SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) November 24, 1997
HOME PRODUCTS INTERNATIONAL, INC.
(Exact name of Registrant as specified in its Charter)
Delaware 0-17237 36-4147027
State of (Commission file number) I.R.S. Employer
Incorporation Identification No.)
4501 West 47th Street 60632
Chicago, Illinois (Zip Code)
(Address of principal executive offices)
(Not Applicable)
(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS
On November 11, 1997, Home Products International, Inc. ("the
Company") announced it has signed a definitive agreement to acquire
Seymour Housewares Corporation ("Seymour") from Chase Capital Partners
("Chase"), a private investment firm. The acquisition is scheduled to
be completed by year-end 1997.
The estimated acquisition price of $100 million is expected to be
financed with a combination of cash and Company stock. Chase will
receive shares resulting in an ownership position of slightly less than
20% of the Company, inclusive of the shares to be issued. The valuation
of the shares to be received by Chase has been set at $13.50 per share.
Seymour is a highly leveraged entity as a result of its prior sale by
Lear Siegler, Inc. in 1993 and Seymour's 1994 purchase of Magla, a
competitor in the ironing pad and cover market. Current debt totals
approximately $70 million. After the acquisition, the Company's debt as
a percent of total capitalization will be 65%-70% as compared to about
50% at present. Initial discussions with GE Capital, the Company's
current lender, indicate a willingness to finance the cash portion of
the purchase price and the pay off of Seymour's existing debt via a
combination of senior and subordinated debt. The subordinated debt is
expected to be less than 10% of the total financing. Interest rates and
covenants are expected to be substantially the same as the Company
currently has in place.
By year end 1997, Seymour will have completed a restructuring of its
business resulting in a reduction of stock keeping units, the closing of
one manufacturing location and the consolidation of its manufacturing
and customer service facilities. This restructuring is expected to
contribute significantly to 1998 and future earnings. It is anticipated
that the Seymour acquisition will add $.01-.05 to earnings per share in
1998 after taking into account the shares to be issued, the resulting
goodwill amortization and the cost of the acquisition financing.
Although no synergies or economies are factored into this accretion,
management believes that certain cost efficiencies may be realized.
Management believes that operating margins for the Company will be
slightly enhanced as a result of the acquisition.
The acquisition of Seymour is consistent with the Company's strategy of
growth through acquisition of companies who sell similar products in the
Company's existing channels of distribution or enable the Company to
enter new product categories more rapidly. Wal*Mart/Sam's Club, Kmart
and Target are all significant customers of both the Company and
Seymour. On a pro forma basis, sales to these three customers would
have exceeded 35% of consolidated sales in 1996.
In addition to the strategic benefits related to vendor consolidation,
the acquisition allows the Company to reduce the significance of cost
swings of its primary raw material, plastic resin. At present, plastic
resin accounts for about 24% of sales. Because Seymour's products are
largely metal and cotton based, plastic resin as a percent of the
Company's consolidated sales will decline to under 15%.
This report on Form 8-K contains forward-looking statements within
the meaning of the "safe-harbor" provisions of the Private Securities
Litigation Reform Act of 1995. Such statements are based on
management's current expectations and are subject to a number of factors
and uncertainties which could cause actual results to differ materially
from those described in the forward-looking statements. Such factors
and uncertainties include, but are not limited to: (i) the anticipated
effect of the Seymour Acquisition on the Company's sales and earnings
including the Company's ability to complete the transaction; (ii) the
impact of the level of the Company's indebtedness; (iii) restrictive
covenants contained in the Company's various debt documents; (iv)
general economic conditions and conditions in the retail environment;
(v) the Company's dependence on a few large customers; (vi) price
fluctuations in the raw materials used by the Company, particularly
plastic resin; (vii) competitive conditions in the Company's markets;
(viii) the seasonal nature of the Company's business; (ix) the Company's
ability to execute its acquisition strategy; (x) fluctuations in the
stock market; (xi) the extent to which the Company is able to retain and
attract key personnel; (xii) relationships with retailers; and (xiii)
the impact of federal, state and local environmental requirements
(including the impact of current or future environmental claims against
the Company). The Company's operating results may fluctuate. especially
when measured on a quarterly basis. The Company undertakes no
obligation to republish revised forward-looking statements to reflect
events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events. Readers are also urged to carefully
review and consider the various disclosures made by the Company which
attempt to advise interested parties of the factors which affect the
Company's business, in this report, as well as the Company's periodic
reports on Forms 10-K, 10-Q and 8-K filed with the Securities and
Exchange Commission.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
c) Exhibits
Exhibit No.
99. Press Release dated November 11, 1997
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
HOME PRODUCTS INTERNATIONAL, INC.
By: /s/ James R. Tennant
James R. Tennant
Chairman of the Board
and Chief Executive Officer
Date: November 24, 1997
EXHIBIT 99
Home Products International
to Acquire Seymour Housewares Corporation
Adds $94 million, market-leading laundry care supplier to
growing portfolio of housewares companies
Chicago, November 11, 1997 - Home Products International, Inc.
(Nasdaq: HPII), a diversified housewares products company, today
announced it has signed a definitive agreement to acquire Seymour
Housewares Corporation from Chase Capital Partners, a private investment
firm. Sales for Seymour Housewares - based in Seymour, Indiana --
totaled $94 million in fiscal 1997. Management estimates the addition
of Seymour to the existing HPI portfolio of companies will result in
combined revenues exceeding $240 million in 1998.
Based on the anticipated contribution of the Seymour operations, HPI
management expects the transaction to be slightly accretive to earnings
per share in 1998. While the terms of the acquisition were not
disclosed, HPI announced the transaction is a combination of cash, stock
and assumption of debt. The acquisition is scheduled to be completed by
year-end 1997.
Seymour Housewares is the leading supplier of laundry management
products in the United States, with No.1 share in both the ironing table
and ironing pad categories. It will join the HPI family of subsidiaries
as a stand-alone subsidiary. Existing HPI companies include Tamor Corp.
(a leading supplier of storage containers and closet organization
products) and Selfix, Inc. (a leading supplier of bath/ shower
organization products and juvenile storage containers.) All three
subsidiaries operate in the mass market, frequently supplying full
programs to the same departments of top national and regional chains.
Home Products International also owns Shutters, Inc., a manufacturer and
marketer of decorative exterior plastic shutters.
In announcing the agreement, James R. Tennant, chairman and chief
executive officer of HPI, said, "When we acquired Tamor earlier this
year, we announced our intention to lead a consolidation in our industry
by assembling synergistic companies with market-leading positions in the
mass market channel. The addition of Seymour to our portfolio of
companies reaffirms our commitment to this consolidation strategy, and
illustrates our ability to attract quality brand companies."
Tennant further outlined synergies of the acquisition to Home Products
International. "Tamor and Selfix primarily offer plastic injection-
molded products, and as a result, HPI was `resin-intensive.' The
addition of Seymour provides significant material diversification, and
reduces our exposure to resin price volatility by 50 percent. Most
importantly, Seymour is a great brand - synonymous with ironing tables
for over 50 years. Seymour dominates its categories because it offers
quality products of value, and provides outstanding service to retail
partners."
HPI also announced that Stephen R. Brian, 49, will continue as president
and chief executive officer of Seymour Housewares. Brian is an 18-year
veteran of General Electric, and also held senior management positions
at Hamilton Beach and Sunbeam prior to coming to Seymour in 1995.
"Stephen Brian is an experienced housewares executive; he and his team
have Seymour operating at a high performance level," said Tennant.
" Steve will continue to manage day-to-day operations, and we are
delighted to have all the dedicated associates of Seymour in the HPI
family."
Commenting on the transaction, Stephen Brian said, "With our dominant
share position in the home laundry category, Seymour Housewares is a
very logical and complimentary partner with Home Products International,
Inc. The product line diversification provided by the combined
companies will strengthen our distribution and offer new benefits to our
retail partners. Our approach to the market, commitment to our
customers, and view of the future are very much in sync. We are excited
about the opportunities that lie ahead."
Seymour Housewares Corporation operates three manufacturing facilities
in Seymour, Indiana, and a fourth in Reynosa, Mexico. HPI's existing
operating companies have manufacturing facilities in Chicago and Hebron,
Illinois; Leominster, Massachusetts; Louisiana, Missouri; and
Thomasville, Georgia.
Home Products International, Inc. is listed on the Nasdaq National
Market System; under the ticker symbol HPII.
The statements regarding the expected completion of the Seymour
acquisition and its anticipated effect on Home Products International's
sales are "forward looking statements" and actual results may differ
materially from those anticipated for a number of reasons. There can be
no assurance that the Seymour acquisition will be consummated or that,
if consummated, there will not be unanticipated problems. In addition,
HPI's future financial performance will depend on a number of factors
beyond its control including increased competition, changes in demand
for its products and fluctuations in the market. Risk factors and
cautionary statements that could cause actual results to differ are
contained in the Company's SEC filings.