. Following completion of such acquisition, Mr. Lipson became President
of LAGA, and each of Mr. Alport and Mr. Glass became Executive Vice President of
LAGA.
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PLAN OF DISTRIBUTION
The Company is registering the Shares on behalf of the Selling Shareholders.
The Shares covered by this Prospectus may be offered and sold by the Selling
Shareholders, or by purchasers, transferees, donees, pledgees or other
successors in interest, directly or through brokers, dealers, agents or
underwriters who may receive compensation in the form of discounts, commissions
or similar selling expenses paid by a Selling Shareholder or by a purchaser of
the Shares on whose behalf such broker-dealer may act as agent. Sales and
transfers of the Shares may be effected from time to time in one or more
transactions, in private or public transactions, on the New York Stock Exchange
(the "NYSE"), in the over-the-counter market, in negotiated transactions or
otherwise, at a fixed price or prices that may be changed, at market prices
prevailing at the time of sale, at negotiated prices, without consideration or
by any other legally available means. Any or all of the Shares may be sold from
time to time by means of (a) a block trade, in which a broker or dealer attempts
to sell the Shares as agent but may position and resell a portion of the Shares
as principal to facilitate the transaction; (b) purchases by a broker or dealer
as principal and the subsequent sale by such broker or dealer for its account
pursuant to this Prospectus; (c) ordinary brokerage transactions (which may
include long or short sales) and transactions in which the broker solicits
purchasers; (d) the writing (sale) of put or call options on the Shares; (e) the
pledging of the Shares as collateral to secure loans, credit or other financing
arrangements and, upon any subsequent foreclosure, the disposition of the Shares
by the lender thereunder; and (f) any other legally available means.
To the extent required with respect to a particular offer or sale of the
Shares, a Prospectus Supplement will be filed pursuant to Section 424(b)(3) of
the Securities Act of 1933, as amended (the "Securities Act"), and will
accompany this Prospectus, to disclose (a) the number of Shares to be sold, (b)
the purchase price, (c) the name of any broker, dealer or agent effecting the
sale or transfer and the amount of any applicable discounts, commissions or
similar selling expenses, and (d) any other relevant information.
The Selling Shareholders may transfer the Shares by means of gifts,
donations and contributions. This Prospectus may be used by the recipients of
such gifts, donations and contributions to offer and sell the Shares received by
them, directly or through brokers, dealers or agents and in private or public
transactions; however, if sales pursuant to this Prospectus by any such
recipient could exceed 500 Shares, then a Prospectus Supplement would need to be
filed pursuant to Section 424(b)(3) of the Securities Act to identify the
recipient as a Selling Shareholder and disclose any other relevant information.
Such Prospectus Supplement would be required to be delivered, together with this
Prospectus, to any purchaser of such Shares.
In connection with distributions of the Shares or otherwise, the Selling
Shareholders may enter into hedging transactions with brokers, dealers or other
financial institutions. In connection with such transactions, brokers, dealers
or other financial institutions may engage in short sales of the Company's
Common Stock in the course of hedging the positions they assume with Selling
Shareholders. To the extent permitted by applicable law, the Selling
Shareholders also may sell the Shares short and redeliver the Shares to close
out such short positions.
The Selling Shareholders and any broker-dealers who participate in the
distribution of the Shares may be deemed to be "underwriters" within the meaning
of Section 2(11) of the Securities Act and any discounts, commissions or similar
selling expenses they receive 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. As a result, the Company has informed the Selling
Shareholders that Regulation M, promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), may apply to sales by the Selling
Shareholders in the market. The Selling Shareholders may agree to indemnify any
broker, dealer or agent that participates in transactions involving the sale of
the Shares against certain liabilities, including liabilities arising under the
Securities 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 discounts,
concessions or commissions.
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Each of the Selling Shareholders is acting independently of the Company in
making decisions with respect to the timing, price, manner and size of each
sale. No broker, dealer or agent has been engaged by the Company in connection
with the distribution of the Shares. There is no assurance, therefore, that the
Selling Shareholders will sell any or all of the Shares. In connection with the
offer and sale of the Shares, the Company has agreed to make available to the
Selling Shareholders copies of this Prospectus and any applicable Prospectus
Supplement and has informed the Selling Shareholders of the need to deliver
copies of this Prospectus and any applicable Prospectus Supplement to purchasers
at or prior to the time of any sale of the Shares offered hereby.
The Shares covered by this Prospectus may qualify for sale pursuant to
Section 4(1) of the Securities Act or Rule 144 promulgated thereunder, and may
be sold pursuant to such provisions rather than pursuant to this Prospectus.
The Company will not receive any proceeds from the sale of the Shares
covered by this Prospectus and has agreed to pay all of the expenses incident to
the registration of the Shares, other than discounts and selling concessions or
commissions, if any, and fees and expenses of counsel for the Selling
Shareholders, 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, 1998
and 1997 and for each of the three years in the period ended December 31, 1998,
incorporated in this Prospectus by reference to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1998, have been audited by
Arthur Andersen LLP, independent public accountants, as set forth in their
report with respect thereto, and are incorporated by reference herein in
reliance upon the authority of such firm as experts in auditing and accounting.
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WHERE TO FIND MORE INFORMATION
HA-LO is subject to the informational requirements of 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 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 Securities 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, 1998 (the "HA-LO 10-K"); (ii) the portions of the Company's Proxy
Statement for the Annual Meeting of Shareholders held on May 11, 1999 that have
been incorporated by reference into the HA-LO 10-K; (iii) the portions of the
Company's 1999 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, 1999; (v) Quarterly Report on Form 10-Q for the quarter
ended June 30, 1999; and (vi) 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, Attention: Michael Nemlich, Vice President of
Corporate Development/Financial Relations, Telephone (847) 647-2300.
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