HALO Industries Reports First Quarter Results

Company Announces Restructuring Plan and Provides Divestiture Update



Apr 26, 2001, 01:00 ET from HALO Industries, Inc.

    CHICAGO, April 26 /PRNewswire/ -- HALO Industries, Inc. (NYSE:   HMK), a
 promotional products industry leader and brand marketing organization, today
 announced results for the first quarter ended March 31, 2001.  The Company
 also announced a restructuring plan and cost savings initiative aimed
 primarily at its branded solutions business segment and provided an update on
 its previously announced divestiture plan.
 
     First quarter results
     Sales from continuing operations for the first quarter of 2001 decreased
 19.3 percent to $113.4 million from $135.3 million in the same period of 2000.
 The net loss from continuing operations for the first quarter of 2001 was
 $28.7 million, compared to net loss from continuing operations of $6.1 million
 for the same period last year.  The Company reported EBITDA from continuing
 operations of ($17.6 million) compared to EBITDA from continuing operations of
 ($5.9 million) for the same period last year.  The net loss applicable to
 common shareholders for the first quarter of 2001 was $27.5 million, or ($.41)
 per diluted share, compared to a net loss applicable to common shareholders of
 $4.6 million, or ($.09) for the same period last year.
 
     Restructuring Plan and Cost Savings Initiative
     The Company announced a restructuring of its business and cost savings
 initiatives, primarily in the branded solutions business segment.  The
 restructuring plan will result in a second quarter charge of approximately
 $300 to $325 million.  Less than $5 million of this charge will result in
 incremental cash cost to the Company.  Major components of the charge will
 include write downs of certain assets, including goodwill resulting from the
 acquisition of Starbelly.com, employee severance, lease buyout costs, expenses
 incurred to exit unprofitable lines and other special charges.  The cost
 savings initiatives are designed to improve annualized profitability by
 approximately $30 million.  The focus of both the restructuring plan and cost
 savings initiative is to establish a business model that will restore the
 branded solutions business to profitability.   The cost savings initiatives
 will be largely in place by May 1.  Implementation of the restructuring plan
 will be completed this year.
 
     Divestiture Update
     The Company continues its efforts to divest itself of two of its marketing
 services subsidiaries.  There are multiple prospective purchasers for each of
 the Company's telemarketing and brand strategy and identity business units.
 Active negotiations continue regarding the sale of each unit, and the Company
 expects to close one or both transactions by the end of the second quarter.
 
     CEO Commentary
     "We remain committed to reducing the debt on our balance sheet, returning
 our focus to our core business and restoring profitability to HALO.  In
 addition to our cost containment initiatives, we are also focused on growing
 our branded solutions revenue base.  So far in 2001, we have added impressive
 new customers like M&M Mars, CIBC World Markets, Newell/Rubbermaid, Brunswick,
 Samsung and Staples.  Also, since the beginning of 2001, top salespeople with
 historic books of business totaling more than $20 million per year have joined
 the HALO team.  Clearly we are taking the appropriate steps to achieve our
 profitability goal," said Marc Simon, HALO's chief executive officer.
 
     About HALO
     HALO Industries (NYSE:   HMK) ( http://www.halo.com ) is a brand marketing
 leader through its two distinct business units --  HALO Branded Solutions and
 UPSHOT Marketing Group. HALO Branded Solutions is the leading business-to-
 business marketer of promotional products.  UPSHOT Marketing Group is a brand
 marketing agency and leader in brand identity and packaging.  HALO's extensive
 client roster includes global leaders such as Abbott Laboratories, Absolut
 Vodka, The Coca-Cola Company, Discover Financial Services, Ford Motor Company,
 General Electric, Lear Corp., Newell Rubbermaid, Procter & Gamble, J.E.
 Seagram & Son, SBC Communications, and Xerox.
 
     Safe Harbor
     Certain statements in this press release are forward-looking statements
 that involve substantial risks and uncertainties and there can be no
 assurances, for example, that the cost savings initiatives and/or divestitures
 referred to herein will be achieved.  Actual results may differ materially
 from those implied by such forward-looking statements as a result of various
 factors.  Readers are encouraged to review HALO's Annual Report on Form 10-K
 and quarterly report on Form 10-Q for other important factors that may cause
 actual results to differ materially from those implied in these forward-
 looking statements.
 
 
                              HA-LO INDUSTRIES, INC.
                         CONSOLIDATED STATEMENTS OF INCOME
                              FOR THE PERIODS ENDED
                             MARCH 31, 2001 AND 2000
                                    (Unaudited)
 
 
                                                       Three Months Ended
                                                  March 31,         March 31,
     (in thousands, except per share amounts)
                                                     2001              2000
 
     NET SALES:
        Products                                    $97,740          $120,947
        Services                                     15,615            14,305
            Net Sales                               113,355           135,252
 
     COST OF SALES:
        Products                                     68,014            82,370
        Services                                      9,764            10,766
            Cost of Sales                            77,778            93,136
 
       Gross profit                                  35,577            42,116
 
     SELLING EXPENSES                                18,512            21,725
     GENERAL AND ADMINISTRATIVE EXPENSES             51,984            29,725
 
       Loss from operations                         (34,919)           (9,334)
 
     INTEREST EXPENSE                                (1,780)             (892)
     INTEREST INCOME                                    186               133
 
       Loss before taxes                            (36,513)          (10,093)
 
     BENEFIT FOR TAXES                               (8,667)           (4,037)
     NET LOSS FROM CONTINUING OPERATIONS           $(27,846)          $(6,056)
 
     ACCRETION TO REDEMPTION VALUE OF
     PREFERRED STOCK                                  $(900)             $-
 
     NET LOSS FROM CONTINUING OPERATIONS
      APPLICABLE TO COMMON SHAREHOLDERS            $(28,746)          $(6,056)
 
     DISCONTINUED OPERATIONS:
        Income from Discontinued
         Operations (net of applicable
            income tax expense of $ 835 in
             2001 and $ 962 in 2000)                 $1,253            $1,443
 
 
     NET LOSS APPLICABLE TO COMMON
      SHAREHOLDERS                                 $(27,493)          $(4,613)
 
 
     LOSS PER SHARE:
       Basic                                         $(0.41)           $(0.09)
 
     LOSS PER SHARE - CONTINUING
      OPERATIONS:
       Basic                                          (0.42)           $(0.12)
 
     WEIGHTED AVERAGE SHARES
       OUTSTANDING:
       Basic                                         67,771            48,867
 
 
     SUPPLEMENTAL INFORMATION:
 
        EBITDA  from Continuing Operations(a)      $(17,622)          $(5,960)
        EBITDA per share                             $(0.26)           $(0.12)
 
 
 
     (a)  EBITDA is defined as earnings before interest, income taxes,
          depreciation and amortization.  EBITDA should not be considered as an
          alternative to net income (as an indicator of operating performance)
          or cash flow (as a measure of liquidity) as it is not in accordance
          with, nor superior to, Generally Accepted Accounting Principles.
          Nonetheless, this data provides additional information for the
          evaluation of HA-LO Industries, Inc.
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X26447605
 
 

SOURCE HALO Industries, Inc.
    CHICAGO, April 26 /PRNewswire/ -- HALO Industries, Inc. (NYSE:   HMK), a
 promotional products industry leader and brand marketing organization, today
 announced results for the first quarter ended March 31, 2001.  The Company
 also announced a restructuring plan and cost savings initiative aimed
 primarily at its branded solutions business segment and provided an update on
 its previously announced divestiture plan.
 
     First quarter results
     Sales from continuing operations for the first quarter of 2001 decreased
 19.3 percent to $113.4 million from $135.3 million in the same period of 2000.
 The net loss from continuing operations for the first quarter of 2001 was
 $28.7 million, compared to net loss from continuing operations of $6.1 million
 for the same period last year.  The Company reported EBITDA from continuing
 operations of ($17.6 million) compared to EBITDA from continuing operations of
 ($5.9 million) for the same period last year.  The net loss applicable to
 common shareholders for the first quarter of 2001 was $27.5 million, or ($.41)
 per diluted share, compared to a net loss applicable to common shareholders of
 $4.6 million, or ($.09) for the same period last year.
 
     Restructuring Plan and Cost Savings Initiative
     The Company announced a restructuring of its business and cost savings
 initiatives, primarily in the branded solutions business segment.  The
 restructuring plan will result in a second quarter charge of approximately
 $300 to $325 million.  Less than $5 million of this charge will result in
 incremental cash cost to the Company.  Major components of the charge will
 include write downs of certain assets, including goodwill resulting from the
 acquisition of Starbelly.com, employee severance, lease buyout costs, expenses
 incurred to exit unprofitable lines and other special charges.  The cost
 savings initiatives are designed to improve annualized profitability by
 approximately $30 million.  The focus of both the restructuring plan and cost
 savings initiative is to establish a business model that will restore the
 branded solutions business to profitability.   The cost savings initiatives
 will be largely in place by May 1.  Implementation of the restructuring plan
 will be completed this year.
 
     Divestiture Update
     The Company continues its efforts to divest itself of two of its marketing
 services subsidiaries.  There are multiple prospective purchasers for each of
 the Company's telemarketing and brand strategy and identity business units.
 Active negotiations continue regarding the sale of each unit, and the Company
 expects to close one or both transactions by the end of the second quarter.
 
     CEO Commentary
     "We remain committed to reducing the debt on our balance sheet, returning
 our focus to our core business and restoring profitability to HALO.  In
 addition to our cost containment initiatives, we are also focused on growing
 our branded solutions revenue base.  So far in 2001, we have added impressive
 new customers like M&M Mars, CIBC World Markets, Newell/Rubbermaid, Brunswick,
 Samsung and Staples.  Also, since the beginning of 2001, top salespeople with
 historic books of business totaling more than $20 million per year have joined
 the HALO team.  Clearly we are taking the appropriate steps to achieve our
 profitability goal," said Marc Simon, HALO's chief executive officer.
 
     About HALO
     HALO Industries (NYSE:   HMK) ( http://www.halo.com ) is a brand marketing
 leader through its two distinct business units --  HALO Branded Solutions and
 UPSHOT Marketing Group. HALO Branded Solutions is the leading business-to-
 business marketer of promotional products.  UPSHOT Marketing Group is a brand
 marketing agency and leader in brand identity and packaging.  HALO's extensive
 client roster includes global leaders such as Abbott Laboratories, Absolut
 Vodka, The Coca-Cola Company, Discover Financial Services, Ford Motor Company,
 General Electric, Lear Corp., Newell Rubbermaid, Procter & Gamble, J.E.
 Seagram & Son, SBC Communications, and Xerox.
 
     Safe Harbor
     Certain statements in this press release are forward-looking statements
 that involve substantial risks and uncertainties and there can be no
 assurances, for example, that the cost savings initiatives and/or divestitures
 referred to herein will be achieved.  Actual results may differ materially
 from those implied by such forward-looking statements as a result of various
 factors.  Readers are encouraged to review HALO's Annual Report on Form 10-K
 and quarterly report on Form 10-Q for other important factors that may cause
 actual results to differ materially from those implied in these forward-
 looking statements.
 
 
                              HA-LO INDUSTRIES, INC.
                         CONSOLIDATED STATEMENTS OF INCOME
                              FOR THE PERIODS ENDED
                             MARCH 31, 2001 AND 2000
                                    (Unaudited)
 
 
                                                       Three Months Ended
                                                  March 31,         March 31,
     (in thousands, except per share amounts)
                                                     2001              2000
 
     NET SALES:
        Products                                    $97,740          $120,947
        Services                                     15,615            14,305
            Net Sales                               113,355           135,252
 
     COST OF SALES:
        Products                                     68,014            82,370
        Services                                      9,764            10,766
            Cost of Sales                            77,778            93,136
 
       Gross profit                                  35,577            42,116
 
     SELLING EXPENSES                                18,512            21,725
     GENERAL AND ADMINISTRATIVE EXPENSES             51,984            29,725
 
       Loss from operations                         (34,919)           (9,334)
 
     INTEREST EXPENSE                                (1,780)             (892)
     INTEREST INCOME                                    186               133
 
       Loss before taxes                            (36,513)          (10,093)
 
     BENEFIT FOR TAXES                               (8,667)           (4,037)
     NET LOSS FROM CONTINUING OPERATIONS           $(27,846)          $(6,056)
 
     ACCRETION TO REDEMPTION VALUE OF
     PREFERRED STOCK                                  $(900)             $-
 
     NET LOSS FROM CONTINUING OPERATIONS
      APPLICABLE TO COMMON SHAREHOLDERS            $(28,746)          $(6,056)
 
     DISCONTINUED OPERATIONS:
        Income from Discontinued
         Operations (net of applicable
            income tax expense of $ 835 in
             2001 and $ 962 in 2000)                 $1,253            $1,443
 
 
     NET LOSS APPLICABLE TO COMMON
      SHAREHOLDERS                                 $(27,493)          $(4,613)
 
 
     LOSS PER SHARE:
       Basic                                         $(0.41)           $(0.09)
 
     LOSS PER SHARE - CONTINUING
      OPERATIONS:
       Basic                                          (0.42)           $(0.12)
 
     WEIGHTED AVERAGE SHARES
       OUTSTANDING:
       Basic                                         67,771            48,867
 
 
     SUPPLEMENTAL INFORMATION:
 
        EBITDA  from Continuing Operations(a)      $(17,622)          $(5,960)
        EBITDA per share                             $(0.26)           $(0.12)
 
 
 
     (a)  EBITDA is defined as earnings before interest, income taxes,
          depreciation and amortization.  EBITDA should not be considered as an
          alternative to net income (as an indicator of operating performance)
          or cash flow (as a measure of liquidity) as it is not in accordance
          with, nor superior to, Generally Accepted Accounting Principles.
          Nonetheless, this data provides additional information for the
          evaluation of HA-LO Industries, Inc.
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X26447605
 
 SOURCE  HALO Industries, Inc.