UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the
Registrant
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Filed by a
Party other than the Registrant
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appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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U.S. HOME SYSTEMS, INC.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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(5)
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Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify
the previous filing by registration statement number, or the form or schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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Filing Party:
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Date Filed:
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U.S. HOME SYSTEMS, INC.
2951 Kinwest Parkway
Irving, Texas 75063
(214) 488-6300
SUPPLEMENT TO THE PROXY STATEMENT FOR
THE SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 26, 2012
This supplement, which we refer to as the proxy supplement, amends and supplements the definitive proxy statement, which
we refer to as the proxy statement, initially filed with the U.S. Securities and Exchange Commission (the SEC) on September 17, 2012 by U.S. Home Systems, Inc., a Delaware corporation, which we refer to as the Company, we, our or
us, for a special meeting of stockholders of the Company to be held on October 26, 2012, at 10:00 a.m., Central Daylight Time, at the Companys offices at 2951 Kinwest Parkway, Irving, Texas 75063. The purpose of the special meeting is to
consider and vote upon, among other things, a proposal to adopt the Agreement and Plan of Merger, dated as of August 6, 2012, as it may be amended from time to time, which we refer to as the merger agreement, by and among THD At-Home Services,
Inc., a Delaware corporation, which we refer to as Parent, Umpire Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of Parent, which we refer to as Merger Sub, and the Company providing for the merger of Merger Sub with and into
the Company, which we refer to as the merger, with the Company being the surviving corporation. Following the merger, the Company will be a wholly-owned subsidiary of Parent.
After careful consideration, the board of directors of the Company has unanimously approved the merger agreement and the merger and declared the merger agreement and the merger to be advisable, fair to
and in the best interests of the Company and its stockholders. The board of directors of the Company unanimously recommends that you vote FOR the approval of the proposal to adopt the merger agreement, FOR the approval, on a
nonbinding, advisory basis, of the proposal regarding golden parachute compensation that may be paid or become payable to the Companys named executive officers in connection with the consummation of the merger and FOR
the approval of the proposal to adjourn the special meeting, if necessary, to solicit additional proxies.
If you have
not already submitted a proxy for use at the special meeting you are urged to do so promptly. No action in connection with this proxy supplement is required by any stockholder who has previously delivered a proxy and who does not wish to revoke or
change that proxy.
The information contained herein speaks only as of October 19, 2012 unless the information
specifically indicates that another date applies.
SUPPLEMENT TO PROXY STATEMENT
The Company is making the following supplemental disclosures to the proxy statement. These disclosures should be read in connection with
the proxy statement, which should be read in its entirety. This proxy supplement is not intended to and does not update the disclosures contained in the proxy statement, which were made as of September 17, 2012 except where the information in
the proxy statement specifically indicated that another date applied. Defined terms used but not defined herein have the meanings set forth in the proxy statement. Page numbers referenced herein correspond to page numbers in the proxy statement
mailed to stockholders of the Company. Without admitting in any way that the disclosures below are material or otherwise required by law, the Company makes the following supplemental disclosures:
The section of the proxy statement entitled
The MergerBackground of the Merger
beginning on page 30 is
supplemented as set forth below:
The following is inserted prior to the second to last sentence of the second full
paragraph on page 34 of the proxy statement:
Bryant Park Capital derived the June 18 illustrative range of values
solely to fulfill its responsibility to assist in negotiating, on behalf of the Companys stockholders, the highest possible price per share from The Home Depot, and did not base the illustrative range of values on a view of fairness or
intrinsic value.
In its June 18 letter, Bryant Park Capital used projected financial data taken from the Companys
confidential information memorandum. The projected financial data from the confidential information memorandum was later revised by the Company to reflect the projected delay in the Companys expansion into Canada due to The Home Depot
questioning the Companys right to proceed with the Canadian Tire services agreement in light of the Companys existing services agreement with The Home Depot; and the financial projections were further revised by the Company to take into
account the projected reduction in the Companys full cabinet replacement initiative reflecting subsequent lower actual results from the Companys test pilot program in Florida. As a result, the Companys projected financial results
in the June 18 letter reflected higher revenue than in the Companys Certain Financial Projections included herein (by approximately $5.3 million in 2012, growing to approximately $18.6 million in 2016). In addition, the
June 18 financial data added back to EBITDA approximately $1.2 million per year of Company corporate overhead, which includes among other costs those associated with the Company being a public company, that would not likely be incurred by The
Home Depot. As a result, the Companys projected financial results in the June 18 letter reflected higher EBITDA than in the Companys Certain Financial Projections included herein (by approximately $1.1 million in 2012,
growing to approximately $5.5 million in 2016).
The Companys updated financial projections are included in the proxy in
the section entitled Certain Financial Projections.
In its June 18 letter, Bryant Park Capital presented
selected financial data for public companies chosen as a group in order to support the highest possible per share price in negotiations between the parties. The median enterprise value/EBITDA multiples for the companies in the June 18 letter
for the LTM period, 2012 and 2013 were 13.6x, 10.8x and 8.3x, respectively. The illustrative range of price per share values in the June 18 letter was also derived, in part, from a discounted cash flow analysis using the Companys
financial data from the confidential information memorandum, after adding back to EBITDA approximately $1.2 million per year of corporate overhead, a discount rate range from 20% to 24% and terminal value exit multiples ranging from 6.0x to 8.0x.
The section of the proxy statement entitled
The MergerOpinion of BPCVSSelected Public Company
Analysis
beginning on page 47 is supplemented as set forth below:
The following table discloses the enterprise value of
each selected public company as a multiple of its revenue and EBITDA for the LTM and estimates of its revenue and EBITDA for calendar years 2012 and 2013. Historical and projected financial results are adjusted to exclude various one-time and/or
non-recurring factors.
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EV / Revenue
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EV / EBITDA
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Company
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LTM
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2012E
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2013E
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LTM
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2012E
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2013E
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American Woodmark Corp.
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0.39x
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0.38x
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0.35x
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NM
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9.13x
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5.71x
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Armstrong World Industries, Inc.
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1.17x
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1.13x
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1.04x
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11.15x
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8.01x
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6.68x
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Griffon Corporation
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0.56x
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0.54x
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0.50x
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7.64x
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6.99x
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6.28x
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Masco Corporation
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0.92x
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0.91x
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0.86x
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13.35x
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11.12x
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9.39x
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Rona Inc.
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0.44x
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0.43x
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0.43x
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8.08x
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7.58x
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7.15x
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Whirlpool Corp.
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0.40x
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0.39x
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0.38x
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4.58x
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4.51x
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4.20x
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The section of the proxy statement entitled
The MergerOpinion of BPCVSDiscounted Cash Flow
Analysis
beginning on page 49 is supplemented as set forth below:
The following is inserted prior to
the last sentence of the first full paragraph under the section of the proxy statement entitled The MergerOpinion of BPCVSDiscounted Cash Flow Analysis:
The weighted average cost of capital is determined by the sum of (a) the market value of equity as a percentage of the total market value of the Companys capital multiplied by the
Companys estimated cost of equity, and (b) the market value of debt as a percentage of the total market value of the Companys capital multiplied by the Companys estimated after-tax market cost of debt. The Companys
estimated cost of equity was calculated using the Capital Asset Pricing Model which took into account the Companys beta (a measure of the sensitivity of an assets returns to market returns), betas of comparable companies, the risk-free
rate, a company specific risk premium based on BPCVSs professional judgment and a historical equity market risk premium and a size premium, both of which were sourced from the Ibbotson SBBI Valuation Yearbook.
The section of the proxy statement entitled
The MergerCertain Financial Projections
beginning on page 53 is
supplemented as set forth below:
The following table sets forth certain additional summary items from the financial projections:
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Financial Projections
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2012E
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2013E
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2014E
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2015E
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2016E
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Tax Rate
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40.5
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40.5
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40.5
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40.5
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%
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40.5
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Increase in Current Assets
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$
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2,429
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$
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2,601
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$
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3,161
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$
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1,068
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$
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983
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Increase in Current Liabilities
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$
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810
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$
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1,793
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$
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2,081
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$
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717
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$
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667
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Capital Expenditures
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$
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900
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$
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1,080
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$
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1,301
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$
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1,378
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$
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1,448
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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
This proxy supplement, and the documents to which we refer you in this proxy supplement, as well as information included in oral
statements or other written statements made or to be made by us, contain a number of forward-looking statements which the Company intends to be covered by the safe harbor provisions for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995. Specifically, all statements other than statements of historical facts included in this proxy supplement regarding the timing or likelihood of completing the merger to which this proxy supplement relates,
our financial position, business strategy and plans and objectives of management for future operations are forward-looking statements. These forward-looking statements are based on the beliefs of management, as well as assumptions made by and
information currently available to management. When used in this proxy supplement, the words anticipate, believe, estimate, expect, may, should, could,
would, will, hope, plan, contemplate, continue and intend, and words or phrases of similar import, as they relate to the timing or likelihood of completing the
merger, our financial position, business strategy and plans, or objectives of management, are intended to identify forward-looking statements.
Our forward-looking statements reflect our current view with respect to future events and are subject to a number of known and unknown risks and uncertainties that could cause actual results, performance
or achievements to differ materially from those described or implied in the forward-looking statements, including, but not limited to, general economic and business conditions (including the current worldwide economic downturn and disruption in
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financial and credit markets), the state of the residential housing market, our ability to enter into new markets or expand our product lines, and changes in legislation. Accordingly, actual
results may differ materially from such forward-looking statements. In addition to other factors and matters contained in or incorporated by reference in this proxy supplement, we believe the following factors could cause actual results to differ
materially from those discussed in the forward-looking statements:
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the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement, including a termination
under circumstances that could require us to pay a termination fee;
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the inability to complete the merger due to the failure to obtain the Company stockholder approval or the failure to satisfy other conditions to
completion of the merger, including the failure to obtain regulatory approval;
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the failure of the merger to close for any other reason;
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risks that the proposed merger disrupts current plans and operations and the potential difficulties in employee retention as a result of the merger;
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the outcome of legal proceedings that have been instituted against us and any other legal proceedings that may be instituted against us or others
relating to the merger agreement;
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diversion of managements and our other employees attention from ongoing business concerns;
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the merger agreements contractual restrictions on the conduct of our business prior to the completion of the merger;
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the possible adverse effect on our business and the price of our shares of Company common stock if the merger is not consummated in a timely fashion or
at all; and
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the amount of the costs, fees, expenses and charges related to the merger.
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Additional information about these factors and about the material factors or assumptions underlying such forward-looking statements may
be found under Item 1A in the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2011, Part II Item 1A of the Companys Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2012
and in our other filings with the SEC. The Company cautions that the foregoing list of important factors that may affect future results and the factors contained in our SEC filings are not exhaustive. When relying on forward-looking statements to
make decisions with respect to the proposed transaction, stockholders and others should carefully consider the foregoing factors and other uncertainties and potential events. All subsequent written and oral forward-looking statements concerning the
proposed transaction or other matters attributable to the Company or any other person acting on its behalf are expressly qualified in their entirety by the cautionary statements referenced above. The forward-looking statements contained in this
proxy supplement speak only as of the date of this proxy supplement. The Company undertakes no obligation to update or revise any forward-looking statements for any reason, even if new information becomes available or other events occur in the
future, except as may be required by law.
WHERE YOU CAN FIND MORE INFORMATION
In connection with the proposed merger, the Company filed the proxy statement with the SEC and first mailed the proxy statement to
stockholders on or about September 20, 2012.
BEFORE MAKING ANY VOTING DECISION, STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT, ALL RELATED SUPPLEMENTS AND ALL OTHER RELATED MATERIALS CAREFULLY BECAUSE THEY CONTAIN (AND WILL CONTAIN)
IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER AND RELATED MATTERS.
We file annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC filings are also available to the public at the SEC website at
www.sec.gov.
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To receive copies of public records not posted to the SECs website at prescribed rates, you may complete an online form at www.sec.gov, send a fax to (202) 772-9337 or submit a written
request to the SEC, Office of FOIA/PA Operations, 100 F. Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information. You also may obtain free copies of the documents we file with the SEC, including this proxy
supplement, by going to the Investor Relations section of our website, www.ushomesystems.com. The information provided on our website is not part of this proxy supplement, and therefore is not incorporated herein by reference.
Statements contained in this proxy supplement are not necessarily complete and each such statement is qualified in its entirety by
reference to the proxy statement and all other related materials filed as an exhibit with the SEC.
Any person, including any
beneficial owner of shares of Company common stock, to whom this proxy supplement is delivered may request copies of proxy statements and any of the documents incorporated by reference in this document or other information concerning us by written
or telephonic request directed to Secretary, Robert A. DeFronzo, at 2951 Kinwest Parkway, Irving, Texas 75063, telephone (214) 488-6300, by telephonic request directed to our proxy solicitor, D.F. King & Co., Inc., at 1-800-659-6590
(toll free) or (212) 269-5550 (call collect) or from the SEC through the SEC website at the address provided above. Documents incorporated by reference are available without charge, excluding any exhibits to those documents unless the exhibit
is specifically incorporated by reference into those documents.
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